Despite FCC criticism, not all operators are willing to roll back DEI policies to secure regulatory approval for consolidation
Operators argue that consolidation would boost their competitiveness on new technological fronts
The US telecoms sector is poised to see a wave of consolidation, with recent developments in three transactions: Verizon’s acquisition of Frontier Communications; the combination of Charter Communications and Cox Communications; and AT&T’s purchase of Lumen Technologies’ consumer fibre business. The operators involved argue that these deals will enable them to better compete in an expanding market that also includes large national broadband operators with fixed and mobile businesses, as well as regional providers, global streaming platforms and satellite players. The Federal Communications Commission (FCC), under the leadership of Brendan Carr (Chair, FCC), has indicated an openness to M&A in the sector, but has warned that operators implementing diversity, equity and inclusion (DEI) policies will struggle to have deals approved.
Verizon’s acquisition of Frontier has been greenlit following the removal of DEI policies
On 16 May 2025, the FCC approved Verizon’s $20bn (£14.8bn) tie-up with Frontier despite no vote being held by its Commissioners. The deal was expected to come through the merger review process largely unscathed, for example due to the two operators owning broadly complementary fibre networks geographically, which may therefore reduce the risk of serious concerns about the loss of competition. Most interesting was that the greenlight from the FCC came just hours after Verizon announced that it would dismantle its DEI programmes – a move that has been strongly advocated by the Trump Administration and by Carr himself. Rather than the usual practice of FCC Commissioners voting on whether a transaction should be allowed to go ahead, the regulator’s Wireline Competition Bureau approved the deal under delegated authority, bypassing the need for a majority vote. This process was likely used as the FCC is currently evenly split with two Democrat and two Republican Commissioners, with the expected fifth (and third Republican Commissioner), Olivia Trusty, awaiting confirmation from the Senate. One of the Democrat Commissioners, Anna Gomez, has argued that acquisitions of this magnitude should not be cleared in “backroom deals” and criticised Verizon for capitulating to the Government’s “attempts to micromanage employment practices and impose heavy regulatory burdens on companies that require the FCC’s approval of their transactions”.
Charter has pledged investment in service quality and significant cost savings, while offering lower price options to new customers
On the same day as the Verizon/Frontier clearance, cable companies Charter and Cox announced a definitive agreement to combine their operations, claiming that the merger would deliver “powerful benefits for American employees, customers, communities and shareholders”. The transaction would bring together two of the US’ largest ISPs, with the parties also promising: to offer Cox customers the choice to pay less for bundled services; $500m (£368.5m) in synergies within three years; and the continued improvement of service quality. By creating the largest cableco in the country (ahead of Comcast), the proposed merger would certainly come under regulatory scrutiny for its sheer size alone; however, the outlook for approval is currently positive, for example given limited overlaps in coverage and the parties’ pledge to “onshore jobs from overseas”.
AT&T will not row back from commitments to diversity to secure approval to acquire Lumen’s consumer fibre business
On 21 May 2025, AT&T agreed a deal to acquire Lumen’s Mass Market – i.e. consumer – fibre operations for approximately $5.75bn (£4.2bn) in cash. The long-mooted acquisition of Lumen would significantly expand AT&T’s fibre network footprint by around four million locations, while also adding one million customers to its base. According to Kate Johnson (President and CEO, Lumen Technologies), the sale would enable Lumen to sharpen its focus on enterprise customers, citing its “once-in-a-generation opportunity to build a digital networking company” capable of serving that market. Despite the FCC’s warnings about the retention of DEI policies, John Stankey (CEO, AT&T) has since stood firm on the operator’s commitment to diversity, with the parties confident that the transaction will clear the necessary regulatory hurdles to complete in H1 2026. Following the deal closing, AT&T would establish a new NetworkCo to house the acquired fibre assets and would seek an equity partner that will co-invest in the ongoing business.
