Verizon buys XO Communications' fiber business for $1.8 billion

Verizon gives XO Communications' sole shareholder, Carl Icahn, an exit.

Verizon on Monday said it will buy XO Communications' fiber-optic network business in a deal valued at $1.8 billion.

The deal is expected to close in the first half of 2017.

For Verizon, the acquisition will bolster its enterprise and wholesale businesses. XO is selling its fiber IP and Ethernet networks. Verizon added that it will also use the XO assets to make its cell network denser.

Verizon also will lease XO's wireless spectrum with an option to buy at the end of 2018.

XO is owned by activist investor Carl Icahn. Icahn bought the company's debt in 2001, but XO filed for bankruptcy and then emerged in 2003. Icahn said:

The following thirteen years were a bumpy road for XO, as well as other telecoms, as we reckoned with major network overcapacity and other issues caused by overly optimistic projections and capital expenditures made by previous owners. In fact, we had to inject additional capital into the company several times over those years to keep it operating. 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.