Verizon Communications Inc. today announced it has signed an agreement to purchase XO Communications’ fiber-optic network business for approximately $1.8 billion.

The acquisition is subject to regulatory approval from various governmental agencies and is expected to close in the first half of 2017.

Consolidation continues in the telecommunication industry to provide the scale that is essential to be competitive. It seems to be increasingly difficult to make a reasonable profit and be small. Carl C. Icahn, the Chairman and Sole Shareholder of XO Holdings, said: “Although this sale to Verizon does not represent a significant annualized return on our investment, we believe that in today’s environment it does represent the best achievable outcome for the company’s customers, employees and owner.”

Verizon will be gaining 20,000 route miles of intercity network in the US and Canada spanning 85 major metro markets. They will also get metro fiber networks in 40 major cities, and a 13,000 route mile metro network. Verizon will be able to quickly increase the capacity of services it can offer business and wholesale customers across North America.

Am I personally happy? Not really. For small businesses serving the telecommunication industry, fewer customers lead to a more difficult environment. Will this acquisition best serve consumers at large in the USA? Let me reserve judgement on that.

To see detailed announcements from each company, see:

Verizon announcement

XO announcement

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