Citi likes Frontier deal for Verizon, sees possible competing bids

Citi analyst Michael Rollins keeps a Buy rating on Verizon Communications (VZ) after the company announced the acquisition of Frontier (FYBR) for $38.50 per share in an all-cash deal. Run-rate cost synergies were established at $500M, Verizon reaffirmed its 2024 guidance and also announced an increase to its quarterly dividend yesterday, the analyst tells investors in a research note. The firm says Verizon also disclosed expectations for the deal to be accretive to revenue and EBITDA growth as well as earnings. Citi believes the deal has “favorable industrial logic” for Verizon. It likes the risk/reward for Verizon to take another step towards improving financial growth with an expanded focus around converged mobile and broadband service offerings. For Frontier, the firm believes there may still be a possibility for competing bids, including from T-Mobile (TMUS) and AT&T (T), given the broader industry interest in convergence.