Verizon CFO Says Wireless Giant Is Keen on Cutting Debt
The company expects its debt-to-EBITDA ratio to edge higher when it closes on an acquisition in about 18 months, but it has time to pay down debt before then.
Verizon Communications Inc., which agreed to buy Frontier Communications Parent Inc. for about $9.59 billion in cash, said it’s focused on paying down debt as it works on closing the deal.
New York-based Verizon expects a measure of its indebtedness—the ratio of its debt to a type of earnings—to edge higher when the transaction closes in about 18 months, the firm’s CFO Tony Skiadas said in a conference call Thursday. But the company has time to pay down debt before then, he added.
“We are announcing a significant investment in the business with the acquisition of Frontier,” said Skiadas. “Yesterday, we increased the dividend for the 18th consecutive year, and we continue to focus on paying down debt.”
Verizon said its ratio of debt to earnings before interest, tax, depreciation, and amortization (debt-to-EBITDA) may rise by between about 0.2 times and 0.3 times after the transaction closes. The company targets a net unsecured leverage ratio of 1.75 times to 2 times, according to Bloomberg Intelligence analyst Stephen Flynn. That ratio was 2.5 times as of the second quarter, and will likely remain the same when the Frontier deal closes in the first half of 2026, he said.
“Verizon may produce annual free cash flow in excess of dividends of about $8 billion, providing the company with the ability to pay down debt incurred in the deal for Frontier,” Flynn said in an emailed response.
Verizon, the third-biggest issuer in the U.S. corporate investment-grade bond market outside the financial sector, said in a presentation on Thursday that it expects to refinance Frontier’s existing debt. Junk-rated Frontier has about $11 billion in debt. Verizon will likely need to issue debt to pay Frontier’s stock investors and to refinance Frontier debt, added Bloomberg Intelligence’s Flynn.
Acquisition-related financing is helping fuel an issuance boom in the U.S. investment-grade primary market. JPMorgan Chase & Co. expects blue-chip firms to raise an additional $71 billion of debt to help fund mergers and acquisitions (M&A) by the end of this year, which would bring full-year total M&A-related supply to $215 billion, the most since 2018, analysts including Eric Beinstein and Nathaniel Rosenbaum wrote in a research note on Thursday.
“We have time now to pay down debt until this is done,” Verizon CEO Hans Vestberg said on the call.
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