We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Verizon to Acquire Frontier Communications: ETFs in Focus
Read MoreHide Full Article
U.S. wireless carrier Verizon Communications Inc. (VZ - Free Report) has agreed to buy the largest pure-play fiber Internet provider in the country, Frontier Communications (FYBR - Free Report) , in an all-cash deal valued at $20 billion to boost its fiber network.
Investors seeking to tap the opportunity arising from the projected deal could bet on telecommunication ETFs like Communication Services Select Sector SPDR Fund (XLC - Free Report) , Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) , Vanguard Communication Services ETF (VOX - Free Report) , iShares Global Comm Services ETF (IXP - Free Report) and SPDR S&P Telecom ETF (XTL - Free Report) .
Deal in Focus
Per the terms of the deal, investors will get $38.50 a share in cash, a 37% premium to the $28.04 closing price on Tuesday. Frontier also has about $11 billion in debt. The deal is expected to be completed in about 18 months.
The transaction will expand Verizon’s fiber footprint in the United States by increasing scale by adding 2.2 million fiber subscribers of Frontier spread across 25 states. This will extend Verizon’s network reach to 25 million premises across 31 states and Washington, D.C, and will bolster its position to compete better against AT&T (T).
Verizon’s fiber network is largely in the Northeast and mid-Atlantic regions while Frontier’s coverage spans multiple states in the Midwest, Texas, California and others. The combination of both will provide a boost to Internet usage with more people streaming video. The flow of data is expected to grow even further as more companies adopt artificial intelligence for their business.
This acquisition is expected to generate at least $500 million in annual run-rate cost synergies and will add to Verizon's revenues and adjusted EBITDA growth upon closing. The transaction, which has been unanimously approved by the Verizon and Frontier Boards of Directors, is subject to approval by Frontier shareholders, regulatory clearance and other customary closing conditions.
ETFs in Focus
Let’s delve into each ETF below:
Communication Services Select Sector SPDR Fund (XLC - Free Report)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services and has accumulated $18.2 billion in its asset base. It follows the Communication Services Select Sector Index and holds 22 stocks in its basket. About 45% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two (read: Meta Jumps on Q2 Earnings Beat: ETFs to Gain).
Communication Services Select Sector SPDR Fund charges 9 bps in annual fees and trades in an average daily volume of 4.4 million shares. It has a Zacks ETF Rank #2 (Buy).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
Fidelity MSCI Communication Services Index ETF follows the MSCI USA IMI Communication Services 25/50 Index. It holds 108 stocks in its basket, with Interactive Media & Services, Entertainment, and Media taking the double-digit exposure each.
Fidelity MSCI Communication Services Index ETF has amassed $1.1 billion in its asset base and trades in an average daily volume of 93,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Vanguard Communication Services ETF also targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 117 stocks in its basket, interactive media & services is the top sector, accounting for 49.1% of the portfolio, while movies & entertainment, cable & satellite, and integrated telecommunication services round off the next three.
Vanguard Communication Services ETF has AUM of $3.9 billion and trades in a good volume of 123,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
iShares Global Comm Services ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 65 stocks in its basket. Interactive media & services dominates the fund’s return at 49.8%, followed by integrated telecommunication services (19.3%).
iShares Global Comm Services ETF has amassed $362.4 million in its asset base while trading at an average daily volume of 14,000 shares. The expense ratio is 0.41%. IXP has a Zacks ETF Rank #3 with a Medium risk outlook.
SPDR S&P Telecom ETF provides exposure to the telecommunications segment and follows the S&P Telecom Select Industry Index. It holds 39 stocks in its basket, with communications equipment making up 50.4% of the assets, while alternative carriers and integrated telecommunication services round off the next two spots with double-digit exposure each (read: The Top ETF of August and its Best Stocks).
SPDR S&P Telecom ETF has amassed $86.7 million in its asset base and charges 35 bps in annual fees. It trades in a lower average daily volume of 11,000 shares and has a Zacks ETF Rank #3 with a Medium risk outlook.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Verizon to Acquire Frontier Communications: ETFs in Focus
U.S. wireless carrier Verizon Communications Inc. (VZ - Free Report) has agreed to buy the largest pure-play fiber Internet provider in the country, Frontier Communications (FYBR - Free Report) , in an all-cash deal valued at $20 billion to boost its fiber network.
Investors seeking to tap the opportunity arising from the projected deal could bet on telecommunication ETFs like Communication Services Select Sector SPDR Fund (XLC - Free Report) , Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) , Vanguard Communication Services ETF (VOX - Free Report) , iShares Global Comm Services ETF (IXP - Free Report) and SPDR S&P Telecom ETF (XTL - Free Report) .
Deal in Focus
Per the terms of the deal, investors will get $38.50 a share in cash, a 37% premium to the $28.04 closing price on Tuesday. Frontier also has about $11 billion in debt. The deal is expected to be completed in about 18 months.
The transaction will expand Verizon’s fiber footprint in the United States by increasing scale by adding 2.2 million fiber subscribers of Frontier spread across 25 states. This will extend Verizon’s network reach to 25 million premises across 31 states and Washington, D.C, and will bolster its position to compete better against AT&T (T).
Verizon’s fiber network is largely in the Northeast and mid-Atlantic regions while Frontier’s coverage spans multiple states in the Midwest, Texas, California and others. The combination of both will provide a boost to Internet usage with more people streaming video. The flow of data is expected to grow even further as more companies adopt artificial intelligence for their business.
This acquisition is expected to generate at least $500 million in annual run-rate cost synergies and will add to Verizon's revenues and adjusted EBITDA growth upon closing. The transaction, which has been unanimously approved by the Verizon and Frontier Boards of Directors, is subject to approval by Frontier shareholders, regulatory clearance and other customary closing conditions.
ETFs in Focus
Let’s delve into each ETF below:
Communication Services Select Sector SPDR Fund (XLC - Free Report)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services and has accumulated $18.2 billion in its asset base. It follows the Communication Services Select Sector Index and holds 22 stocks in its basket. About 45% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two (read: Meta Jumps on Q2 Earnings Beat: ETFs to Gain).
Communication Services Select Sector SPDR Fund charges 9 bps in annual fees and trades in an average daily volume of 4.4 million shares. It has a Zacks ETF Rank #2 (Buy).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
Fidelity MSCI Communication Services Index ETF follows the MSCI USA IMI Communication Services 25/50 Index. It holds 108 stocks in its basket, with Interactive Media & Services, Entertainment, and Media taking the double-digit exposure each.
Fidelity MSCI Communication Services Index ETF has amassed $1.1 billion in its asset base and trades in an average daily volume of 93,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Vanguard Communication Services ETF (VOX - Free Report)
Vanguard Communication Services ETF also targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 117 stocks in its basket, interactive media & services is the top sector, accounting for 49.1% of the portfolio, while movies & entertainment, cable & satellite, and integrated telecommunication services round off the next three.
Vanguard Communication Services ETF has AUM of $3.9 billion and trades in a good volume of 123,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
iShares Global Comm Services ETF (IXP - Free Report)
iShares Global Comm Services ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 65 stocks in its basket. Interactive media & services dominates the fund’s return at 49.8%, followed by integrated telecommunication services (19.3%).
iShares Global Comm Services ETF has amassed $362.4 million in its asset base while trading at an average daily volume of 14,000 shares. The expense ratio is 0.41%. IXP has a Zacks ETF Rank #3 with a Medium risk outlook.
SPDR S&P Telecom ETF (XTL - Free Report)
SPDR S&P Telecom ETF provides exposure to the telecommunications segment and follows the S&P Telecom Select Industry Index. It holds 39 stocks in its basket, with communications equipment making up 50.4% of the assets, while alternative carriers and integrated telecommunication services round off the next two spots with double-digit exposure each (read: The Top ETF of August and its Best Stocks).
SPDR S&P Telecom ETF has amassed $86.7 million in its asset base and charges 35 bps in annual fees. It trades in a lower average daily volume of 11,000 shares and has a Zacks ETF Rank #3 with a Medium risk outlook.