Verizon's stock heads for a 2-year high after $3.3 billion tower deal

By Tomi Kilgore

Vertical Bridge to obtain exclusive rights to lease and operate more than 6,000 of Verizon's wireless-communications towers

Shares of Verizon Communications Inc. were rising toward a two-year high in early Monday trading, after the telecommunications company announced a deal valued at $3.3 billion to lease out its wireless-communications towers.

The stock (VZ) tacked on 0.4% in premarket trading, to put them on track to open at the highest price seen since Aug. 17, 2022.

Even with the stock's gain, the dividend yield will still be above 6%, enough to keep it the highest-yielding Dow Jones Industrial Average DJIA component.

The company said the deal gives wireless-infrastructure company Vertical Bridge the exclusive rights to lease and operate 6,339 towers across 50 U.S. states and Washington, D.C. The deal includes an upfront payment of about $2.8 billion in cash and certain commercial benefits.

Under the terms of the deal, Verizon said it will enter into a 10-year agreement to lease back capacity on the towers from Vertical Bridge, and will have access to certain additional space on the towers for future use.

Verizon said the deal supports its aim to lower tower-related costs.

"This transaction builds on our existing relationship with Vertical Bridge while realizing substantial value for this unique set of assets and allows us to be agile in optimizing the network with one of the best operating partners," said Verizon Chief Executive Hans Vestberg.

The tower deal comes about three weeks after Verizon announced plans to buy Frontier Communications Parent Inc. (FYBR) for $20 billion in cash.

Also earlier this month, Verizon detailed the charges it will take, up to $1.9 billion, as about 4,800 employees are set to leave the company by March under a voluntary separation program announced in June.

Verizon's stock has rallied 19.1% year to date, while the Dow has gained 12.3%.

-Tomi Kilgore

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09-30-24 0757ET

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