WEBVTT 1 00:00:08.625 --> 00:00:11.455 Hello and welcome to this Vidcast, which is devoted 2 00:00:11.475 --> 00:00:14.335 to a strategic and operational trade off in the 3 00:00:14.475 --> 00:00:18.135 telecommunication industry between towers and users. 4 00:00:20.295 --> 00:00:22.255 Quite recently, on the 4th of October 5 00:00:22.835 --> 00:00:24.855 is announced the acquisition of Frontier 6 00:00:25.375 --> 00:00:26.815 Communication by Verizon. 7 00:00:28.055 --> 00:00:30.255 Frontier Communication is a company which is very much 8 00:00:30.575 --> 00:00:32.375 involved in infrastructure business 9 00:00:32.395 --> 00:00:34.335 as fast telecommunications are concerned 10 00:00:34.915 --> 00:00:35.935 and extremely credible. 11 00:00:36.395 --> 00:00:38.375 In fiber optics. 12 00:00:39.275 --> 00:00:41.935 The deal is negotiated at an enterprise value 13 00:00:41.935 --> 00:00:43.535 of $20 billion. 14 00:00:44.445 --> 00:00:46.495 It's about 10 billion for equity 15 00:00:46.835 --> 00:00:49.455 and the remaining 10 billion for net debt. 16 00:00:49.485 --> 00:00:51.175 It's going to be a cash transaction, 17 00:00:51.235 --> 00:00:52.535 not a stock transaction. 18 00:00:53.195 --> 00:00:57.895 So Verizon is offering $38.50 per frontier 19 00:00:58.065 --> 00:01:02.015 share, which represents uh, an addition of $10 20 00:01:02.115 --> 00:01:04.775 to the last stock price, a premium 21 00:01:05.035 --> 00:01:07.735 of 30% against the last stock price. 22 00:01:08.555 --> 00:01:12.015 The price of Frontier is going to adjust to $38.50, is going 23 00:01:12.015 --> 00:01:16.815 to a little bit decline down to $34.60, 24 00:01:16.815 --> 00:01:18.935 which is its level today. 25 00:01:20.765 --> 00:01:23.345 The economic and strategic stakes are quite 26 00:01:23.415 --> 00:01:24.705 obvious for Verizon. 27 00:01:25.815 --> 00:01:29.945 There's undoubtedly a growing demand in the data business 28 00:01:30.005 --> 00:01:31.825 as far as telecommunications are concerned, 29 00:01:31.885 --> 00:01:35.025 and fiber optics represents a very 30 00:01:35.585 --> 00:01:37.745 reliable technical performance. 31 00:01:38.455 --> 00:01:41.465 It's the ideal infrastructure for the 5G 32 00:01:41.845 --> 00:01:44.785 for IAAS infrastructure as a service 33 00:01:45.085 --> 00:01:48.945 and definitely cloud, including decentralized cloud, 34 00:01:49.525 --> 00:01:53.185 the very well-known unfamous edge computing, 35 00:01:53.185 --> 00:01:55.065 which is growing at the moment. 36 00:01:56.015 --> 00:01:58.105 Last but not least, uh, the infrastructure 37 00:01:58.625 --> 00:02:01.625 represents an investment which is a long-term investment 38 00:02:01.895 --> 00:02:03.825 with stable income. 39 00:02:05.845 --> 00:02:09.425 So definitely this acquisition is absolutely in line 40 00:02:09.425 --> 00:02:11.025 with the development strategy 41 00:02:11.365 --> 00:02:13.625 and the growth ambitions of Verizon. 42 00:02:15.155 --> 00:02:18.905 After the announcement of the acquisition, Verizon presented 43 00:02:18.905 --> 00:02:20.945 to the financial analyst community 44 00:02:21.495 --> 00:02:24.225 some guidelines about its growth ambitions. 45 00:02:24.975 --> 00:02:27.905 It's about fixed wireless, it's about fiber, 46 00:02:28.635 --> 00:02:30.305 fixed wireless access target. 47 00:02:30.685 --> 00:02:33.945 We would like to double the number of subscribers by 2028, 48 00:02:34.975 --> 00:02:38.345 same 2028, including Frontier acquisition. 49 00:02:38.405 --> 00:02:42.025 We would like to reach 30 million plus passings 50 00:02:42.025 --> 00:02:45.225 for the fiber and it should reach 34 51 00:02:45.485 --> 00:02:49.025 to 40 million over time, beyond 2028. 52 00:02:49.485 --> 00:02:52.265 So very ambitious growth strategy. 53 00:02:54.205 --> 00:02:55.865 The very good news about the networks 54 00:02:55.865 --> 00:02:59.345 of these two companies is that they are very complimentary. 55 00:03:00.685 --> 00:03:04.285 Frontier is very much in the southwest of the United States, 56 00:03:05.005 --> 00:03:07.405 a little bit in the south, north, northeast, 57 00:03:08.305 --> 00:03:09.885 and Verizon East. 58 00:03:10.665 --> 00:03:13.045 So Verizon, it's about 18 million. 59 00:03:13.365 --> 00:03:15.365 Passings Frontier is about seven. 60 00:03:15.585 --> 00:03:20.245 The sum is 25 million across 31 states plus 61 00:03:20.255 --> 00:03:23.565 Washington DC Again, the objectives 62 00:03:23.565 --> 00:03:28.325 for the future is 2028, 30 million plus coming from 25 today 63 00:03:28.865 --> 00:03:31.165 and 35 to 40 million in the future. 64 00:03:33.045 --> 00:03:35.145 Now, if you look at the evolution of the stock price 65 00:03:35.145 --> 00:03:39.105 of the horizon of the last five euros, you observe 66 00:03:39.105 --> 00:03:41.505 that the stock market credibility 67 00:03:41.605 --> 00:03:45.945 of the company has been significantly eroded in a range 68 00:03:46.125 --> 00:03:48.385 of 55 to $60 per share. 69 00:03:48.495 --> 00:03:51.185 Five years ago it went down sharply 70 00:03:51.185 --> 00:03:54.345 and at the end of 2023 it reaches almost 71 00:03:54.845 --> 00:03:56.265 $30 per share. 72 00:03:57.005 --> 00:03:59.505 Now, ever since it bounced back a little bit, 73 00:03:59.525 --> 00:04:04.425 but today's stock price is about $42 quite far from 55 74 00:04:04.525 --> 00:04:07.305 to 60, it represents a drop 75 00:04:07.445 --> 00:04:09.625 of 31% in stock price. 76 00:04:09.655 --> 00:04:11.545 What about the peers? At and t? 77 00:04:12.375 --> 00:04:15.065 Same period minus 19%. 78 00:04:15.205 --> 00:04:16.585 So no good news as well, 79 00:04:17.085 --> 00:04:19.465 but as far as T-Mobile US is concerned, 80 00:04:19.655 --> 00:04:22.745 it's plus 212% for the period. 81 00:04:23.325 --> 00:04:26.265 So definitely Verizon has to make a 82 00:04:26.825 --> 00:04:28.945 positive move in the minds of the investors. 83 00:04:31.035 --> 00:04:33.625 Based on this observation, we need to make a little bit 84 00:04:33.625 --> 00:04:35.785 of financial analysis of Verizon. 85 00:04:36.775 --> 00:04:40.225 This is a large company weighs 2023 revenues 86 00:04:40.225 --> 00:04:42.785 of $134 billion. 87 00:04:43.725 --> 00:04:45.985 Now the net financial debt net 88 00:04:46.125 --> 00:04:50.105 of cash is $148 billion. 89 00:04:50.925 --> 00:04:54.745 It represents quotes only three years of EBDA 90 00:04:54.805 --> 00:04:58.425 and EBDA represents 36% of revenue. 91 00:04:58.725 --> 00:05:00.345 So the p and l looks great, 92 00:05:01.005 --> 00:05:03.265 but the capital employed is very big. 93 00:05:03.335 --> 00:05:04.905 It's a capital intensive business. 94 00:05:05.055 --> 00:05:09.065 Capital employed is $243 billion, 95 00:05:09.445 --> 00:05:12.505 so about 100 billion more than debt, 96 00:05:12.515 --> 00:05:14.785 which represents book equity. 97 00:05:16.215 --> 00:05:19.345 EBIT operating income is 28.7 billion, 98 00:05:19.715 --> 00:05:23.025 which represents 12% to capital, 99 00:05:23.285 --> 00:05:25.825 and the row say is 12%. 100 00:05:27.005 --> 00:05:30.625 Now, if the EBIT is quite high as a percentage to revenues, 101 00:05:31.045 --> 00:05:34.185 the assets turnover is on less 0.55. 102 00:05:34.495 --> 00:05:37.345 This is an extremely capital intensive business. 103 00:05:38.995 --> 00:05:41.855 In order to assess the financial performance of Verizon, 104 00:05:41.955 --> 00:05:43.415 we are going to confirm the rose 105 00:05:44.065 --> 00:05:47.415 after tax with the weighted average cost of capital. 106 00:05:48.315 --> 00:05:51.215 Before tax rose represents 12%, which 107 00:05:51.225 --> 00:05:53.775 after tax is 9.2%. 108 00:05:53.795 --> 00:05:56.175 To calculate the walk we need 109 00:05:56.175 --> 00:05:58.485 to take into account market capitalization, 110 00:05:58.905 --> 00:06:01.565 net financial debt, the cost of debt after tax, 111 00:06:01.585 --> 00:06:03.445 and the expected return equity 112 00:06:04.145 --> 00:06:07.925 in which the most important parameter is a systematic risk 113 00:06:07.925 --> 00:06:11.685 coefficient debate, which represents a sensitivity 114 00:06:11.905 --> 00:06:14.565 of your business to macroeconomic conditions. 115 00:06:15.425 --> 00:06:19.405 Econometrically the beta is about 0.42, 116 00:06:20.015 --> 00:06:22.365 which mean that the company is free cash flows 117 00:06:22.425 --> 00:06:25.045 and profitability is not that sensitive to 118 00:06:25.275 --> 00:06:28.445 what happens in the world, at least on a nasdaq. 119 00:06:29.025 --> 00:06:31.205 Now you can calculate a kind of theoretical 120 00:06:32.065 --> 00:06:34.125 no growth market book. 121 00:06:34.715 --> 00:06:38.325 What should be a price value on capital employed 122 00:06:38.905 --> 00:06:42.205 if there was no growth in the free cash flow is gross, say 123 00:06:42.205 --> 00:06:43.965 after tax divided by the wac. 124 00:06:43.995 --> 00:06:47.645 9.2 divided by 4.2 is 2.2. 125 00:06:47.715 --> 00:06:50.005 This is a theoretical market to book of the company, 126 00:06:50.485 --> 00:06:52.565 assuming that there is no growth in the free cash flow, 127 00:06:52.825 --> 00:06:55.045 the actual calculated the market 128 00:06:55.185 --> 00:06:59.525 to book enterprise value over book capital employed is only 129 00:06:59.905 --> 00:07:03.725 1.3 so much less than the theoretical market to book, 130 00:07:04.565 --> 00:07:05.765 considering that there is no gross. 131 00:07:06.265 --> 00:07:09.005 So definitely the company is suffering of 132 00:07:09.555 --> 00:07:12.685 very low credibility in the investor's mind. 133 00:07:14.885 --> 00:07:18.465 So what is needed by Verizon is of course growth, 134 00:07:18.685 --> 00:07:23.425 but beyond growth, each stock market credibility, you have 135 00:07:23.425 --> 00:07:27.425 to make the $156 billion in 136 00:07:28.025 --> 00:07:31.865 invested in the license's business plus an additional 137 00:07:31.885 --> 00:07:33.345 100 billion in the network. 138 00:07:33.645 --> 00:07:37.305 IT and network you have to make this investment profitable 139 00:07:37.365 --> 00:07:39.665 and as much profitable as possible. 140 00:07:40.925 --> 00:07:44.065 Now let's move to the target, to frontier communication 141 00:07:44.485 --> 00:07:46.705 and let's observe its financial situation. 142 00:07:47.765 --> 00:07:49.185 To make a long story short, 143 00:07:49.245 --> 00:07:51.505 the company experienced very difficult moment 144 00:07:52.125 --> 00:07:54.065 and had to put itself under the protection 145 00:07:54.085 --> 00:07:57.345 of the chapter 11th bankruptcy law in 2020. 146 00:07:58.285 --> 00:08:01.745 It went out of this difficult moment in 2021 147 00:08:02.285 --> 00:08:05.545 and since then has been generating stable revenues 148 00:08:05.565 --> 00:08:07.625 20 22, 20 23, 149 00:08:08.035 --> 00:08:10.705 about $5.8 billion of revenues. 150 00:08:10.705 --> 00:08:14.825 The operating income revenues minus operating expenses is 151 00:08:15.215 --> 00:08:17.345 half a billion $500 million. 152 00:08:17.405 --> 00:08:21.065 Now to calculate the ebitda, you start from this figure 153 00:08:21.085 --> 00:08:23.865 and you add depreciation, a ation 154 00:08:24.405 --> 00:08:26.625 and stock base compensation, 155 00:08:26.625 --> 00:08:29.265 which represents about 0.1 billion. 156 00:08:29.845 --> 00:08:32.985 You get an EBDA of $2 billion, 157 00:08:34.775 --> 00:08:38.395 $2 billion of EBDA looks great at first sight, 158 00:08:38.395 --> 00:08:39.915 especially if you compare that 159 00:08:40.105 --> 00:08:42.955 with $5.8 billion of revenues. 160 00:08:43.615 --> 00:08:45.955 But the EBDA has one aim, which is 161 00:08:45.955 --> 00:08:49.555 to find the capital expenditures the company is growing, 162 00:08:49.735 --> 00:08:50.955 is developing its network, 163 00:08:51.855 --> 00:08:56.045 and basically the CapEx figure is about $3 billion per year. 164 00:08:56.705 --> 00:08:59.445 So if you generate two and you finance 165 00:08:59.865 --> 00:09:02.005 and invest three, you understand 166 00:09:02.005 --> 00:09:03.245 that the free cash flow is going 167 00:09:03.245 --> 00:09:05.565 to be negative if the free cash flow is negative, 168 00:09:05.985 --> 00:09:10.925 the debt net of cash is up $7 billion at the end of 2022, 169 00:09:10.925 --> 00:09:14.965 which represented at that time 3.7 years of EBDA, 170 00:09:15.825 --> 00:09:20.645 but 9 billion in 20 23, 4 0.5 times the EBDA. 171 00:09:21.315 --> 00:09:24.485 This figure stabilized in September, 2024 172 00:09:24.555 --> 00:09:27.005 with 4.4 times the EBDA, 173 00:09:27.305 --> 00:09:31.325 but now that is no more nine, it is $10 billion. 174 00:09:31.825 --> 00:09:34.605 So definitely the question about Frontier is 175 00:09:35.345 --> 00:09:38.885 it cannot be sustainable in the long term to increase 176 00:09:39.065 --> 00:09:41.565 so much the net debt each and every year. 177 00:09:43.355 --> 00:09:44.805 Even though the networks 178 00:09:45.145 --> 00:09:49.485 of these two companies look quite complimentary, Verizon has 179 00:09:49.485 --> 00:09:51.525 to justify the fact that it's going 180 00:09:51.525 --> 00:09:55.205 to pay $10 more than the last stock price of Frontier. 181 00:09:55.985 --> 00:10:00.405 The company announces $500 million of synergies 182 00:10:01.585 --> 00:10:04.965 per year after three years of implementation 183 00:10:05.065 --> 00:10:06.085 for these synergies. 184 00:10:06.305 --> 00:10:08.085 Now, let's try to put a value on that. 185 00:10:08.895 --> 00:10:13.165 These $500 million are going to be an additional EBD 186 00:10:13.305 --> 00:10:14.485 for Verizon, assuming 187 00:10:14.485 --> 00:10:17.445 that the enterprise value on EBITDA remains the same. 188 00:10:17.915 --> 00:10:20.685 Nine, it's going to be an incremental value 189 00:10:20.785 --> 00:10:25.085 of nine times $500 million for Verizon, which 190 00:10:25.605 --> 00:10:27.925 represents $4.5 billion, 191 00:10:28.705 --> 00:10:33.085 spread over 245 million shares of Frontier, 192 00:10:33.945 --> 00:10:36.965 but as it's going to be potentially generated in three years 193 00:10:36.965 --> 00:10:40.765 time, this figure has to be discounted at a work 194 00:10:40.825 --> 00:10:45.685 of about 5% and again, divided by 240 million shares. 195 00:10:45.865 --> 00:10:48.565 It represents $16 per share, 196 00:10:48.695 --> 00:10:52.045 which is significantly more than the $10 per share 197 00:10:52.195 --> 00:10:53.525 paid by Verizon. 198 00:10:55.615 --> 00:10:57.745 Then it looks like quite a good deal 199 00:10:57.805 --> 00:10:59.425 for the Verizon shareholders. 200 00:11:00.405 --> 00:11:01.985 But as a consequence, 201 00:11:01.985 --> 00:11:04.025 the Frontier communication shareholders are going 202 00:11:04.025 --> 00:11:06.185 to protest at least some of them. 203 00:11:06.535 --> 00:11:08.785 Glendon Capital S. 204 00:11:09.015 --> 00:11:11.665 They're going to say, if we compare this deal 205 00:11:11.665 --> 00:11:16.305 with a zip fiber deal should be minimum $60 per share 206 00:11:16.305 --> 00:11:18.385 and certainly not 38.5. 207 00:11:19.285 --> 00:11:21.865 Now, at the end of the day, there won't be any counter offer 208 00:11:22.565 --> 00:11:24.585 and the frontier communication are going 209 00:11:24.585 --> 00:11:25.865 to approve the deal. 210 00:11:28.295 --> 00:11:31.475 The comments made by Glendon Capital on 211 00:11:31.475 --> 00:11:33.915 by SBA is justify ticking a minute 212 00:11:33.975 --> 00:11:36.595 to observe the zip fiber deal. 213 00:11:37.415 --> 00:11:39.115 The company is acquired by bc, 214 00:11:39.115 --> 00:11:43.035 which is Bell Canada's parent company, smaller deal, 215 00:11:43.245 --> 00:11:47.955 7 billion Canadian dollars, 5.1 billion US dollars 216 00:11:48.665 --> 00:11:51.155 because of uh, deferred taxes 217 00:11:51.335 --> 00:11:53.885 and the balance sheet of ZIP PLI is going to cost 218 00:11:53.975 --> 00:11:58.165 after tax 4.8 billion US dollars to BCE. 219 00:11:59.525 --> 00:12:04.125 Interestingly, Verizon was the owner of zip fiber from 2000 220 00:12:04.125 --> 00:12:08.285 to 2010, and from two 2010 to 2020 it was 221 00:12:08.925 --> 00:12:10.485 Frontier Communication the owner, 222 00:12:11.545 --> 00:12:16.165 it became an asset in Wave Division capital from 2020 223 00:12:16.505 --> 00:12:18.205 to today, 2024. 224 00:12:18.625 --> 00:12:20.205 As a consequence of the acquisition 225 00:12:20.205 --> 00:12:23.685 of the Frontier Communication Northwest Network 226 00:12:25.425 --> 00:12:27.805 as a consequence of this deal, you remember that 227 00:12:28.325 --> 00:12:30.685 frontier is very much in the southwest. 228 00:12:31.185 --> 00:12:33.885 Now, zip PLI is very much in the northwest 229 00:12:33.945 --> 00:12:35.045 of the United States 230 00:12:35.555 --> 00:12:38.965 with 1.3 million fiber passings 231 00:12:39.585 --> 00:12:44.325 and an objective of 3 million plus by the end of 28 28. 232 00:12:44.975 --> 00:12:49.085 Today it's about 325,000 fiber 233 00:12:49.885 --> 00:12:52.965 subscribers in the northwest of the United States, 234 00:12:52.965 --> 00:12:56.285 which is quite strategic for the development of BCE. 235 00:12:57.105 --> 00:13:00.445 The company generates $700 million of revenue 236 00:13:01.545 --> 00:13:06.205 and the adjusted EBDA should be about $310 million 237 00:13:06.705 --> 00:13:09.285 in 2025 expected. 238 00:13:11.215 --> 00:13:13.435 Now, there is a couple of simple calculations 239 00:13:13.455 --> 00:13:16.075 to make in order to benchmark the zip PLI 240 00:13:16.335 --> 00:13:18.515 and the Frontier Communication Acquisitions. 241 00:13:19.375 --> 00:13:20.635 As far as zip PLI is concerned, 242 00:13:20.635 --> 00:13:24.795 the acquisition price represents 14.3 times the adjusted BDA 243 00:13:24.825 --> 00:13:26.475 post synergies 244 00:13:27.135 --> 00:13:29.235 and a price of $4.8 billion 245 00:13:29.775 --> 00:13:32.275 for 325,000. 246 00:13:32.405 --> 00:13:34.955 Fiber subscribers mean that the company is paying 247 00:13:35.465 --> 00:13:39.235 $15,000 per subscriber as an acquisition cost. 248 00:13:39.975 --> 00:13:42.875 Now, if we get to a Verizon's Frontier acquisition, 249 00:13:43.135 --> 00:13:48.075 the purchase price is only 8.3 times the adjusted bid 250 00:13:48.155 --> 00:13:51.275 DA as opposed to 14.34 zip, 251 00:13:52.135 --> 00:13:54.115 and when you pay $20 billion 252 00:13:54.255 --> 00:13:57.595 for 2.2 million fiber subscribers, 253 00:13:57.735 --> 00:14:01.075 it represents an acquisition price of $9,000 254 00:14:01.655 --> 00:14:03.235 and not 15,000. 255 00:14:03.815 --> 00:14:06.875 Of course, these are a little bit simplistic calculations 256 00:14:07.095 --> 00:14:09.155 and it should be quite important 257 00:14:09.255 --> 00:14:12.475 to deep dive into the comparation between these two deals, 258 00:14:12.855 --> 00:14:15.675 but you can understand why BER 259 00:14:16.255 --> 00:14:19.235 and Glendon are a little bit upset by the price. 260 00:14:21.685 --> 00:14:24.625 Now that the implementation of the acquisitions is underway, 261 00:14:25.285 --> 00:14:27.345 the question is about its financing. 262 00:14:27.695 --> 00:14:32.145 There's always the opportunity to integrate a core asset 263 00:14:32.855 --> 00:14:34.905 divesting from a non-core asset. 264 00:14:34.905 --> 00:14:37.945 This is why Verizon is currently selling its 265 00:14:38.125 --> 00:14:39.665 telecommunication towers. 266 00:14:40.625 --> 00:14:42.705 I read a comment made by a journalist, 267 00:14:42.705 --> 00:14:47.385 which is the only surprise in the deal is that Verizon still 268 00:14:47.895 --> 00:14:49.145 owns its towers, 269 00:14:49.685 --> 00:14:51.645 and it's quite interesting to observe 270 00:14:51.675 --> 00:14:55.165 that this is probably the last telecommunication operator, 271 00:14:55.215 --> 00:14:56.805 which still owes its towers. 272 00:14:57.145 --> 00:15:01.045 All of them already sold this real estate asset. 273 00:15:03.195 --> 00:15:05.665 Let's have a look at the financial metrics of the deal. 274 00:15:06.335 --> 00:15:10.305 Verizon sells 6,339 towers 275 00:15:11.325 --> 00:15:12.785 all based in the United States. 276 00:15:12.785 --> 00:15:16.385 There is a 10 year rental contract and commitment 277 00:15:16.495 --> 00:15:18.665 because when you are a telco, you want to make sure 278 00:15:18.665 --> 00:15:21.425 that the location is available as long as needed. 279 00:15:22.165 --> 00:15:26.025 In addition, there is an option to extend this commitment 280 00:15:26.025 --> 00:15:27.505 to 50 years. 281 00:15:28.565 --> 00:15:31.385 The acquirer is vertical bridge number one 282 00:15:31.385 --> 00:15:32.425 in the United States. 283 00:15:32.485 --> 00:15:36.345 In terms of number of sites with more than 300,000 sites, 284 00:15:37.405 --> 00:15:40.785 the price paid by vertical is $3.3 billion. 285 00:15:41.575 --> 00:15:43.705 Cash out is only 2.8 billion 286 00:15:44.135 --> 00:15:47.625 because it's going to be 3.3 minus the first rent 287 00:15:47.725 --> 00:15:49.345 of $500 million. 288 00:15:50.205 --> 00:15:53.305 Now, if you divide 500 million by 6,000 289 00:15:53.305 --> 00:15:57.705 and something towers, it's about 80,000 rental 290 00:15:58.565 --> 00:15:59.945 income per tower. 291 00:16:00.445 --> 00:16:02.545 For vertical, which is quite a lot of money, 292 00:16:03.325 --> 00:16:05.265 the price is paid off 293 00:16:05.855 --> 00:16:08.825 $520,000 per tower, 294 00:16:09.165 --> 00:16:12.705 simply dividing 3.3 billion by 6,000 towers. 295 00:16:13.405 --> 00:16:15.465 Now, if you take the matrix of this business, 296 00:16:16.205 --> 00:16:19.185 the price per tower represents eight times the ebit, 297 00:16:19.275 --> 00:16:23.905 which is quite low for a nice nature like Verizon. 298 00:16:24.405 --> 00:16:25.785 The financial economics 299 00:16:25.785 --> 00:16:29.025 of this business is described in the educational film, 300 00:16:29.025 --> 00:16:31.705 which I produced in February, 2021, 301 00:16:32.325 --> 00:16:34.785 and it's very much based on American Tower. 302 00:16:35.445 --> 00:16:38.145 If you look at the enterprise value to a bid 303 00:16:38.165 --> 00:16:42.465 of American Tower, it's 22 times the A BDA, 304 00:16:42.845 --> 00:16:47.305 not eight times, so definitely it's not a very high sales 305 00:16:47.305 --> 00:16:48.585 price for the towers. 306 00:16:50.535 --> 00:16:53.835 Now, as a matter of conclusion, we have observed a set 307 00:16:53.855 --> 00:16:56.835 of deals which represent an obvious 308 00:16:57.475 --> 00:16:59.035 strategic trade off for Verizon. 309 00:16:59.975 --> 00:17:03.875 You sell non-core asset relay state assets so 310 00:17:03.875 --> 00:17:05.955 that you can find on the acquisition of 311 00:17:06.475 --> 00:17:07.875 subscribers of users. 312 00:17:08.655 --> 00:17:12.835 The reason why the company exists now, is it a bar again 313 00:17:12.855 --> 00:17:14.115 for Verizon shareholders. 314 00:17:14.255 --> 00:17:16.995 As far as the frontier communication deal is concerned, 315 00:17:17.215 --> 00:17:19.195 it looks quite okay for them. 316 00:17:20.055 --> 00:17:23.155 As far as a tower sales concerns, there's still a little bit 317 00:17:23.155 --> 00:17:24.195 of a question mark. 318 00:17:25.165 --> 00:17:29.195 Still, there is a challenge for Verizon. It's an investment. 319 00:17:29.535 --> 00:17:32.555 Now they have to turn this investment into growth 320 00:17:33.255 --> 00:17:37.275 and not growth, but credible growth for the investors, 321 00:17:37.695 --> 00:17:41.195 and it seems that really the investor's credibility 322 00:17:41.415 --> 00:17:43.475 of Verizon is at stake. 323 00:17:44.245 --> 00:17:45.035 Thank you very much.