Verizon’s Backflip

It’s the investment bankers’ dream—a company so desperate for growth that it engages in years of dealmaking under one CEO, while his successor spends years undoing all that earlier work. We’re talking about Verizon, whose $9.6 billion purchase of Frontier today is the culmination of nearly a decade of back-and-forth M&A negotiation. This is what happens when you’re making lots of money but your core business—cellular phones—has saturated the market.

In 2015, Verizon’s then-CEO Lowell McAdam decided to sell its landline phone and Fios broadband and TV businesses in California, Texas and Florida to Frontier for $10.5 billion in cash. The reason? According to McAdam, operations in these three states would be difficult to grow because they weren’t close to Verizon’s “contiguous East Coast footprint” centered on New York.