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Verizon Communications ( VZ ), in a move that could boost its plans to offer 5G wireless services, agreed to buy privately held XO Communications’ fiber-optic network for about $1.8 billion. Verizon said it expects the deal to close by June 30. Level 3 Communications ( LVLT ) has also been viewed as a potential buyer of XO Communications. Controlled by activist investor Carl Icahn, XO Communications provides services to large and midsize businesses. It also connects cellphone towers to mobile switching centers, where calls are routed to long-distance networks. In that market, XO competed with Zayo Group Holdings ( ZAYO ) and others. Verizon plans on improving its wireless network with “small cell” technology in urban areas, a process called densification. The low-power “base stations” are located in shopping malls and outdoor public spaces. “Verizon’s ownership of XO’s fiber-based IP and Ethernet networks will help better serve enterprise and wholesale customers. In addition, acquired fiber facilities will help Verizon continue to densify its cell network,” said Verizon in a statement. Verizon will also lease XO Communications’ high-frequency wireless spectrum, with an option to buy for $200 million, by year-end 2018, UBS said in a research report. “LMDS (local multipoint distribution service) is very high frequency spectrum in the 28-31 GHz bands, which Verizon believes will be well-suited for 5G,” UBS analyst John Hodulik said in the report. “XO’s LMDS spectrum covers some of the largest U.S. metros, including New York, Boston, Chicago, Minneapolis, Atlanta, Miami, Tampa, Dallas and Austin, Denver, Phoenix, San Francisco and Los Angeles.” XO has also competed in what’s called the “special access” market, along with Sprint ( S ) and Level 3, vs. Verizon and AT&T ( T ). The Federal Communications Commission has been probing how banks, schools, retail outlets and others buy high-speed data services from telecom companies. Verizon stock was up a fraction in early afternoon trading in the stock market today . Scalper1 News
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