XO to sell fiber-optic network business to Verizon for $1.8 billion

Published February 22, 2016 by Robert Powell, III

Herndon-based XO Communications said Monday that it will sell its fiber-optic network business to New York-based Verizon Communications Inc. for about $1.8 billion. 

The transaction would provide Verizon access to XO’s fiber-based IP and Ethernet networks.

Verizon said the acquisition will help it better serve enterprise and wholesale customers.

The transaction is subject to customary regulatory approvals and is expected to close in the first half of 2017.

Verizon expects to receive several financial benefits from the transaction, including a step-up in the basis of the assets as well as operating and capital expense savings. The net present value of the operational savings is expected to be more than $1.5 billion.

Verizon also will lease available XO wireless spectrum, with an option to buy it by the end of 2018.