• Verizon splashes $20bn on FTTx operator Frontier
• Tele2 needs a new CEO
• AT&T is suing Broadcom over VMware support deal

In today’s industry news roundup: Verizon is spending big to expand its fibre access network reach; Sweden’s Tele2 is searching for a new CEO; AT&T is taking VMware’s new owner Broadcom to court; and more!

Verizon is acquiring US fibre broadband network operator Frontier Communications for $20bn in cash, a move that adds 2.2 million high-speed broadband subscribers to Verizon’s customer base of 7.4 million Fios broadband users and extends the giant US telco’s fibre network to reach 25 million premises across 31 states as well as Washington DC. “This strategic acquisition of the largest pure-play fibre internet provider in the US will significantly expand Verizon’s fibre footprint across the nation, accelerating the company’s delivery of premium mobility and broadband services to current and new customers. It will also expand Verizon’s intelligent edge network for digital innovations like AI and IoT,” noted Verizon in its announcement. Verizon CEO and chairman Hans Vestberg said: “Connectivity is essential in nearly every part of our lives and work, and no one delivers better than Verizon… The acquisition of Frontier is a strategic fit. It will build on Verizon’s two decades of leadership at the forefront of fibre and is an opportunity to become more competitive in more markets throughout the United States, enhancing our ability to deliver premium offerings to millions more customers across a combined fibre network.” The acquisition is also somewhat ironic, as Verizon offloaded its broadband access network in California, Florida and Texas to Frontier for $10.54bn in 2015 and is now buying those (enhanced) assets back. For the second quarter of 2024, Frontier generated revenues of almost $1.5bn and an operating profit of just $91m. While the official news of the deal broke on Thursday morning, speculation that a deal was imminent emerged on Wednesday afternoon, heralding a sharp dip in Verizon’s share price, which has lost more than 4% of its value in the past day and was trading at $41.08 as this article was published. Read more.   

Tele2, which has operations in Sweden, Estonia, Latvia and Lithuania, is looking for a new head honcho following the resignation of CEO Kjell Johnsen, who will remain in his role until a successor is found. “I want to thank Kjell for his significant contributions to Tele2’s development during his four years at the helm,” noted Tele2 chairman Thomas Reynaud, who is also the CEO at Xavier Niel’s Iliad Group, which acquired a 19.8% stake in Tele2 in February this year. “It has been a pleasure and a privilege to run Tele2 over the past four years,” noted Johnsen. “We have accomplished a lot together, returning to growth in all major areas with a strong balance sheet and cash flow. Building on our challenger culture and our sharp focus on sustainability, I am pleased to hand over Tele2 to a new CEO who can write the next chapter.” Tele2 reported a slight improvement in its financials for the second quarter, with its total revenue rising by 1% year on year to 7.3bn Swedish krona (US$693.5m) in the period. 

AT&T is taking legal action against VMware owner Broadcom, alleging that the chip and cloud software giant is refusing to honour an extended support deal that AT&T struck with VMware, which was acquired by Broadcom for $61bn late last year. AT&T filed a complaint last week with the Supreme Court of New York State explaining that it holds licences for VMware software and that it paid for support services under a contract that ends on 8 September, which the telco had the right to extend for a further two years as long as it renewed ahead of the agreement’s expiry. AT&T claims that Broadcom is refusing to honour that contract, and has allegedly told AT&T that it will only continue the support if AT&T buys more services and support. Naturally, Broadcom isn't on board with AT&T's interpretation of events. “Broadcom strongly disagrees with the allegations and is confident we will prevail in the legal process," the company stated in an email to TelecomTV. "VMware has been moving to a subscription model, the standard for the software industry, for several years – beginning before the acquisition by Broadcom. Our focus will continue to be providing our customers choice and flexibility while helping them address their most complex technology challenges.”

The value of the broadband access networking equipment market shrank by 8% year on year to $4.2bn in the second quarter of this year, but there are signs of recovery, according to research house Dell’Oro Group, as spending was up 4% compared with the first quarter (when broadband equipment investments were at their lowest for three years). “Cable operators continue to feel squeezed between fibre ISPs and fixed wireless providers who are syphoning away their valuable residential subscribers,” noted Dell’Oro VP and analyst Jeff Heynen in this announcement. “As a result, fixed wireless CPE [customer premises equipment] unit shipments posted their fourth consecutive quarter of year-on-year growth, while cable operators reduced their CPE purchases, pushing unit shipments to historically low levels,” he added.

– The staff, TelecomTV