Verizon Communications Inc., the No. 1 local phone company, said Tuesday it will use $2.8 billion in cash generated from access line sales outside of its dominant territory to slash its debt.
The New York-based telecommunications giant said it would use the proceeds to reduce its total debt - tallying $61.6 billion at the end of the second quarter - including its $8.5 billion in short-term loans known as commercial paper.
Verizon had $17 billion of debt maturing within a year as of June 30. The company, which had $3 billion of cash on hand at the end of the second quarter, planned to use $2.2 billion to repay its commercial paper loans as they came due.
The access line sales will help the company improve its liquidity.
Last year Verizon disclosed a plan to sell its telephone lines in states where the company did not have a large presence or support operations in the region.
Verizon has sold a total of 1.27 million access lines in Alabama, Kentucky and Missouri, generating $4 billion in pre-tax cash in the third quarter, or $3,200 per access line before taxes.
The company said it closed the sale of 371,000 access lines in Missouri to CenturyTel Inc. over the weekend. Verizon earlier made $1 billion from the sale of 304,000 lines in Alabama to CenturyTel and $1.9 billion from the sale of 596,000 lines in Kentucky to ALLTEL Corp. All the telephone lines go to homes and small businesses, a spokesman said.
A total of 1,758 Verizon employees has been transferred to CenturyTel and ALLTEL at the same or comparable wages, according to Verizon.
Shares of Verizon were trading Tuesday afternoon at $29.69 on the New York Stock Exchange.
