The top wireless service provider in the U.S., Verizon Communications, has announced on Monday that it would be purchasing XO Communications' fiber-optic network business in a massive, $1.8-billion deal, in what Verizon stated is part of the company's efforts to improve its service to customers, according to The Consumerist.
Apart from acquiring XO Communications' fiber-optic network business, Verizon is also set to lease XO's wireless spectrum, with an option to fully purchase the spectrum at the end of 2018.
Based in Herndon, Va., XO Communications is owned by billionaire Carl Icahn, who also acts as the chairman and the sole shareholder of the company. XO has built its reputation by operating networks that its customers use for Internet access, cloud computing, as well as other related services, reports The New York Daily News.
Speaking about the Verizon purchase, Icahn has stated that despite the deal not represent a significant annualized return on investment, it is nonetheless what is best for the company. The billionaire further stated that since buying senior debt in 2001, he had personally invested additional capital in order to keep XO's operations.
As for Verizon, the purchase of XO's fiber-optics network business is expected to save the company about $1.5 billion in cost savings, reports Reuters through CNBC News.
The purchase of XO Communications was warmly received by Verizon's investors, as the company's shares rose 24 cents, closing at $51.10 on Monday. The deal is expected to be finalized sometime in the first half of 2017.
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