8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 23, 2010

Frontier Communications Corporation

(Exact name of registrant as specified in its charter)

Delaware	001-11001	06-0619596
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

3 High Ridge Park, Stamford, Connecticut	06905
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (203) 614-5600

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

New Credit Facility

Frontier Communications Corporation (the “Company”) has entered into a new $750.0 million revolving credit facility (the “New Credit Facility”) that will become effective upon, and subject to (1) the closing of the merger of New Communications Holdings Inc. (“Spinco”), a wholly owned subsidiary of Verizon Communications Inc. (“Verizon”), with and into the Company, pursuant to the Agreement and Plan of Merger entered into on May 13, 2009, by and among Verizon, Spinco and the Company, as amended on July 24, 2009 (the “Merger Agreement”), (2) the termination of the Company’s existing revolving credit facility and (3) other customary conditions. The terms of the New Credit Facility are set forth in the Credit Agreement, dated as of March 23, 2010, between the Company, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Credit Agreement”). Associated facility fees under the New Credit Facility will vary from time to time depending on the Company’s debt rating (as defined in the Credit Agreement). The New Credit Facility is scheduled to terminate on the date that is three years and six months after the effective date of the New Credit Facility. During the term of the New Credit Facility, the Company may borrow, repay and reborrow funds, and may obtain letters of credit, subject to customary borrowing conditions. Loans under the New Credit Facility will bear interest based on the alternate base rate or the adjusted LIBO rate (each as determined in the Credit Agreement), at the Company’s election, plus a margin specified in the Credit Agreement based on the Company’s debt rating. Letters of credit issued under the New Credit Facility will also be subject to fees that vary depending on the Company’s debt rating. The New Credit Facility will be available for general corporate purposes but may not be used to fund dividend payments.

Amendment to Distribution Agreement

On March 23, 2010, Verizon and Spinco entered into Amendment No. 2 to Distribution Agreement (the “Distribution Agreement Amendment”), which amends the Distribution Agreement, dated as of May 13, 2009, by and between Verizon and Spinco, as amended by Amendment No. 1 to Distribution Agreement, dated as of July 24, 2009, by and among Verizon and Spinco (the “Distribution Agreement”).

Among other things, the Distribution Agreement Amendment: (i) provides that Verizon will not retain control of certain business and governmental accounts of Spinco, (ii) excludes certain assets in a portion of North Carolina from the definition of “Spinco Assets”, and (iii) includes certain assets in a portion of Virginia in the definition of “Spinco Assets”. The assets described in clause (iii) of the previous sentence will only be transferred to a Company subsidiary if a certificate of public convenience is obtained in Virginia by such subsidiary. If a certificate of public convenience is obtained in Virginia, the Company subsidiary will serve approximately 300 customers in that portion of Virginia bordering West Virginia.

Agreement Regarding Intellectual Property Matters

On March 23, 2010, Verizon, Spinco and the Company entered into the Agreement Regarding Intellectual Property Matters (the “IP Matters Agreement”).

Among other things, the IP Matters Agreement requires (i) the Company to pay $105 million at the closing of the Merger to reimburse Verizon for licenses to certain third party software the Company will acquire pursuant to the Merger, (ii) Verizon to obtain the consents necessary for Frontier to operate certain third-party software after the Merger, and (iii) Verizon and the Company to share the costs associated with obtaining consents pursuant to clause (ii) of this sentence. Including the amounts payable by the Company pursuant to the IP Matters Agreement, the Company currently expects to incur acquisition and integration costs of approximately $100 million and capital expenditures of approximately $180 million in 2010 related to the Merger.

ITEM 7.01 REGULATION FD DISCLOSURE

In the preliminary offering memorandum and the marketing materials distributed to investors in connection with the private offering described under Item 8.01 of this Current Report on Form 8-K, the Company and Spinco disclosed certain information to prospective investors. Pursuant to Regulation FD, the Company is furnishing as Exhibits 99.1, 99.2, 99.3 and 99.4 the following information: (i) the unaudited pro forma condensed combined financial information, based upon the historical consolidated financial information of the Company and the historical combined special-purpose financial information of Verizon’s Separate Telephone Operations, a combination of Arizona and Nevada carved-out of Verizon California Inc.; Illinois, Indiana, Michigan, Ohio and Wisconsin carved-out of Verizon North Inc.; Illinois, North Carolina and South Carolina carved-out of Verizon South Inc.; Verizon Northwest Inc., Contel of the South, Inc., Verizon West Virginia Inc. and carved-out components of Verizon Long Distance LLC, Verizon Enterprise Solutions LLC and Verizon Online LLC, as of and for the year ended December 31, 2009, (ii) the section of the preliminary offering memorandum captioned “Business—Regulatory Environment”, (iii) the section of the preliminary offering memorandum captioned “Risk factors” and (iv) the pages of the marketing materials captioned “2009 Key Pro Forma Financial Data,” “Non-GAAP Information” and “Reconciliation of Non-GAAP Financial Measures.”

In addition, on March 24, 2010, Verizon filed a Current Report on Form 8-K which included the combined special-purpose statements of selected assets, selected liabilities and parent funding of Verizon’s Separate Telephone Operations, as of December 31, 2009 and 2008, and the related combined statements of income, parent funding and cash flows for each of the three years in the period ended December 31, 2009.

The information in this Item 7.01, including Exhibits 99.1, 99.2, 99.3 and 99.4, and the information in Verizon’s Current Report on Form 8-K, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that Section, nor shall it be deemed to be incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended.

ITEM 8.01 OTHER EVENTS

On March 24, 2010, the Company issued a press release announcing that Spinco intends to offer, subject to market and other conditions, senior notes in a private offering that is exempt from the registration requirements of the Securities Act.

A copy of the press release is attached as Exhibit 99.5 to this Current Report on Form 8-K and is incorporated herein by reference.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibit        The following exhibits are filed as part of this report on Form 8-K:

Exhibit Number	Description of Exhibit
99.1	Unaudited pro forma condensed combined financial information, based upon the historical consolidated financial information of the Company and the historical combined special-purpose financial information of Verizon’s Separate Telephone Operations, as of and for the year ended December 31, 2009.
99.2	Business—Regulatory environment.
99.3	Risk factors.
99.4	2009 Key Pro Forma Financial Data, Non-GAAP Information and Reconciliation of Non-GAAP Financial Measures.
99.5	Press release of Frontier Communications Corporation, issued March 24, 2010.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FRONTIER COMMUNICATIONS CORPORATION
(Registrant)
By:	/s/    DAVID R. WHITEHOUSE
Name:	David R. Whitehouse
Title:	Senior Vice President and Treasurer

Date: March 24, 2010

Exhibits

Exhibit Number	Description of Exhibit
99.1	Unaudited pro forma condensed combined financial information, based upon the historical consolidated financial information of the Company and the historical combined special-purpose financial information of Verizon’s Separate Telephone Operations, as of and for the year ended December 31, 2009.
99.2	Business—Regulatory Environment.
99.3	Risk factors.
99.4	2009 Key Pro Forma Financial Data, Non-GAAP Information and Reconciliation of Non-GAAP Financial Measures.
99.5	Press release of Frontier Communications Corporation, issued March 24, 2010.

EX-99.1

Exhibit 99.1

Unaudited pro forma condensed

combined financial information

The following unaudited pro forma condensed combined financial information is based upon the historical consolidated financial information of Frontier and the historical combined special-purpose financial information of Verizon’s Separate Telephone Operations included elsewhere in this offering memorandum, and has been prepared to reflect the transactions based on the acquisition method of accounting, with Frontier treated as the accounting acquirer. Under the acquisition method, the assets and liabilities of Verizon’s Separate Telephone Operations will be recorded by Frontier at their respective fair values as of the date the merger is completed. The unaudited pro forma condensed combined financial information presents the combination of the historical financial statements of Frontier and the historical financial statements of Verizon’s Separate Telephone Operations, adjusted to give effect to (1) the transfer of specified assets and liabilities from Verizon to Spinco in the distribution immediately prior to the spin-off that are not included in Verizon’s Separate Telephone Operations’ historical balance sheet as of December 31, 2009 and the retention of specified assets and liabilities by Verizon that are included in Verizon’s Separate Telephone Operations’ historical balance sheet as of December 31, 2009, as more fully described in note 4(c) below, (2) the incurrence by Spinco of new debt (including the notes) to finance the special cash payment to Verizon, as more fully described in note 4(a) below, (3) the distribution of shares of Spinco common stock to a third-party distribution agent for the benefit of Verizon stockholders, (4) the receipt by Verizon from Spinco of $3,333 million in aggregate value in the form of the special cash payment and the Verizon debt reduction as more fully described in note 4(a) below and (5) the merger of Spinco with and into Frontier, with Frontier considered the accounting acquirer, based on the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial information. The historical financial information has been adjusted to give effect to events that are directly attributable to the transactions and factually supportable and, in the case of the statement of operations information, that are expected to have a continuing impact.

The unaudited pro forma condensed combined balance sheet information has been prepared as of December 31, 2009, and gives effect to the transactions as if they had occurred on that date. The unaudited pro forma condensed combined statement of operations information, which has been prepared for the year ended December 31, 2009, gives effect to the transactions as if they had occurred on January 1, 2009.

The unaudited pro forma condensed combined financial information was prepared using (1) the audited combined special-purpose financial statements of Verizon’s Separate Telephone Operations as of and for the year ended December 31, 2009, included in this offering memorandum, and (2) the audited consolidated financial statements of Frontier as of and for the year ended December 31, 2009, included in this offering memorandum.

The unaudited pro forma condensed combined financial information is presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that would have been achieved had the transactions been completed at the dates indicated. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or results of operations of the combined company after completion of the merger. In the opinion of Frontier’s management, all adjustments considered necessary for a fair presentation have been included.

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The unaudited pro forma condensed combined financial information does not give effect to any potential cost savings or other operating efficiencies that could result from the merger. In addition, the fair value of the assets acquired and liabilities assumed are based upon estimates. The final allocation is dependent upon valuations and other studies that will not be completed until after the merger is consummated. Accordingly, pro forma adjustments for the allocation of the value of Frontier common stock to be issued by Frontier as consideration as discussed in note (2) below are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information in this offering memorandum.

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Frontier Communications Corporation and subsidiaries

Unaudited pro forma condensed combined

balance sheet information

As of December 31, 2009

($ in millions)

			Verizon’s Separate Telephone Operations
	Frontier		Verizon’s Separate Telephone Operations as reported		Incurrence of new debt (4a)		Special cash payment (4b)			Additional transfer of assets and liabilities to/from Verizon (4c)			Verizon’s Separate Telephone Operations as adjusted		Pro forma   adjustments (4d)		Pro forma combined
Assets:
Cash and cash equivalents	$	359	$	—	$	2,708	$	(2,708	)	$	—		$	—	$	—	$	359	(4e)
Accounts receivable, net		191		391										391				582
Other current assets		130		255							(115	)		140				270
Total current assets		680		646		2,708		(2,708	)		(115	)		531				1,211
Property, plant and equipment, net		3,134		5,266							98			5,364				8,498
Goodwill, net		2,642														3,562		6,204
Other intangibles, net		247														1,180		1,427
Other assets		175		2,444		65					(2,359	)		150				325
Total assets	$	6,878	$	8,356	$	2,773	$	(2,708	)	$	(2,376	)	$	6,045	$	4,742	$	17,665
Liabilities and stockholders’ equity
Long-term debt due within one year	$	7	$	375	$	—	$	—		$	—		$	375	$	—	$	382
Accounts payable and other current liabilities		386		607							(166	)		441		37		864
Total current liabilities		393		982							(166	)		816		37		1,246
Deferred income taxes		722		1,310							(471	)		839		437		1,998
Other liabilities		630		1,369							(944	)		425				1,055
Long-term debt		4,794		250		2,773								3,023				7,817
Total long-term liabilities		6,146		2,929		2,773					(1,415	)		4,287		437		10,870
Stockholders’ equity		339		4,445				(2,708	)		(795	)		942		4,268		5,549
Total liabilities and stockholders’ equity	$	6,878	$	8,356	$	2,773	$	(2,708	)	$	(2,376	)	$	6,045	$	4,742	$	17,665

See notes to unaudited pro forma condensed combined financial information.

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Frontier Communications Corporation and subsidiaries

Unaudited pro forma condensed combined statement of operations information

For the year ended December 31, 2009

($ in millions, except per share amounts)

	Frontier			Verizon’s Separate Telephone Operations		Adjustments			Pro forma combined
Revenue	$	2,118		$	4,065	$	16	(5a)	$	6,071
							(66	) (5b)
							(62	) (5d)
Cost and expenses (exclusive of depreciation and amortization)		1,007			2,742		10	(5a)		3,193
							(63	) (5b)
							(412	) (5c)
							(62	) (5d)
							(26	) (5e)
							(1	) (5f)
							(2	) (5h)
Depreciation and amortization		477			781		3	(5a)		1,511
							236	(5g)
							14	(5h)
Acquisition and integration costs		28					(28	) (5e)		—
Total operating expenses		1,512			3,523		(331	)		4,704
Operating income (loss)		606			542		219			1,367
Investment and other income (expense), net		(37	)		1		—			(36	)
Interest expense		378			92		229	(5i)		648
							(51	) (5j)
Income tax expense (benefit)		70			159		15	(5k)		244
Net income (loss)	$	121		$	292	$	26		$	439
Basic and diluted income per common share:	$	0.38							$	0.44
Weighted-average shares outstanding (in millions)		310								987

See notes to unaudited pro forma condensed combined financial information.

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Notes to unaudited pro forma condensed

combined financial information

1. Description of the Transactions

On May 13, 2009, Verizon, Frontier and Spinco, a wholly owned subsidiary of Verizon, entered into the merger agreement pursuant to which Spinco will merge with and into Frontier, with Frontier surviving the merger as the combined company. Pursuant to the merger agreement, Verizon stockholders will receive shares of Frontier common stock in an amount to be determined at the closing of the merger, which shares of Frontier common stock are assumed for purposes of the pro forma condensed combined financial information to have a value of $5,247 million.

Immediately prior to the merger, Spinco (1) will hold defined assets and liabilities of the local exchange business and related landline activities of Verizon in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin and in portions of California bordering Arizona, Nevada and Oregon, including Internet access and long distance services and broadband video provided to designated customers in those states, and (2) will be spun off to Verizon stockholders. In addition, subject to obtaining a certificate of public convenience in Virginia, which is not a condition to the merger, we will also serve approximately 300 customers in a portion of Virginia bordering West Virginia. In connection with the spin-off, Verizon will receive from Spinco $3,333 million in aggregate value in the form of the special cash payment, the Verizon debt reduction and, if required, Spinco debt securities. The parties expect, and it is assumed for purposes of the pro forma condensed combined financial information, that no Spinco debt securities will be issued to Verizon in connection with the transactions.

The exact number of shares to be issued by Frontier will be determined based on the average of the volume-weighted averages of the trading prices of Frontier common stock for the 30 consecutive trading days ending on the third trading day before the closing of the merger, subject to a collar such that in no case will such average Frontier common stock price, for the purpose of determining the number of shares of Frontier common stock to be issued to Verizon stockholders at the closing of the merger, be lower than $7.00 or higher than $8.50. Depending on the trading prices of Frontier common stock prior to the closing of the merger, immediately after the closing of the merger, Verizon stockholders will own between approximately 66% and 71% of the combined company’s outstanding equity, and Frontier stockholders will own between approximately 29% and 34% of the combined company’s outstanding equity. Additionally, the aggregate consideration to be received by Verizon stockholders referred to above is subject to increase by any amounts paid, payable or forgone by Verizon pursuant to orders or settlements that are issued or entered into in order to obtain governmental approvals in the Spinco territory that are required to complete the merger or the spin-off. As a result, the number of shares of Frontier common stock issuable pursuant to the merger agreement may increase. Verizon will not own any shares of Frontier after the merger.

Verizon received a favorable ruling from the IRS indicating, with certain caveats, that the spin-off and merger qualify as tax-free transactions, except to the extent that cash is paid to Verizon stockholders in lieu of fractional shares. As expected, the IRS ruling does not rule that the spin-off satisfies every requirement of a tax-free spin-off, and the parties will rely solely on an opinion of counsel to determine that such additional requirements are satisfied.

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The pro forma condensed combined financial information was prepared using the accounting standard relating to Business Combinations. For purposes of the pro forma condensed combined financial information, estimated transaction costs have been disregarded and are therefore not reflected except for the estimated debt incurrence fees of $65 million as described in Note 4(a) below. The aggregate estimated transaction costs (other than debt incurrence fees referred to above) are expected to be approximately $55 million and include estimated costs associated with investment banker advisory fees, legal fees, and regulatory and auditor services of Frontier. Approximately $18 million of transaction costs were recognized by Frontier for the year ended December 31, 2009, and the balance of $37 million is reflected as an accrual in the Pro Forma adjustments column on the unaudited pro forma condensed combined balance sheet. These costs are eliminated as a pro forma adjustment in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2009. In addition, the combined company will incur integration costs primarily related to information systems, network and process conversions (including hardware and software costs). The specific details of these integration plans will be refined as the integration is implemented over the next three years after completion of the transactions and will be recorded based on the nature and timing of the specific action. For purposes of the pro forma condensed combined financial information, it is assumed that no amounts will be paid, payable or forgone by Verizon pursuant to orders or settlements issued or entered into in order to obtain governmental approvals in the Spinco territory that are required to complete the merger or the spin-off.

Frontier is considered the accounting acquirer for purposes of the preparation of the pro forma condensed combined financial information. This conclusion is based upon Frontier’s consideration of all relevant factors included in the accounting standard relating to Business Combinations including (1) the issuance by Frontier of its common stock to Verizon stockholders to acquire the Spinco business through the merger of Spinco with and into Frontier, (2) the composition of the board of directors of the combined company, which will initially consist of nine Frontier-selected directors and three Verizon-selected directors, and (3) the composition of the executive management team of the combined company, which will be led by current Frontier executives, including its Chief Executive Officer, Chief Operating Officer and Chief Financial Officer.

The merger is subject to customary closing conditions and regulatory approvals. Subject to these conditions, it is anticipated that the merger will be completed by the end of the second quarter of 2010.

2. Basis of Preliminary Estimated Transaction Consideration Allocation

The allocation presented below represents the effect of recording on a preliminary basis the value of Frontier common stock to be issued by Frontier as consideration in the merger under the acquisition method of accounting (dollars in millions):

Estimated transaction consideration:				$	5,247
Current assets	$	531
Property, plant & equipment—net		5,364
Goodwill		3,562
Customer list		1,180
Other assets		150
Current liabilities		(816	)
Deferred income taxes		(1,276	)
Long-term debt		(3,023	)
Other liabilities		(425	)
Total net assets acquired	$	5,247

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The allocation of the value of the Frontier common stock to be issued by Frontier as consideration in the merger to assets and liabilities is preliminary. The final allocation of the value of the Frontier common stock to be issued by Frontier as consideration in the merger will be based on the actual value of the Frontier common stock to be issued by Frontier as consideration in the merger and the fair values of assets acquired and liabilities assumed as of the effective time of the merger, determined based upon a third-party valuation. The valuation will be completed after consummation of the merger. There can be no assurance that the actual allocation will not differ significantly from the preliminary allocation.

The above noted preliminary allocation includes deferred taxes that are established at acquisition. Deferred taxes represent the tax effect at 37% of the non-deductible step-up in value of the customer list (($1,180 million x 0.37) = $437 million). The offsetting entry to establish the deferred tax liability is recorded as goodwill.

3. Frontier common stock to be issued:

The following assumptions have been made regarding the number of shares to be issued by Frontier and show the resulting impact on relative share ownership and earnings per share:

Projected Value of shares to be issued (in millions)	$	5,247	$	5,247	$	5,247
Divided by Price Per Share	$	7.00	$	7.75	$	8.50
Projected Shares to be Issued to Verizon stockholders (in millions)		750		677		617
Frontier Shares Outstanding at December 31, 2009, pre-merger (in millions)		312		312		312
Total Shares after merger (in millions)		1,062		989		929
Percentage ownership by Frontier stockholders after merger		29%		32%		34%
Percentage ownership by Verizon stockholders after merger		71%		68%		66%

Impact on Pro Forma Earnings Per Share (basic and diluted), Year Ended December 31, 2009:

Pro Forma Weighted Average
Shares outstanding (in millions):
Frontier pre merger		310		310		310
Plus shares issued in the merger		750		677		617
Total Pro Forma Weighted Average shares outstanding		1,060		987		927
Pro Forma Net Income (dollars in millions)	$	439	$	439	$	439
Pro Forma Earnings Per Share (basic and diluted)	$	0.41	$	0.44	$	0.47

4. Balance Sheet Adjustments:

(a) Prior to or substantially contemporaneous with the contribution of the Spinco business to Spinco by Verizon, Spinco will incur one or more term loan bank borrowings or capital markets issuances (including the notes) to finance the special cash payment to Verizon. The amount of the special cash payment is subject to a limit of $3,333 million and will be reduced

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by the amount of long-term debt (including current maturities) of Verizon that will become the consolidated indebtedness of Spinco at the time of the spin-off. At December 31, 2009, Verizon’s Separate Telephone Operations had long-term debt, including current maturities, of $625 million. The adjustment presented therefore assumes debt incurrence of $2,773 million with net cash proceeds to Spinco of $2,708 million after estimated debt incurrence fees of $65 million. The new debt is assumed to be long-term debt issued at par and to bear interest at a weighted average rate of 8.25%.

Total cash to be paid to Verizon of $2,708 million plus distribution date indebtedness of Verizon’s Separate Telephone Operations of $625 million provides Verizon with total value of $3,333 million.

$200 million of the $625 million of Verizon’s Separate Telephone Operations’ debt as of December 31, 2009, was repaid on February 15, 2010. An additional $175 million of such debt matures on June 1, 2010. The amount of new debt to be incurred by Spinco as part of the special cash payment financing will therefore increase in an amount that corresponds to the amount of any additional repayment of such debt. For purposes of the pro forma condensed combined financial information, we have assumed an estimated debt incurrence fee of $65 million in all cases for the new debt to be incurred by Spinco. Assuming the closing of the merger occurs after June 1, 2010, Spinco will borrow approximately $3,148 million ($2,773 million as shown in the column titled “Incurrence of New Debt”, plus $375 million in aggregate principal amount of additional borrowings). The repayment at maturity of the debt by Verizon does not impact the total “as adjusted” debt of Verizon’s Separate Telephone Operations or the debt of the combined company. Interest expense is expected to rise slightly based upon the rate differential between Verizon’s Separate Telephone Operations’ existing debt and the assumed interest rate applicable to the new debt to be incurred by Spinco. Assuming the repayment of $375 million of Verizon’s Separate Telephone Operations’ existing debt and the corresponding increase in the amount of additional new debt to be raised by Spinco as part of the special cash payment financing, a rate increase of 2% between such existing debt and the additional new debt would result in an $8 million increase in the annual interest expense of the combined company.

The parties expect, and it has been assumed for purposes of the pro forma condensed combined financial information, that no Spinco debt securities will be issued to Verizon in connection with the transactions.

(b) This adjustment represents a special cash payment to Verizon by Spinco from the net cash proceeds of the assumed debt offering described in 4(a) above.

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(c) Verizon’s Separate Telephone Operations are adjusted to (1) include assets and liabilities that will be transferred to Spinco but are not included in Verizon’s Separate Telephone Operations’ financial statements provided elsewhere in this offering memorandum and (2) exclude assets and liabilities that will be retained by Verizon that are included in Verizon’s Separate Telephone Operations’ financial statements provided elsewhere in this offering memorandum. A brief description of these items follows (dollars in millions):

Balance	Amount			Reason
Other current assets	$	(83	)	Intercompany receivables retained by Verizon
		(3	)	Receivables related to businesses retained by Verizon
		2		Receivables related to approximately 23,000 California access lines transferred to Spinco but not included in Verizon’s Separate Telephone Operations financial information
		(8	)	Deferred income taxes related to uncertain tax balances and postemployment benefits retained by Verizon
		(23	)	Inventory net transfer
	$	(115	)
Property, plant and equipment, net	$	25		Fixed assets related to approximately 23,000 California access lines referenced above
		(65	)	Fixed assets related to Verizon’s national operations to be retained by Verizon
		73		Verizon corporate real estate in the Spinco territory transferred to Spinco
		60		Capital expenditures to permit stand-alone operation of Spinco
		5		Corporate leased vehicles in the Spinco territory to be transferred to Spinco
	$	98
Other assets	$	(2,325	)	Prepaid pension in excess of actuarial liability retained by Verizon
		(34	)	Reclassify capital expenditures to permit stand-alone operation of Spinco to Property, plant and equipment
		(2,359	)
Accounts payable and other current liabilities	$	(126	)	Intercompany payables retained by Verizon
		(27	)	Accrued income taxes retained by Verizon
		(14	)	Postemployment benefits retained by Verizon
		1		Accounts payable and accrued liabilities related to approximately 23,000 California access lines referenced above
	$	(166	)
Other liabilities	$	(886	)	Pension, other postretirement employee benefits of retirees, stock-based compensation and postemployment benefits retained by Verizon
		5		Corporate leased vehicles in the Spinco territory transferred to Spinco
		3		Other liabilities related to approximately 23,000 California access lines referenced above
		(66	)	Accrued uncertain tax position liability retained by Verizon
	$	(944	)
Deferred income taxes	$	(471	)	Deferred income taxes on the adjustments above
Parent funding	$	(795	)	Reflects the aggregate impact of the above noted entries

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The pension and other postretirement employee benefits adjustments are based on a preliminary actuarial evaluation obtained from a third party. The final actuarial evaluation completed at the time of completion of the merger may be different from that reflected in the pro forma condensed combined financial information. This difference including the related impact on deferred taxes may be material.

(d) (i) This adjustment in the amount of $3,562 million ($3,125 million + $437 million) reflects the goodwill associated with the excess of the transaction consideration issued over the preliminary estimated fair value of the underlying identifiable net tangible and intangible assets at December 31, 2009 ($3,125 million), and reflects the impact of the deferred taxes established in (iii) below ($437 million).

(ii) This adjustment in the amount of $1,180 million reflects the preliminary fair value of the identifiable intangible asset (customer list) which was estimated by Frontier’s management based on the fair values assigned to similar assets in recently completed acquisitions (a market approach). A third party valuation firm will be utilized to help determine the final fair value after the merger is completed. The estimated useful life of the customer list asset was assumed to be five years.

(iii) This adjustment in the amount of $437 million reflects the deferred taxes associated with the non-deductible customer list asset ($1,180 million x 37% = $437 million) based on an assumed tax rate of 37%.

(iv) This adjustment in the amount of $37 million records the estimated unpaid non-recurring costs for acquisition related transaction costs, primarily bankers, lawyers and consulting advisory fees.

(v) This adjustment in the amount of $4,268 million ($5,247 million – $942 million – $37 million) eliminates the “as adjusted” net equity of Verizon’s Separate Telephone Operations ($942 million) and reflects Frontier’s issuance of common stock to Verizon stockholders ($5,247 million) less unpaid estimated transaction costs of $37 million as of December 31, 2009.

(e) A portion of the pro forma combined cash and cash equivalents is expected to be held in escrow accounts or otherwise restricted after the closing of the merger in order to satisfy certain commitments to be made by Frontier in connection with obtaining regulatory approvals for the transactions. The amount of such restricted cash will be determined in connection with obtaining those regulatory approvals.

5. Income Statement Adjustments:

(a) This adjustment reflects results of operations related to the transfer of approximately 23,000 California access lines, representing a portion of the Spinco business not included in Verizon’s Separate Telephone Operations, to the combined company.

(b) This adjustment reflects results of operations of wireless directory assistance, long distance revenues from calling cards and discontinued services, and customer premises equipment contracts that will not be transferred in the transactions.

(c) This adjustment reflects pension, other postretirement employee benefits of retirees and postemployment benefits retained by Verizon.

(d) This adjustment conforms the classification of bad debt expenses by Verizon’s Separate Telephone Operations to the classification policy of Frontier.

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(e) This adjustment reflects the removal of acquisition, integration and realignment expenses related to activities to enable Spinco to operate on a stand-alone basis in connection with the proposed business combination with Frontier.

(f) This adjustment reflects the removal of transactions between Verizon’s Separate Telephone Operations and Frontier.

(g) This adjustment reflects amortization expense associated with the customer list asset estimated in note 4(d) above assuming an estimated useful life of five years which corresponds to an increase in depreciation and amortization of $236 million for the year ended December 31, 2009.

The actual depreciation and amortization expense will be based on the final fair value attributed to the identifiable tangible and intangible assets based upon the results of the third-party valuation of the acquired assets. The depreciation and amortization rates may also change based on the results of this third-party valuation. There can be no assurance that the actual depreciation and amortization expense will not differ significantly from the pro forma adjustment presented.

(h) This adjustment reflects depreciation on Verizon corporate real estate in the Spinco territory transferred to Spinco, net of depreciation in fixed assets related to Verizon national operations to be retained by Verizon and related rent expense allocated to Verizon’s Separate Telephone Operations.

(i) This adjustment reflects additional interest expense on $2,773 million of new debt (including the notes) to be incurred by Spinco prior to the merger, based on an assumed weighted average interest of 8.25%. Assuming the principal amount of new debt does not change, a 0.5% increase or decrease in the assumed interest rate would change interest expense by approximately $14 million annually ($16 million if $3,148 million is incurred; see Note 4(a)).

(j) This adjustment adjusts interest expense of Spinco to represent the annualized third party interest charge on the long-term debt, including current maturities ($625 million) contributed by Verizon to Spinco.

(k) This adjustment reflects the tax effect of the adjustments described in notes 5(a) through 5(j) above, using an estimated effective income tax rate of 37%.

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EX-99.2

Exhibit 99.2

Regulatory environment

The majority of Frontier’s and Spinco’s operations are regulated by the FCC and various state regulatory agencies, often called public service or utility commissions.

Certain of Frontier’s and Spinco’s revenue is subject to regulation by the FCC and various state regulatory agencies. Frontier expects federal and state lawmakers to continue to review the statutes governing the level and type of regulation for telecommunications services.

Regulation of our business after the spin-off and merger

The following summary does not describe all present and proposed federal, state and local legislation and regulations affecting the communications industry. Some legislation and regulations are or could in the future be the subject of judicial proceedings, legislative hearings and administrative proposals which could change the manner in which this industry operates. Neither the outcome of any of these developments, nor their potential impact on us, can be predicted at this time. Regulation can change rapidly in the communications industry, and such changes may have an adverse effect on us. See “Risk factors—Risks related to regulation—Changes in federal or state regulation may reduce the access charge revenues we will receive.”

The merger of Frontier and Spinco will affect the regulatory operations and risks of Frontier in several specific ways:

• The closing of the merger is subject to certain state and federal regulatory approvals. Frontier and Verizon may be delayed in obtaining or unable to obtain the necessary approvals, which could delay or prevent the consummation of the merger. In addition, regulatory agencies have imposed and may impose further requirements (including service quality and capital expenditures requirements) on our business operations for specified periods of time post-closing in connection with granting such approvals, which may restrict our ability to modify the operations of our business as needed in reaction to changing circumstances.

• Most of Frontier and some parts of the Spinco business have previously operated under different statutory classifications that can affect their obligations to interconnect with competing carriers and, under current FCC rules, also affect the computation of USF funds. All of Frontier’s current ILEC operations other than Rochester Telephone are defined as “rural telephone companies” under Section 3(37) of the Communications Act, while at least some of the current operations of the Spinco business are non-rural telephone companies. Irrespective of whether they are statutorily classified as rural telephone companies, none of the current operations of the Spinco business have reduced obligations to interconnect with competing carriers.

• Prior to the transactions, Frontier served fewer than 2% of the wireline subscriber lines in the aggregate nationwide, which permitted Frontier to have reduced regulatory obligations. Following the transactions, we will serve more than 2% of the wireline subscriber lines in the aggregate nationwide, which will mean that we will no longer be eligible for those reduced obligations.

Our regulated communications services will continue to be subject to federal, state and local regulation. We will hold various regulatory authorizations for our regulated service offerings. At the federal level, the FCC generally exercises jurisdiction over facilities and services of communications common carriers, such as our company, to the extent those facilities are used to

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provide, originate or terminate interstate or international communications. State regulatory commissions generally exercise jurisdiction over common carriers’ facilities and services to the extent those facilities are used to provide, originate or terminate intrastate communications. In addition, pursuant to the Telecommunications Act of 1996 (the “1996 Act” or the “Telecommunications Act”), state and federal regulatory agencies share responsibility for implementing and enforcing the domestic pro-competitive policies introduced by that legislation. In particular, state regulatory agencies have substantial oversight over the provision by incumbent telephone companies of interconnection and non-discriminatory network access to competitive communications providers. Local governments often regulate the public rights-of-way necessary to install and operate networks, and may require communications services providers to obtain licenses or franchises regulating their use of public rights-of-way. Additionally, municipalities and other local government agencies may regulate limited aspects of our business, including our use of public rights-of-way, and by requiring us to obtain construction permits and abide by building codes.

Frontier believes that competition in our telephone service areas will increase in the future as a result of the Telecommunications Act and actions taken by the FCC and state regulatory authorities, and through increased deployment of various types of technology, although the ultimate form and degree of competition cannot be predicted at this time. Competition may lead to loss of revenues and profitability as a result of loss of customers; reduced usage of our network by our customers who may use alternative providers for long distance, voice and data services; and reductions in prices for our services which may be necessary to meet competition.

Under the 1996 Act, state regulatory commissions have jurisdiction to arbitrate and review interconnection disputes and agreements between ILECs and competitive local exchange carriers, in accordance with rules set by the FCC. State regulatory commissions also may impose fees on providers of communications services within their respective states to support state universal service programs. States often require prior approvals or notifications for certain acquisitions and transfers of assets, customers, or ownership of regulated entities. In connection with the transactions, Frontier and Verizon have applied for pre-closing approvals from the Arizona, California, Illinois, Nevada, Ohio, Oregon, South Carolina, Washington, and West Virginia commissions for Spinco’s local exchange service areas, and have to date received approvals from state commissions in Arizona, California, Nevada, Ohio, Oregon and South Carolina (state approval in Ohio has been effective since February 11, 2010, although a labor union has filed an Application for Rehearing, which will be determined by the Ohio state commission in mid-April). Frontier and Verizon are in the process of working with various parties to obtain approvals from the remaining state commissions and expect to obtain such approvals by the end of the second quarter of 2010. It is possible, however, that those state commissions may delay their approvals or decline to grant them. For example, on March 9, 2010, an administrative law judge in Illinois, in connection with the approval process in that state, issued a recommendation and proposed order to the Illinois Commerce Commission against approval of the transactions. The recommendation and proposed order by the administrative law judge are not decisions of the Illinois Commerce Commission, which will review the relevant records before granting or declining approval of the transactions. Frontier and Verizon have filed a joint brief on exceptions with the Illinois Commerce Commission. The Staff of the Illinois Commerce Commission and the United States Department of Defense and all other Federal Executive Agencies have filed briefs on exceptions with the Illinois Commerce Commission identifying concerns with the proposed order and asking the Illinois Commerce Commission to adopt the Staff of the Illinois Commerce Commission’s recommendations to approve the transactions. Regulatory staffs in Ohio, Oregon

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and Washington, in connection with their process for approving the transactions, are also monitoring Verizon’s progress in segregating the operational support systems of the Spinco business (other than the portion conducted in West Virginia) from Verizon’s other businesses, and the parties are awaiting approval of the transactions in West Virginia. In addition, certain state regulatory commissions have, in connection with granting their approvals, specified certain capital expenditure and operating requirements for our business for specified periods of time post-closing, and other state regulatory commissions that have not yet approved the transactions may impose such requirements in connection with granting their approvals. These requirements have thus far focused primarily on a variety of capital investment commitments, including the expansion of broadband availability (in some cases, with our agreeing to place cash in escrow accounts to satisfy such future capital investment commitments). In addition, in certain states we will be subject to operating restrictions such as price caps (including maintenance of existing prices on certain residential and business products and existing prices and terms of interconnection agreements with competitive local exchange carriers and arrangements with other carriers), continuation of existing product bundle offerings, waiver of certain customer early termination fees, post-closing changes to our operational support systems, and certain minimum service quality standards for a defined period of time. We expect similar conditions from the three remaining state regulatory commissions, which may also include requirements to pre-fund into escrow accounts amounts for commitments related to broadband expansion and, in one case, cash management restrictions, upon the failure to meet service quality standards over a period of time. We will also be required to report certain financial information and adhere for a period of time to certain conditions regulating competition and consumer protection. Although these requirements are generally consistent with our current business plans, they may restrict our flexibility in operating our business during such specified periods, including our ability to raise rates in a declining revenue environment. Also, the regulatory agency in Pennsylvania approved the transfer of Verizon’s ILEC operations in that state, which Verizon will retain, to a newly created Verizon operating company and North Carolina granted a Certificate of Public Convenience and Necessity to Frontier. Requests for consent for the transaction remain pending in Illinois, Washington and West Virginia. States generally retain the right to sanction a carrier or to revoke certifications if a carrier materially violates relevant laws or regulations.

Frontier and Verizon have applied to 41 local franchising authorities in Oregon and Washington for approval to transfer control of Verizon’s franchises to provide video services in those states to Frontier. All of those local franchising authorities have granted approval to permit Verizon to transfer control of the franchises to Frontier, subject to the satisfaction of certain conditions. With respect to many of the Oregon local franchising authorities, the relevant orders state that the approval of the proposed transfer of control shall not take effect until such time as Frontier obtains a substantial portion of Verizon’s existing content rights from third-party content providers. A certification on the securing of such rights is due on March 31, 2010. In the event that the local authorities determine that this condition has been not satisfied, Verizon and Frontier could be required to take further action up to and including re-submitting applications for their approval, in which case these authorities have a statutory period of up to 120 days from the date of receiving required information to act. Frontier has not yet obtained the required minimum portion of the content rights. In the event Frontier fails to obtain the content rights and the authorities require Frontier and Verizon to re-submit their applications, there can be no assurance that these authorities will issue their approvals prior to the time at which the parties otherwise currently anticipate completing the transactions, or at all.

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Regulation of the telecommunications industry at the federal and state level

The 1996 Act dramatically changed the telecommunications industry. The main purpose of the 1996 Act was to open local telecommunications marketplaces to competition. The 1996 Act preempts state and local laws to the extent that they prevent competition with respect to communications services. Under the 1996 Act, however, states retain authority to impose requirements on carriers necessary to preserve universal service, protect public safety and welfare, ensure quality of service and protect consumers. States are also responsible for mediating and arbitrating interconnection agreements between CLECs and ILECs if voluntary negotiations fail. The 1996 Act imposes a number of requirements for access to network facilities and interconnection on all local communications providers. Incumbent local carriers must interconnect with other carriers, unbundle some of their services at wholesale rates, permit resale of some of their services, enable collocation of equipment, provide local telephone number portability and dialing parity, provide access to poles, ducts, conduits and rights-of-way, and complete calls originated by competing carriers under termination arrangements.

At the federal level and in a number of the states in which we will operate, we will be subject to price cap or incentive regulation plans under which prices for regulated services are capped in return for the elimination or relaxation of earnings oversight. The goal of these plans is to provide incentives to improve efficiencies and increased pricing flexibility for competitive services while ensuring that customers receive reasonable rates for basic services. Some of these plans have limited terms and, as they expire, we may need to renegotiate with various states. These negotiations could impact rates, service quality and/or infrastructure requirements which could impact our earnings and capital expenditures. In other states in which we will operate, we will be subject to rate of return regulation that limits levels of earnings and returns on investments. The National Broadband Plan recommends requiring all incumbent local exchange carriers to be regulated for interstate services, if at all, under incentive regulation. We will continue to advocate our position for no regulation with various regulatory agencies. In some of states, Frontier has already been successful in reducing or eliminating price regulation on end-user services under state commission jurisdiction.

For interstate services regulated by the FCC, Frontier has elected to comply with price caps for most of its operations and all of the current operations of the Spinco business are subject to price caps as well. In May 2000, the FCC adopted a methodology for regulating the interstate access rates of price cap providers through May 2005, which has continued in effect in the absence of any changes in FCC rules. The FCC has been considering a number of different proposals for comprehensive intercarrier compensation reform, including changes to the regulation of interstate access rates. The National Broadband Plan recommends reducing intrastate terminating switched access rates to interstate terminating switched access levels over a two to four year period beginning in 2012, and eliminating all per-minute intercarrier compensation charges by 2020. This plan must still be considered by the full FCC which may adopt, reject or modify these proposals. In addition, the FCC also has an ongoing proceeding considering whether to make changes in its regulatory regime governing special access services, including whether to mandate lower rates, change standards for deregulation and pricing flexibility, or to require changes to other terms and conditions.

Another goal of the 1996 Act was to remove implicit subsidies from the rates charged by local telecommunications companies. Some state legislatures and regulatory agencies are looking to reduce the implicit subsidies in intrastate rates. The most common subsidies are in intrastate access rates that historically have been priced above their costs to allow basic local rates to be

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priced below cost. Legislation has been considered in several states to require regulators to eliminate these subsidies and implement state universal service programs where necessary to maintain reasonable basic local rates. However, not all the reductions in access charges would be fully offset. Frontier anticipates additional state legislative and regulatory pressure to lower intrastate access rates.

The National Broadband Plan recommends transitioning all of the existing federal high cost subsidy programs, including the Federal High Cost Loop Fund, federal interstate access support, federal interstate common line support, federal local switching support fund (but not including surcharges billed to customers), into a new fund focusing on broadband infrastructure buildout in unserved areas. The National Broadband Plan recommends that there would be only one subsidized provider of broadband per geographic area, and that eligibility criteria would be company and technology agnostic so long as the service provided meets the specifications set by the FCC. There is no assurance that a carrier that receives support under the existing federal high cost subsidy programs would receive support under the new broadband fund. In addition, the National Broadband Plan proposes that the total federal universal service fund, including high cost support, low income support and support to schools and libraries, remain close to its current size in 2010 dollars.

Telephone companies are subject to FCC rules governing privacy of customer information. Among other things, these rules obligate carriers to protect customer information from inappropriate disclosure, set requirements for obtaining customer permission to use information in marketing and for disclosure of information to customers, and require carriers to certify annually that they are in compliance with the rules.

Most states have certification requirements that require providers of communications services to obtain authority from the state regulatory commission prior to offering common carrier services. Most of the local exchange companies that will be operated by us will operate as incumbent carriers in the states in which they operate and are certified in those states to provide local telephone services. State regulatory commissions generally regulate the rates ILECs charge for intrastate services, including rates for intrastate access services paid by providers of intrastate long distance services.

Local government authorizations

We may be required to obtain from municipal authorities permits for street opening and construction or operating franchises to install and expand facilities in certain communities. Some of these franchises may require the payment of franchise fees. Frontier has historically obtained municipal franchises as required. In some areas, we will not need to obtain permits or franchises because the subcontractors or electric utilities with which we will have contracts already possess the requisite authorizations to construct or expand our networks.

Promotion of local service competition and traditional telephone companies.    The Telecommunications Act provides, in general, for the removal of barriers to entry into the communications marketplace. With respect to facilities, the FCC has determined that certain unbundling requirements that apply to narrowband facilities do not apply to broadband facilities such as fiber-to-the-premises loops and packet switches. With respect to services, the FCC has concluded that broadband Internet access services offered by telephone companies, cable companies, electric utilities, wireless providers and their affiliates qualify as information services and are not subject to mandatory common carriage regulation. The FCC has also concluded that

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telephone companies may offer the underlying broadband transmission services that are used as an input to Internet access services through private carriage arrangements on negotiated commercial terms. In addition, a Verizon petition asking the FCC to forbear from applying common carrier regulation to certain broadband services sold primarily to larger business customers when those services are not used for Internet access was deemed granted by operation of law on March 19, 2006, when the FCC did not deny the petition by the statutory deadline. Frontier received similar relief for certain broadband services in a forbearance petition granted in an order adopted by the FCC on October 24, 2007. In the National Broadband Plan, an FCC staff team recommended that the FCC review its wholesale regulatory framework for broadband services, including competitive access to local fiber facilities, copper retirement rules and implementation of Section 271 of the Communications Act of 1934, as amended.

Promotion of universal service.    Current FCC rules provide different methodologies for the determination of universal service payments to rural and non-rural telephone company areas. In general, the rules provide high-cost support to rural telephone company study areas where the company’s actual costs exceed a preset nationwide benchmark level. High-cost support for non-rural telephone company areas, on the other hand, is determined by a nationwide proxy cost model. The FCC’s current rules for support to high-cost areas served by non-rural local telephone companies were previously remanded by U.S. Court of Appeals for the Tenth Circuit, which had found that the FCC had not adequately justified these rules. The FCC has initiated a rulemaking proceeding in response to the court’s remand, but its rules remain in effect pending the results of the rulemaking. The Federal-State Joint Board on Universal Service is also considering proposals to update the proxy model used to determine non-rural high-cost funding is determined. In 2000, the FCC also created an explicit support mechanism to replace implicit support that was previously recovered in interstate access charges for carriers subject to price-cap regulation. Most of our price-cap regulated study areas will receive this interstate access support.

The payments received by our rural local exchange carriers from the rural and high cost portions of the USF are intended to support the high cost of our operations in rural markets. Various parts of the federal rural and the high cost USF are subject to caps that can reduce the amount of support provided from year to year. For example, payments from the USF will fluctuate based upon our average cost per loop in a study area compared with the national average cost per loop. For areas classified as rural telephone companies, if the national average cost per loop increases and our operating costs and average cost per loop increase at a lower rate, remain constant or decrease, the payments we will receive from the USF will decline. Conversely, if the national average cost per loop decreases and our operating costs and average cost per loop decrease at a lower rate, remain constant or increase, the payments we will receive from the USF will increase. Over the past year, the national average cost per loop in relation to the average cost per loop for the majority of Frontier study areas has increased, and Frontier believes the national average cost per loop will likely continue to increase in relation to its average cost per loop. As a result, the payments from the rural portions of the USF that we will receive with respect to the operations of the current Frontier business will likely decline. In addition, subsidy revenue received under the federal interstate access support fund may also decline, as that fund is also subject to a national cap and the formula used to allocate funds among recipients may cause our support to decline, as occurred for the Frontier business and the Spinco business in 2008 and 2009. Furthermore, the proposed changes in the federal rules governing both the collection and distribution of the USF are pending before the FCC. If our rural local exchange carriers were unable to receive USF payments, or if those payments were reduced, many of our rural local exchange carriers may operate less profitably as they have historically under Frontier

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in the absence of our implementation of increases in charges for other services. Moreover, if we raise prices for services to offset loss of USF payments, the increased pricing of our services may disadvantage us competitively in the marketplace, resulting in additional potential revenue loss.

Universal service rules have been adopted by both the FCC and some state regulatory commissions. USF disbursements may be distributed only to carriers that are designated as eligible telecommunications carriers by a state regulatory commission. All of the incumbent local exchange carriers that will be operated by us have been designated as eligible telecommunications carriers pursuant to the Telecommunications Act. However, under the Telecommunications Act, competitors can obtain the same support payments per line served as we will if a state regulatory commission determined that granting support payments to competitors would be in the public interest, although the FCC placed a temporary cap on high-cost support paid to CETCs in May 2008. The FCC is currently considering revisions to the distribution mechanisms for universal service funds.

In May 2007, the FCC requested comment on the possible use of reverse auctions to determine recipients of high-cost universal service reform, as well as on other rule changes that could reduce support in the future, or provide for new support, such as for broadband services. The FCC issued a Further Notice of Proposed Rulemaking on November 5, 2008, with a range of different proposals. Some of these proposals would likely substantially reduce the universal service support Frontier would receive, if ultimately adopted without change. Neither Spinco nor Frontier can predict what course the FCC will take on universal service distribution reform, but it is possible that the remedy selected by the FCC could materially affect the amount of universal service funding we will receive. It is possible that the Joint Board will recommend and the FCC will adopt additional mechanisms to reduce the amount of high-cost universal service support disbursed in rural areas to ILECs, as it recently did with respect to CETCs.

As discussed above, the National Broadband Plan recommends transitioning all of the existing federal high cost subsidy programs into a new fund focusing on broadband infrastructure building out unserved areas with support going to only one subsidized provider per geographic area. There is no assurance that a carrier that receives support under the existing federal high cost subsidy programs would receive support under the new broadband fund. The National Broadband Plan also recommends that the federal universal service fund in total remain close to its current size in 2010 dollars.

Universal service funding is currently collected through a surcharge on interstate and international end-user revenues. Declining long distance revenues, the popularity of service bundles that include local and long distance services, and the growth in the size of the fund, due primarily to increased funding to CETCs, are all causing the FCC to consider alternative and more sustainable means for collecting this funding. One alternative under active consideration would be to impose surcharges on telephone numbers or network connections. As an interim step, in June 2006, the FCC ordered that providers of certain VOIP services are subject to federal universal service obligations. The FCC also increased the percentage of revenues subject to federal universal service obligations that wireless providers may use as a safe harbor. The FCC is considering revisions to the contribution methodology for funding universal service. In the National Broadband Plan, an FCC staff team recommended broadening the universal service contribution base, and discussed proposals to include broadband revenues or to assess broadband connections through a hybrid numbers and connections-based approach, but also noted that some suggest that broadband should not be assessed. Any further change in the

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current assessment mechanism could result in a change in the contribution that local telephone companies, wireless carriers or others must make and that would be collected from customers.

Neither Frontier nor Spinco can predict whether the FCC or Congress will require modification to any of the universal service rules, or the ultimate impact that any such modification might have on us.

Recent and potential regulatory developments

Federal legislators, the FCC and state regulators are currently considering a number of proposals for changing the manner in which eligibility for federal subsidies is determined as well as the amounts of such subsidies. In May 2008, the FCC issued an order to cap CETC receipts from the high cost Federal Universal Service Fund. In 2009, the federal court upheld the FCC’s order and the cap remains in place pending any future reform.

The FCC is considering proposals that may significantly change interstate, intrastate and local intercarrier compensation and would revise the Federal Universal Service funding and disbursement mechanisms to incentivize expanded broadband availability. The National Broadband Plan recommends eliminating all per-minute intercarrier compensation charges by 2020, and reducing intrastate terminating switched access rates to interstate terminating switched access levels over a two to four year period beginning in 2012. The National Broadband Plan also recommends transitioning all of the existing federal high cost subsidy programs, including the Federal High Cost Loop Fund, federal interstate access support, federal interstate common line support, federal local switching support fund (but not including surcharges billed to customers), into a new fund focusing on broadband infrastructure buildout in unserved areas. The National Broadband Plan further recommends that there would be only one subsidized provider of broadband per geographic area, and that eligibility criteria would be company and technology agnostic, so long as the service provided meets the specifications set by the FCC. However, there is no assurance that a carrier that receives support under the existing federal high cost subsidy programs would receive support under the new broadband fund. In addition, the National Broadband Plan proposes that the total federal universal service fund, including high cost support, low income support and support to schools and libraries, remain close to its current size in 2010 dollars. The National Broadband Plan proposals could be accepted, rejected or modified significantly by the FCC. The FCC also has an ongoing proceeding considering whether to make changes in its regulatory regime governing special access services, including whether to mandate lower rates, change standards for deregulation and pricing flexibility, or to require changes to other terms and conditions. When and how these proposed changes will be addressed are unknown and, accordingly, we are unable to predict the impact of future changes on our results of operations. However, future reductions in our subsidy and access revenues will directly affect our profitability and cash flows as those regulatory revenues do not have associated variable expenses. Frontier’s access and subsidy revenues declined in 2009 compared to 2008 and are both likely to decline further in 2010.

Certain states have opened proceedings to address reform to intrastate access charges and other intercarrier compensation. Neither Spinco nor Frontier can predict when or how these matters will be decided or the effect on our subsidy or access revenues. In addition, Frontier has been approached by, and/or is involved in formal state proceedings with, various carriers seeking reductions in intrastate access rates in certain states.

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Regulators at both the federal and state levels continue to address whether VOIP services are subject to the same or different regulatory and intercarrier compensation regimes as traditional telephony. The FCC has concluded that certain VOIP services are jurisdictionally interstate in nature and states therefore are preempted from regulating the rates, terms and conditions on which providers offer these services. The FCC has not addressed other related issues, such as: whether or under what terms VOIP originated traffic may be subject to intercarrier compensation; and whether VOIP services are subject to general state requirements relating to taxation and general commercial business requirements. The FCC has stated its intent to address these open questions in subsequent orders in its ongoing “IP-Enabled Services Proceeding.” Internet telephony may have an advantage over the traditional services of Frontier and Spinco if it remains less regulated.

In January 2008, the FCC released public notices requesting comments on two petitions that have been filed regarding net neutrality and the application of the FCC’s Internet Policy Statement. In October 2009 the FCC issued a proposed rulemaking looking at rules to “Preserve a Free and Open Internet”, including proposed restrictions on broadband network management practices. That proceeding remains pending.

Some state regulators have in the past considered imposing on regulated companies (including us) cash management practices that could limit the ability of a company to transfer cash between its subsidiaries or to its parent company. None of the existing state requirements materially affect the cash management of Frontier, but future changes by state regulators could affect our ability to freely transfer cash within our consolidated companies.

In February 2009, the President signed into law an economic stimulus package, the American Recovery and Reinvestment Act (“ARRA”), that includes $7.2 billion in funding, through grants and loans, for new broadband investment and adoption in unserved and underserved communities. Frontier filed applications for the first round of stimulus funding in West Virginia, but was notified in February 2010 that it was not selected. The federal agencies responsible for administering the programs released rules and evaluation criteria for the second round of funding, with applications due by March 15, 2010. Frontier has applied for one funding of approximately $5.5 million in this round.

Current and potential internet regulatory obligations

In connection with our Internet access offerings, we could become subject to laws and regulations as they are adopted or applied to the Internet. There is currently only limited regulation applicable to these services. As the significance of the Internet expands, federal, state and local governments may adopt rules and regulations, or apply existing laws and regulations to the Internet (including Internet access services), and related matters are under consideration in both federal and state legislative and regulatory bodies. Neither Frontier nor Spinco can predict whether the outcome of pending or future proceedings will prove beneficial or detrimental to our competitive position.

The FCC adopted orders which put wireline broadband Internet access service, commonly delivered by DSL or fiber technology, as well as mobile wireless based broadband Internet access service and other forms of broadband Internet access services on an equal regulatory footing with cable modem service. This approach is consistent with a United States Supreme Court decision upholding the FCC’s classification of cable modem services as “information services” not subject to mandatory common carriage regulation. Specifically, the FCC has determined that

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these information services are functionally integrated with any underlying telecommunications component, and that there is no obligation to separate out and offer that transmission component subject to common carriage regulation. The FCC provides the option, however, for rate of return carriers to voluntarily provide wireline broadband Internet access service as a common-carrier offering. In the National Broadband Plan, the FCC staff team indicates that the FCC will consider the legal classification of broadband as it reviews the Plan.

The FCC has imposed particular regulatory obligations on broadband services. For example, it has concluded that VOIP and facilities-based broadband Internet access providers must comply with the Communications Assistance for Law Enforcement Act, a decision that the United States Court of Appeals for the District of Columbia Circuit has upheld. The FCC has also required VOIP providers to provide enhanced 911 emergency calling capabilities. Recently, there have also been discussions among policymakers concerning “net neutrality” or the potential requirement for non-discriminatory treatment of traffic over broadband networks. The FCC has sought comment on industry practices in connection with this issue. However, neither Spinco nor Frontier can predict what, if any, impact this may have on our business.

The National Broadband Plan proposes a series of other actions that could result in additional regulatory requirements for broadband services. These proposals include, but are not limited to, mandating specific disclosures to customers concerning actual speed of service; new regulations governing customer privacy; reports to the government on service outages; providing emergency alerts and access to next-generation 911 services; evaluating the resiliency of broadband networks in disasters and emergencies; and providing priority access to first responders in emergencies. The FCC staff has indicated that the FCC will initiate proceedings on these and other issues over the next several months. Neither Spinco nor Frontier can predict, however, what, if any, impact these proposals may have on our business.

Video programming.    We will provide video programming in Oregon, Washington, and Indiana, pursuant to franchises, permits, and similar authorizations issued by local franchising authorities. Each local franchising authority in Oregon and Washington often must approve a transfer to another party. Most franchises are subject to termination proceedings in the event of a material breach. In addition, most franchises require payment of a franchise fee to the granting authority.

Many franchises establish comprehensive facilities and service requirements, as well as specific customer service standards and monetary penalties for non-compliance. In many cases, franchises are terminable if the franchisee fails to comply with significant provisions set forth in the franchise agreement governing system operations. Franchises are generally granted for fixed terms of at least ten years and must be periodically renewed. Local franchising authorities may resist granting a renewal if either past performance or the prospective operating proposal is considered inadequate.

For information regarding approvals by local franchising authorities in connection with the transactions, see “—Regulation of our business after the spin-off and merger.”

Federal, state and local governments extensively regulate the video services industry. Our video programming operations will be subject to, among other things, subscriber privacy regulations; requirements that we carry a local broadcast station or obtain consent to carry a local or distant broadcast station; rules for franchise renewals and transfers; the manner in which program packages are marketed to subscribers; and program access requirements.

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Environmental regulation.

Like all other local telephone companies, the local exchange carrier subsidiaries that will be operated by us are subject to federal, state and local laws and regulations governing the use, storage, disposal of, and exposure to hazardous materials, the release of pollutants into the environment and the remediation of contamination. As an owner and former owner of property, we could be subject to environmental laws that impose liability for the entire cost of cleanup at contaminated sites, including sites formerly owned by Frontier or the Spinco business, regardless of fault or the lawfulness of the activity that resulted in contamination. Frontier believes that our operations will be in substantial compliance with applicable environmental laws and regulations.

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EX-99.3

Exhibit 99.3

Risk factors

You should carefully consider the following risks, together with the other information contained in this offering memorandum, before investing in the notes. The risks described below are not the only risks facing the combined company. Additional risks and uncertainties not currently known or that are currently deemed to be immaterial may also materially and adversely affect our business operations or the trading prices of the notes following completion of the merger. In such a case, you may lose all or part of your investment in the notes.

Risks related to the combined company’s business following the merger

We will likely face further reductions in access lines, switched access minutes of use, long distance revenues and federal and state subsidy revenues, which could adversely affect us.

The businesses that will make up the combined company have experienced declining access lines, switched access minutes of use, long distance revenues, federal and state subsidies and related revenues because of economic conditions, increasing competition, changing consumer behavior (such as wireless displacement of wireline use, e-mail use, instant messaging and increasing use of VOIP), technology changes and regulatory constraints. For example, Frontier’s access lines declined 6% in 2009 and 7% in 2008. In addition, Frontier’s switched access minutes of use declined 12% in 2009 and 9% in 2008 (after excluding the switched access minutes added through acquisitions in 2007). The Spinco business’s access lines declined 12% in 2009 and 10% in 2008. In addition, the Spinco business’s switched access minutes of use declined 15% in 2009 and 10% in 2008. These factors, among others, are likely to cause our local network service, switched network access, long distance and subsidy revenues to continue to decline, and these factors may cause our cash generated by operations to decrease.

We will face intense competition, which could adversely affect us.

The communications industry is extremely competitive and competition is increasing. The traditional dividing lines between local, long distance, wireless, cable and Internet service providers are becoming increasingly blurred. Through mergers and various service expansion strategies, service providers are striving to provide integrated solutions both within and across geographic markets. Our competitors will include competitive local exchange carriers and other providers of services, such as Internet service providers, wireless companies, VOIP providers and cable companies, that may provide services competitive with the services that we will offer or intend to introduce. Competition will continue to be intense following the merger, and neither Frontier nor Spinco can assure you that we will be able to compete effectively. The merger agreement and the distribution agreement do not contain any restrictions on either party’s ability to compete with the other party following the merger. Frontier also believes that wireless and cable telephony providers have increased their penetration of various services in Frontier’s and Spinco’s markets. Frontier expects that we will continue to lose access lines and that competition with respect to all of our products and services will increase. Following the merger we will compete with Verizon with respect to long distance, wireless voice and data services and other services, including services to business customers of Spinco, which Verizon will continue to offer in the Spinco territory.

Frontier expects competition to intensify as a result of the entrance of new competitors, penetration of existing competitors into new markets, changing consumer behavior and the development of new technologies, products and services that can be used in substitution for our

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products and services. Neither Spinco nor Frontier can predict which of the many possible future technologies, products or services will be important in order to maintain our competitive position or what expenditures will be required to develop and provide these technologies, products or services. Our ability to compete successfully will depend on the success and cost of capital expenditure investments in our territories, as well as the cost of marketing efforts and on our ability to anticipate and respond to various competitive factors affecting the industry, including a changing regulatory environment that may affect our business and that of our competitors differently, new services that may be introduced (including wireless broadband offerings), changes in consumer preferences, demographic trends, economic conditions and pricing strategies by competitors. Increasing competition may reduce our revenues and increase our marketing and other costs as well as require us to increase our capital expenditures and thereby decrease our cash flow.

Some of our future competitors will have superior resources, which may place us at a cost and price disadvantage.

Some of the companies that will be our competitors will have market presence, engineering, technical and marketing capabilities and financial, personnel and other resources substantially greater than our own. In addition, some of these future competitors will be able to raise capital at a lower cost than we will be able to. Consequently, some of these competitors may be able to develop and expand their communications and network infrastructures more quickly, adapt more swiftly to new or emerging technologies and changes in customer requirements, take advantage of acquisition and other opportunities more readily and devote greater resources to the marketing and sale of their products and services than we will be able to. Additionally, the greater brand name recognition of some future competitors may require us to price our services at lower levels in order to retain or obtain customers. Finally, the cost advantages of some of these competitors may give them the ability to reduce their prices for an extended period of time if they so choose.

We may be unable to grow our revenues and cash flows despite the initiatives Frontier has implemented and we intend to continue after the spin-off and merger.

We must produce adequate revenues and cash flows that, when combined with funds available under our new revolving credit facility, will be sufficient to service our debt, fund our capital expenditures, pay our taxes, fund our pension and other employee benefit obligations and pay dividends pursuant to our dividend policy. Frontier has identified some potential areas of opportunity and implemented and will continue to implement several growth initiatives that will affect us after the spin-off and merger, including increasing marketing promotions and related expenditures and launching new products and services with a focus on areas that are growing or demonstrate meaningful demand, such as wireline and wireless HSI, satellite video products and the “Frontier Peace of Mind” suite of products, including computer technical support. Neither Frontier nor Spinco can assure you that Frontier management will choose the best initiatives to pursue, that its approach to these opportunities will be successful, or that these initiatives will improve our financial position or our results of operations.

Weak economic conditions may decrease demand for our services.

We could be sensitive to the ongoing recession if current economic conditions or their effects continue following the merger. Downturns in the economy and competition in our markets could cause some of our customers to reduce or eliminate their purchases of our basic and enhanced

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services, HSI and video services and make it difficult for us to obtain new customers. In addition, if current economic conditions continue, they could cause our customers to delay or discontinue payment for our services.

Disruption in our networks, infrastructure and information technology may cause us to lose customers and incur additional expenses.

To attract and retain customers, we will need to provide customers with reliable service. Some of the risks to our networks, infrastructure and information technology include physical damage, security breaches, capacity limitations, power surges or outages, software defects and disruptions beyond our control, such as natural disasters and acts of terrorism. From time to time in the ordinary course of business, we experience short disruptions in our service due to factors such as cable damage, inclement weather and service failures of our third-party service providers. We could experience more significant disruptions in the future. We could also face disruptions due to capacity limitations if changes in our customers’ usage patterns for our HSI services result in a significant increase in capacity utilization, such as through increased usage of video or peer-to-peer file sharing applications. Disruptions may cause interruptions in service or reduced capacity for customers, either of which could cause us to lose customers and incur additional expenses, and thereby adversely affect our business, revenues and cash flows.

Our business will be sensitive to the creditworthiness of our wholesale customers.

We will have substantial business relationships with other telecommunications carriers for whom we will provide service. While bankruptcies of these carriers have not had a material adverse effect on Frontier or the Spinco business in recent years, future bankruptcies in our industry could result in the loss of significant customers, as well as cause more price competition and uncollectible accounts receivable. Such bankruptcies may be more likely in the future if current economic conditions continue through 2010 or beyond. As a result, our revenues and results of operations could be materially and adversely affected.

A significant portion of our workforce will be represented by labor unions and will therefore be subject to collective bargaining agreements, and if we are unable to enter into new agreements or renew existing agreements before they expire, our workers subject to collective bargaining agreements could engage in strikes or other labor actions that could materially disrupt our ability to provide services to our customers.

As of December 31, 2009, Frontier had approximately 5,400 active employees. Approximately 2,800, or 52%, of these employees were represented by unions and were therefore subject to collective bargaining agreements. Of the union-represented employees as of December 31, 2009, approximately 750, or 27%, were subject to collective bargaining agreements that expire in 2010 and approximately 1,300, or 46%, were subject to collective bargaining agreements that expire in 2011.

As of December 31, 2009, assuming the contribution had taken place as of that date, Spinco would have had approximately 8,900 active employees. Approximately 6,600, or 74%, of these employees were represented by unions and were therefore subject to collective bargaining agreements. Of the union-represented employees as of December 31, 2009, approximately 2,900, or 43%, were subject to collective bargaining agreements that expire in 2010 and approximately 2,700, or 41%, were subject to collective bargaining agreements that expire in 2011.

Neither Spinco nor Frontier can predict the outcome of negotiations of their collective bargaining agreements covering their respective employees who will become employees of the

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combined company. If we are unable to reach new agreements or renew existing agreements, employees subject to collective bargaining agreements may engage in strikes, work slowdowns or other labor actions, which could materially disrupt our ability to provide services. New labor agreements or the renewal of existing agreements may impose on us significant new costs, which could adversely affect our financial condition and results of operations in the future.

A significant portion of our work force will be eligible for retirement.

As of December 31, 2009, approximately 1,200, or 22%, of Frontier’s approximately 5,400 active employees were retirement eligible and, assuming the contribution had taken place as of that date, approximately 2,300, or 26%, of the Spinco business’s approximately 8,900 active employees were retirement eligible. If a substantial portion of these employees were to retire and could not be replaced (and, if necessary, their replacements could not be trained promptly), our customer service could be negatively impacted, which could have a material impact on our operations and financial results. Also, the Spinco business has recently experienced increased vacancies resulting primarily from employees becoming eligible for, and taking, retirement, and Verizon has been hiring (and, if necessary, training) additional employees for the Spinco business to fill such vacancies. Spinco expects that at the time of the spin-off and the merger, Spinco will have up to 9,400 active employees.

If we are unable to hire or retain key personnel, we may be unable to operate our business successfully.

Our success will depend in part upon the continued services of our management. Neither Spinco nor Frontier can guarantee that their personnel will not leave or compete with the combined company. The loss, incapacity or unavailability for any reason of key members of our management team could have a material impact on our business. In addition, our financial results and our ability to compete will suffer should we become unable to attract, integrate or retain other qualified personnel in the future.

We may complete a future significant strategic transaction that may not achieve intended results or could increase the number of our outstanding shares or amount of outstanding debt or result in a change of control.

We will evaluate and may in the future enter into additional strategic transactions. Any such transaction could happen at any time following the closing of the merger, could be material to our business and could take any number of forms, including, for example, an acquisition, merger or a sale of all or substantially all of our assets.

Evaluating potential transactions and integrating completed ones may divert the attention of our management from ordinary operating matters. The success of these potential transactions will depend, in part, on our ability to realize the anticipated growth opportunities and cost synergies through the successful integration of the businesses we acquire with our existing business. Even if we are successful in integrating the acquired businesses, neither Spinco nor Frontier can assure you that these integrations will result in the realization of the full benefit of any anticipated growth opportunities or cost synergies or that these benefits will be realized within the expected time frames. In addition, acquired businesses may have unanticipated liabilities or contingencies.

If we complete an acquisition, investment or other strategic transaction, we may require additional financing that could result in an increase in the number of our outstanding shares or the aggregate amount of our debt, although there are restrictions on our ability to issue additional shares of stock

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for these purposes for two years after the merger. See “—Risks related to the spin-off and the merger—We will be unable to take certain actions after the merger because such actions could jeopardize the tax-free status of the spin-off or the merger, and such restrictions could be significant.” The number of shares of our common stock or the aggregate principal amount of our debt that we may issue may be significant. A strategic transaction may result in a change in control of our company or otherwise materially and adversely affect our business.

Risks related to liquidity, financial resources and capitalization

If the lingering impact of the severe contraction in the global financial markets and current economic conditions continue through 2010, this economic scenario may have an impact on our business and financial condition.

The diminished availability of credit and liquidity due to the lingering impact of the severe contraction in the global financial markets and current economic conditions may continue through 2010. This economic scenario may affect the financial health of our customers, vendors and partners, which in turn may negatively affect our revenues, operating expenses and cash flows. In addition, in connection with the transactions, Frontier has entered into a new $750 million revolving credit facility to replace its existing $250 million revolving credit facility upon and subject to the closing of the merger and termination of the existing revolving credit facility. See “Description of other indebtedness—Description of Frontier indebtedness—Frontier credit facilities.” Although Frontier believes, based on currently available information, that the financial institutions with commitments under that new revolving credit facility will be able to fulfill their commitments to us after the spin-off and merger, future adverse economic conditions could prevent them from doing so.

Volatility in asset values related to Frontier’s pension plan and our assumption of Spinco’s pension plan obligations may require us to make cash contributions to fund pension plan liabilities.

As a result of the ongoing payment of benefits and negative investment returns arising from a contraction in the global financial markets, Frontier’s pension plan assets have declined from $822.2 million at December 31, 2007, to $608.6 million at December 31, 2009, a decrease of $213.6 million, or 26%. This decrease consisted of a decline in asset value of $72.8 million, or 9%, and benefits paid of $140.8 million, or 17%. As a result of the continued accrual of pension benefits under the applicable pension plan and the cumulative negative investment returns arising from the contraction of the global financial markets since 2007, Frontier’s pension expenses increased in 2009. While the pension asset values have increased in 2009, Frontier expects to make a cash contribution to its pension plan of $10.0 million in 2010. We will maintain Frontier’s pension plan and will be responsible for contributions to fund the plan’s liabilities, and may be required to continue making these cash contributions in respect of liabilities under Frontier’s pension plan. We will also maintain pension plans that assume the Spinco business’s pension plan liabilities for active employees. The applicable Verizon tax-qualified pension plans will transfer assets to the Spinco pension plans pursuant to applicable law and the terms of the employee matters agreement entered into among Verizon, Spinco and Frontier. The aggregate transfer related to the tax-qualified pension plans for active Spinco union employees will be sufficient for full funding of projected benefit obligations in the aggregate. Following the merger, we will be responsible for making any required contributions to the new pension plans to fund liabilities of the plans, and the ongoing pension expenses of the Spinco business may require us to make cash contributions in respect of the Spinco business’s pension plan liabilities.

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Substantial debt and debt service obligations may adversely affect us.

Frontier has a significant amount of indebtedness, which amounted to approximately $4.8 billion at December 31, 2009. Upon the completion of the merger, we will have additional indebtedness in the amount of approximately $3.4 billion. Frontier may also obtain additional long-term debt and working capital lines of credit to meet future financing needs, subject to certain restrictions under the terms of its existing indebtedness, which would increase its total debt. Despite the substantial additional indebtedness that we will have, we will not be prohibited from incurring even more indebtedness. If we were to incur additional indebtedness, the risks that result from our substantial indebtedness could be magnified.

The potential significant negative consequences on our financial condition and results of operations that could result from our substantial debt include:

• limitations on our ability to obtain additional debt or equity financing, particularly in light of the current credit environment;

• instances in which we are unable to meet the financial covenants contained in our debt agreements or to generate cash sufficient to make required debt payments, which would have the potential of accelerating the maturity of some or all of our outstanding indebtedness;

• the allocation of a substantial portion of our cash flow from operations to service our debt, thus reducing the amount of our cash flow available for other purposes, including operating costs, capital expenditures and dividends that could improve our competitive position, results of operations or stock price;

• requiring us to sell debt or equity securities or to sell some of our core assets, possibly on unfavorable terms, to meet payment obligations;

• compromising our flexibility to plan for, or react to, competitive challenges in our business and the communications industry; and

• the possibility of our being put at a competitive disadvantage with competitors who do not have as much debt as us, and competitors who may be in a more favorable position to access additional capital resources.

We will require substantial capital to upgrade and enhance our operations.

Verizon’s historical capital expenditures in connection with the Spinco business, excluding expenditures relating to Verizon’s fiber-to-the-home network (“FiOS”), have been significantly lower than Frontier’s level of capital expenditures, when compared on a similar basis. Replacing or upgrading our infrastructure will require significant capital expenditures, including any expected or unexpected expenditures necessary to make replacements or upgrades to the existing infrastructure of the Spinco business. If this capital is not available when needed or required as a result of the regulatory approval process in connection with the transactions, our business will be adversely affected. Responding to increases in competition, offering new services, and improving the capabilities of, or reducing the maintenance costs associated with, our plant may cause our capital expenditures to increase in the future. In addition, our anticipated annual dividend of $0.75 per share will utilize a significant portion of our cash

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generated by operations and therefore could limit our ability to increase capital expenditures significantly. While Frontier believes that our anticipated cash flows will be adequate to maintain this dividend policy while allowing for appropriate capital spending and other purposes, any material reduction in cash generated by operations and any increases in planned capital expenditures, interest expense or cash taxes would reduce the amount of cash available for further capital expenditures and payment of dividends. Accelerated losses of access lines, the effects of increased competition, lower subsidy and access revenues and the other factors described above may reduce our cash generated by operations and may require us to increase capital expenditures.

Risks related to regulation

Changes in federal or state regulations may reduce the access charge revenues we will receive.

A significant portion of Frontier’s revenues (approximately $246.3 million, or 12%, in 2009) and a significant portion of Verizon’s Separate Telephone Operations’ revenues (approximately $190 million, or 5%, in 2009) are derived from access charges paid by other carriers for services Frontier and the Spinco business provide in originating and terminating intrastate and interstate long distance traffic. As a result, Frontier expects a significant portion of the combined company’s revenue will continue to be derived from access charges paid by these carriers for services that we will provide in originating and terminating this traffic. The amount of access charge revenues that we will receive for these services is regulated by the Federal Communications Commission (the “FCC”) and state regulatory agencies.

The FCC is considering proposals that may significantly change interstate, intrastate and local intercarrier compensation. On March 16, 2010, an FCC staff team issued a National Broadband Plan (the “National Broadband Plan”) that recommends reducing intrastate terminating switched access rates to interstate terminating switched access levels over a two to four year period beginning in 2012. The National Broadband Plan further recommends eliminating all per-minute intercarrier compensation charges by 2020. This plan must still be considered by the full FCC, which may adopt, reject or modify these proposals. The FCC also has an ongoing proceeding considering whether to make changes to its regulatory regime governing special access services, including whether to mandate lower rates, change standards for deregulation and pricing flexibility, or to require changes to other terms and conditions. When and how these proposed changes will be addressed are unknown and, accordingly, neither Frontier nor Spinco can predict the impact of future changes on our results of operations. However, future reductions in our access revenues will directly affect our profitability and cash flows as those regulatory revenues do not have substantial associated variable expenses.

Certain states also have open proceedings to address reform to access charges and other intercarrier compensation. Neither Frontier nor Spinco can predict when or how these matters will be decided or the effect on our subsidy or access revenues. In addition, Frontier has been approached by, and is currently involved in formal state proceedings with, various carriers seeking reductions in intrastate access rates in certain states. Certain of those claims have led to formal complaints to the applicable state regulatory agencies. A material reduction in the access revenues we will receive would adversely affect our financial results.

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We will be reliant on support funds provided under federal and state laws.

A portion of Frontier’s revenues (approximately $113.3 million in the aggregate, or 5%, in 2009) and a portion of Verizon’s Separate Telephone Operations’ revenues (approximately $220 million in the aggregate, or 5%, in 2009) are derived from federal and state subsidies for rural and high cost support, commonly referred to as universal service fund subsidies, including the Federal High Cost Loop Fund, federal interstate access support, federal interstate common line support, federal local switching support fund, various state funds and surcharges billed to customers. The FCC and state regulatory agencies are currently considering a number of proposals for changing the manner in which eligibility for federal and state subsidies is determined as well as the amounts of such subsidies. The FCC issued an order on May 1, 2008, to cap the amounts that competitive eligible telecommunications carriers (“CETCs”) may receive from the high cost Federal Universal Service Fund (the “USF”). In 2009, a Federal court upheld the FCC’s order and the cap remains in place pending any future reform. In November 2008, the FCC issued a Further Notice of Proposed Rulemaking seeking comment on several different alternatives, some of which could significantly reduce the amount of federal high cost universal service support that we would receive. Neither Frontier nor Spinco can predict if or when the FCC will take additional actions or the effect of any such actions on our subsidy revenues. The National Broadband Plan, released on March 16, 2010, recommends transitioning all of the existing federal high cost subsidy programs, including the Federal High Cost Loop Fund, federal interstate access support, federal interstate common line support and the federal local switching support fund (not including surcharges billed to customers), into a new fund focusing on broadband infrastructure buildout in unserved areas. The National Broadband Plan further recommends that there would be only one subsidized provider of broadband per geographic area, and that eligibility criteria would be company and technology agnostic, so long as the service provided meets the specifications set by the FCC. There is no assurance that a carrier that receives support under the existing federal high cost subsidy programs would receive support under the new broadband fund. In addition, the National Broadband Plan proposes that the total federal universal service fund, including high cost support, low income support and support to schools and libraries, remain close to its current size in 2010 dollars.

Federal subsidies representing interstate access support, rural high cost loop support and local switching support represented approximately $69.1 million, or 3%, of Frontier’s revenues in 2009 and approximately $113 million, or 3%, of Verizon’s Separate Telephone Operations’ revenues in 2009. Frontier currently expects that as a result of both an increase in the national average cost per loop and a decrease in Frontier’s and the Spinco business’s cost structure, there will be a decrease in the subsidy revenues Frontier and the Spinco business will earn in 2010 through the Federal High Cost Loop Fund. The amount of federal interstate access support funds received may also decline as that fund is also subject to a national cap and the amounts allocated among carriers within that cap can vary from year to year. State subsidies represented approximately $8.7 million, or less than 1%, of Frontier’s revenues in 2009 and approximately $20 million, or less than 1%, of Verizon’s Separate Telephone Operations’ revenues in 2009. Approximately $35.5 million, or 2%, of Frontier’s 2009 revenues, and approximately $87 million, or 2%, of Verizon’s Separate Telephone Operations’ 2009 revenues, represent a surcharge to customers (local, long distance and interconnection) to recover universal service fund contribution fees which are remitted to the FCC and recorded as an expense in “other operating expenses.”

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We and our industry will likely remain highly regulated, and we could incur substantial compliance costs that could constrain our ability to compete in our target markets.

As an ILEC, some of the services we offer are subject to significant regulation from federal, state and local authorities. This regulation could impact our ability to change our rates, especially on our basic voice services and our access rates, and could impose substantial compliance costs on us. Regulation could constrain our ability to compete and, in some jurisdictions, may restrict how we are able to expand our service offerings. In addition, changes to the regulations that govern our business (including any implementation of the National Broadband Plan) may have an adverse effect on our business by reducing the allowable fees that we may charge, imposing additional compliance costs, reducing the amount of our subsidies or otherwise changing the nature of our operations and the competition in our industry.

Pending FCC rulemakings and state regulatory proceedings, including those relating to intercarrier compensation, universal service and broadband services, could have a substantial adverse impact on our operations.

Risks related to technology

In the future, as competition intensifies within our markets, we may be unable to meet the technological needs or expectations of our customers, and may lose customers as a result.

The communications industry is subject to significant changes in technology. If we do not replace or upgrade technology and equipment, we may be unable to compete effectively because we will not be able to meet the needs or expectations of our customers. Replacing or upgrading the combined infrastructure could result in significant capital expenditures.

In addition, rapidly changing technology in the communications industry may influence our customers to consider other service providers. For example, we may be unable to retain customers who decide to replace their wireline telephone service with wireless telephone service. In addition, VOIP technology, which operates on broadband technology, now provides our competitors with a competitive alternative to provide voice services to our customers, and wireless broadband technologies may permit our competitors to offer broadband data services to our customers throughout most or all of our service areas.

Risks related to the spin-off and the merger

The spin-off and the merger are subject to certain conditions, including additional financing and the receipt of regulatory consents, and therefore the spin-off and the merger may not be consummated on the terms or timeline currently contemplated.

The consummation of the spin-off and the merger is subject to certain conditions, including (1) the availability of financing on terms that satisfy certain requirements (including with respect to pricing and maturity) and the receipt of net proceeds thereof that, taken together with the aggregate amount of the distribution date indebtedness, equals $3.333 billion, (2) the absence of conditions imposed in connection with obtaining governmental consents that would constitute a materially adverse regulatory condition, (3) the absence of any order by a court or governmental authority enjoining or prohibiting any of the transactions, (4) the absence of any action taken by any governmental authority in connection with the transactions that would reasonably be expected to have a material adverse effect on Verizon (assuming Verizon were comparable in

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size to the combined company) or the combined company, (5) the receipt of applicable regulatory consents, (6) the receipt of certain tax opinions, (7) the absence of a material adverse effect on Frontier, on Spinco or on the Spinco business, (8) receipt by Verizon and Frontier of a solvency opinion of a nationally recognized independent valuation firm and (9) other customary closing conditions. In addition, in connection with their process for approving the transactions, regulatory staffs in Ohio, Oregon and Washington are monitoring Verizon’s progress in segregating the operational support systems of the Spinco business (other than the portion conducted in West Virginia) from Verizon’s other businesses, and the parties are also awaiting approval of the transactions in West Virginia. Also, with respect to many of the Oregon local franchising authorities, the relevant orders state that the approval of the proposed transfer of control shall not take effect until such time as Frontier obtains a substantial portion of Verizon’s existing content rights from third-party content providers. A certification on the securing of such rights is due on March 31, 2010. Frontier has not yet obtained the required portion of the content rights and, if it does not do so by March 31, 2010, Frontier and Verizon could be required to re-submit their applications for approval by those local franchising authorities, in which case such authorities may decide not to grant their approvals, or it may take up to 120 days after required submissions before the approvals would become effective again, unless such authorities grant their approvals earlier. There can be no assurance that the remaining required regulatory approvals will be issued without the imposition of conditions that could adversely affect the combined company, or at all. In addition, the parties to the merger agreement have the right to terminate the merger agreement under certain circumstances. See “Summary – The transactions—The merger.” Neither Frontier nor Spinco can assure you that the spin-off and the merger will be consummated on the terms or timeline currently contemplated.

In order to satisfy the conditions to the consummation of the spin-off and the merger, Spinco will be required to raise a substantial amount of debt in addition to the notes as part of the special cash payment financing. See “Use of proceeds.” Pursuant to the merger agreement, the terms of the special cash payment financing are subject to certain requirements (including with respect to pricing and maturity). The terms of such additional financing may be less favorable to Frontier, as compared to the terms of the notes offered hereby, or as compared to the terms that have been assumed for purposes of calculating the pro forma financial information presented in this offering memorandum. Such additional financing may also be guaranteed by our subsidiaries or be secured, in which case the notes would be effectively subordinated to such additional financing. Spinco’s inability to obtain such additional financing on favorable terms, or at all, may prevent the completion of the merger. Such financing may also require the combined company to incur additional interest expense, which may make it more difficult to service the debt obligations of the combined company, including under the notes.

Frontier has and will continue to expend a significant amount of capital and management’s time and resources on the spin-off and the merger, and a failure to consummate the transactions as currently contemplated could have a material adverse effect on its business and results of operations. Moreover, any portion of the special cash payment financing that is raised prior to the closing of the spin-off and the merger (including the notes offered hereby) would obligate Frontier to incur interest expenses on such financing prior to the completion of the merger without yet having achieved any of the expected benefits from the merger, and the amount of such interest expense may be significant if the closing of the merger is delayed for a significant period of time.

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For risks associated with the failure of the merger to be completed, see “—Risks related to the notes and this offering—In the event that the merger is not completed and the notes are subject to the special mandatory redemption, you will not realize the return on the notes that may otherwise have been obtained had the merger been completed.”

Regulatory agencies may delay approval of the spin-off and the merger, fail to approve them, or approve them in a manner that may diminish the anticipated benefits of the merger.

Completion of the spin-off and the merger is conditioned upon the receipt of certain government consents, approvals, orders and authorizations. While Frontier and Verizon have obtained certain governmental approvals, intend to pursue vigorously all remaining required governmental approvals and expect to obtain the necessary approvals by the end of the second quarter of 2010, the requirement to receive these approvals before the spin-off and merger could significantly delay the completion of the spin-off and merger. See “Business—Regulatory environment” for more information on the regulatory approvals for the transactions. Any delay in the completion of the spin-off and the merger could diminish the anticipated benefits of the spin-off and the merger or result in additional transaction costs, loss of revenues or other effects associated with uncertainty about the transactions. Any uncertainty over the ability of the companies to complete the spin-off and the merger could make it more difficult for Frontier to maintain or to pursue particular business strategies. In addition, until the spin-off and the merger are completed, the attention of Frontier management may be diverted from ongoing business concerns and regular business responsibilities to the extent management is focused on obtaining regulatory approvals.

Further, governmental agencies may decline to grant required approvals (or grant their approvals subject to certain pre-merger requirements that, if not met, may result in the withdrawal of such approvals). If any governmental agency declines to grant or withdraws any required approval that is a condition under the merger agreement to the spin-off and the merger, then the spin-off and the merger may not be consummated and Spinco may be required to redeem the notes offered hereby. In addition, conditions imposed by governmental agencies in connection with their approval of the spin-off and the merger (such as capital expenditure and operating requirements, including expansion of broadband availability, minimum capital investment commitments, price caps on certain residential and business products, product bundle offering requirements and cash management restrictions in the event certain minimum service quality standards have not been met over a defined period of time) may restrict our ability to modify the operations of our business in response to changing circumstances for a period of time after the closing of the merger or our ability to expend cash for other uses. In particular, regulators may require us to pre-fund commitments (such as by placing cash into escrow accounts) that may be made in connection with their approval of the spin-off and the merger, and we may need, or elect, to raise capital in order to finance or pre-fund these commitments.

Our efforts to combine Frontier’s business and the Spinco business may not be successful.

The acquisition of the Spinco business is the largest and most significant acquisition Frontier has undertaken. Our management will be required to devote a significant amount of time and attention to the process of integrating the operations of Frontier’s business and the Spinco business, which may decrease the time it will have to serve existing customers, attract new customers and develop new services or strategies. Frontier expects that the Spinco business will operate on an independent basis, separate from Verizon’s other businesses and operations, immediately prior to the closing of the merger (other than with respect to the portion operated

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in West Virginia, which is expected to be ready for integration into Frontier’s existing business at the closing of the merger) and will not require significant post-closing integration for us to continue the operations of the Spinco business immediately after the merger. However, the size and complexity of the Spinco business and the process of using Frontier’s existing common support functions and systems to manage the Spinco business after the merger, if not managed successfully by our management, may result in interruptions in our business activities, a decrease in the quality of our services, a deterioration in our employee and customer relationships, increased costs of integration and harm to our reputation, all of which could have a material adverse effect on our business, financial condition and results of operations. In addition, Frontier management will be required to devote a significant amount of time and attention before completion of the merger to the process of migrating the systems and processes supporting the operations of the Spinco business in West Virginia from systems owned and operated by Verizon to those owned and operated by Frontier. The size, complexity and timing of this migration, if not managed successfully by Frontier management, may result in interruptions of our business activities.

We may not realize the growth opportunities and cost synergies that are anticipated from the merger.

The benefits that Frontier expects to achieve as a result of the merger will depend, in part, on our ability to realize anticipated growth opportunities and cost synergies. Our success in realizing these growth opportunities and cost synergies, and the timing of this realization, depends on the successful integration of Frontier’s business and operations and the Spinco business and operations. Even if we are able to integrate the Frontier and Spinco businesses and operations successfully, this integration may not result in the realization of the full benefits of the growth opportunities and cost synergies Frontier currently expects from this integration within the anticipated time frame or at all. For example, we may be unable to eliminate duplicative costs. Moreover, we may incur substantial expenses in connection with the integration of Frontier’s business and the Spinco business. While Frontier anticipates that certain expenses will be incurred, such expenses are difficult to estimate accurately, and may exceed current estimates. For example, our estimate of expected 2010 capital expenditures related to integration activities has recently increased from $75 million to $180 million, attributable in large part to costs to be incurred in connection with third party software licenses necessary to operate the Spinco business after the closing of the merger. Accordingly, the benefits from the merger may be offset by costs incurred or delays in integrating the companies.

If the assets contributed to Spinco by Verizon are insufficient to operate the Spinco business, it could adversely affect our business, financial condition and results of operations.

Pursuant to the distribution agreement, Verizon will contribute to Spinco defined assets and liabilities of its local exchange business and related landline activities in the Spinco territory, including Internet access and long distance services and broadband video provided to designated customers in the Spinco territory. The merger agreement provides that Verizon will segregate the Spinco business (other than the portion conducted in West Virginia) from Verizon’s other businesses, so that the Spinco business operates independently from Verizon’s other businesses, at least 60 days prior to the closing of the spin-off and merger. However, the contributed assets may not be sufficient to operate all aspects of the Spinco business, and we may need to use assets or resources from Frontier’s existing business or acquire additional assets in order to operate the Spinco business, which could adversely affect our business, financial condition and results of operations.

12

Pursuant to the distribution agreement, we have certain rights to cause Verizon to transfer to us any assets required to be contributed to Spinco under that agreement that were not contributed as required. If Verizon were to be unable or unwilling to transfer those assets to us, or if we and Verizon were to disagree about whether those assets were required to be contributed to Spinco under the distribution agreement, we might not be able to obtain those assets or similar assets from others without significant costs or at all.

Our business, financial condition and results of operations may be adversely affected following the merger if we are not able to obtain consents to assign certain Verizon contracts to Spinco.

Certain wholesale, large business, Internet service provider and other customer contracts that are required to be assigned to Spinco by Verizon require the consent of the customer party to the contract to effect this assignment. We and Verizon may be unable to obtain these consents on terms favorable to us or at all, which could have a material adverse impact on our business, financial condition and results of operations following the merger.

If the spin-off does not qualify as a tax-free spin-off under Section 355 of the Internal Revenue Code (the “Code”), including as a result of subsequent acquisitions of stock of Verizon or Frontier, then Verizon or Verizon stockholders may be required to pay substantial U.S. federal income taxes, and Frontier may be obligated to indemnify Verizon for such taxes imposed on Verizon or Verizon stockholders as a result thereof.

The spin-off and merger are conditioned upon Verizon’s receipt of a private letter ruling from the Internal Revenue Service (the “IRS”) to the effect that the spin-off and certain related transactions will qualify as tax-free to Verizon, Spinco and the Verizon stockholders for U.S. federal income tax purposes (the “IRS ruling”). A private letter ruling from the IRS generally is binding on the IRS. The favorable IRS ruling has been received by Verizon. The IRS ruling does not rule that the spin-off satisfies every requirement for a tax-free spin-off, and the parties will rely solely on the opinion of counsel described below for comfort that such additional requirements are satisfied.

The spin-off and merger are also conditioned upon Verizon’s receipt of an opinion of Debevoise & Plimpton LLP (“Debevoise”), counsel to Verizon, to the effect that the spin-off and certain related transactions will qualify as tax-free to Verizon, Spinco and the stockholders of Verizon. The opinion will rely on the IRS ruling as to matters covered by it.

The IRS ruling is, and the opinion of counsel will be, based on, among other things, certain representations and assumptions as to factual matters made by Verizon, Spinco and Frontier. The failure of any factual representation or assumption to be true, correct and complete in all material respects could adversely affect the validity of the IRS ruling or the opinion of counsel. An opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the IRS ruling is based on current law, and cannot be relied upon if current law changes with retroactive effect.

The spin-off will be taxable to Verizon pursuant to Section 355(e) of the Code if there is a 50% or more change in ownership of either Verizon or Spinco, directly or indirectly, as part of a plan or series of related transactions that include the spin-off. Because Verizon stockholders will collectively own more than 50% of the Frontier common stock following the merger, the merger alone will not cause the spin-off to be taxable to Verizon under Section 355(e). However, Section 355(e) might apply if other acquisitions of stock of Verizon before or after the merger, or

13

of Frontier after the merger, are considered to be part of a plan or series of related transactions that include the spin-off. If Section 355(e) applied, Verizon might recognize a very substantial amount of taxable gain.

Under a tax sharing agreement, in certain circumstances, and subject to certain limitations, Frontier is required to indemnify Verizon against taxes on the spin-off that arise as a result of actions or failures to act by Frontier, or as a result of changes in ownership of the stock of Frontier after the merger. See “—We will be unable to take certain actions after the merger because such actions could jeopardize the tax-free status of the spin-off or the merger, and such restrictions could be significant.” In some cases, however, Verizon might recognize gain on the spin-off without being entitled to an indemnification payment under the tax sharing agreement.

If the merger does not qualify as a tax-free reorganization under Section 368 of the Code, we may be required to pay substantial U.S. federal income taxes.

The obligations of Verizon and Frontier to complete the merger are conditioned, respectively, on Verizon’s receipt of an opinion of Debevoise and Frontier’s receipt of an opinion of Cravath, Swaine & Moore LLP, counsel to Frontier, in each case to the effect that the merger will qualify as a tax-free reorganization under Section 368(a) of the Code, and that no gain or loss will be recognized as a result of the merger by Spinco or by Spinco stockholders (except for cash in lieu of fractional shares). These opinions will be based upon, among other things, certain representations and assumptions as to factual matters made by Verizon, Spinco and Frontier. The failure of any factual representation or assumption to be true, correct and complete in all material respects could adversely affect the validity of the opinions. An opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the opinions will be based on current law, and cannot be relied upon if current law changes with retroactive effect. If the merger was taxable, Spinco stockholders would recognize taxable gain or loss on their receipt of Frontier stock in the merger, and Spinco would be considered to have made a taxable sale of its assets to Frontier. If we are required to make a payment to Verizon under the tax sharing agreement, it may make it more difficult to service the debt obligations of the combined company, including under the notes.

We will be unable to take certain actions after the merger because such actions could jeopardize the tax-free status of the spin-off or the merger, and such restrictions could be significant.

The tax sharing agreement prohibits us from taking actions that could reasonably be expected to cause the spin-off to be taxable or to jeopardize the conclusions of the IRS ruling or opinions of counsel received by Verizon or Frontier. In particular, for two years after the spin-off, we may not:

• enter into any agreement, understanding or arrangement or engage in any substantial negotiations with respect to any transaction involving the acquisition, issuance, repurchase or change of ownership of our capital stock, or options or other rights in respect of our capital stock, subject to certain exceptions relating to employee compensation arrangements, stock splits, open market stock repurchases and stockholder rights plans;

• permit certain wholly owned subsidiaries owned by Spinco at the time of the spin-off to cease the active conduct of the Spinco business to the extent it was conducted immediately prior to the spin-off; or

14

• voluntarily dissolve, liquidate, merge or consolidate with any other person, unless we survive and the transaction otherwise complies with the restrictions in the tax sharing agreement.

Nevertheless, we are permitted to take any of the actions described above if we obtain Verizon’s consent, or if we obtain a supplemental IRS private letter ruling (or an opinion of counsel that is reasonably acceptable to Verizon) to the effect that the action will not affect the tax-free status of the spin-off or the merger. However, the receipt of any such consent, opinion or ruling does not relieve us of any obligation we have to indemnify Verizon for an action we take that causes the spin-off to be taxable to Verizon.

Because of these restrictions, for two years after the merger, we may be limited in the amount of capital stock that we can issue to make acquisitions or to raise additional capital. Also, our indemnity obligation to Verizon may discourage, delay or prevent a third party from acquiring control of us during this two-year period in a transaction that holders of our securities might consider favorable.

Frontier does not currently control the Spinco business and will not control it until completion of the merger.

The Spinco business is currently controlled by Verizon, and Frontier will not obtain control until completion of the merger. Verizon’s interests in operating the Spinco business may be different from those of Frontier or the holders of notes, and Verizon may not operate the business during the period prior to the completion for the merger in the same way that Frontier would have if the merger had occurred prior to or concurrently with this offering.

The pendency of the merger could potentially adversely affect the business and operations of Frontier and the Spinco business.

In connection with the pending merger, some customers of each of Frontier and the Spinco business may delay or defer decisions or may end their relationships with the relevant company, which could negatively affect the revenues, earnings and cash flows of Frontier and the Spinco business, regardless of whether the merger is completed. Similarly, it is possible that current and prospective employees of Frontier and the Spinco business could experience uncertainty about their future roles with us following the merger, which could materially adversely affect the ability of each of Frontier and the Spinco business to attract and retain key personnel during the pendency of the merger.

Risks related to the notes and this offering

Frontier Communications Corporation is, and following the merger will remain, a holding company and, as a result, will rely on the receipt of funds from the combined company’s subsidiaries in order to meet its cash needs and service its indebtedness, including the notes. After the closing of the merger, the notes will be effectively subordinated to liabilities of the combined company’s subsidiaries.

After the completion of the merger, Frontier Communications Corporation, as the obligor under the notes, will remain a holding company and its principal assets will consist of the shares of capital stock or other equity instruments of the combined company’s subsidiaries. As a holding company without independent means of generating operating revenues, Frontier Communications Corporation will depend on dividends, distributions and other payments from the combined company’s subsidiaries to fund its obligations, including those arising under the

15

notes, and meet its cash needs. Neither Frontier nor Spinco can assure you that the operating results of the combined company’s subsidiaries at any given time will be sufficient to make dividends, distributions or other payments to Frontier Communications Corporation in order to allow it to make payments on the notes. In addition, the payment of these dividends, distributions and other payments, as well as other transfers of assets between the combined company’s subsidiaries and from such subsidiaries to Frontier Communications Corporation, may be subject to legal, regulatory or contractual restrictions. Some state regulators have imposed and others are considering imposing on regulated companies, such as us, cash management practices that could limit the ability of such regulated companies to transfer cash between subsidiaries or to the parent company. While no state regulations materially affect Frontier’s cash management, any changes to the existing regulations or imposition of new regulations or restrictions may materially adversely affect the combined company’s ability to transfer cash within its consolidated companies.

You will not have any claim as a creditor against the combined company’s subsidiaries. As a holding company, Frontier Communications Corporation’s right to receive any assets of the combined company’s subsidiaries upon their bankruptcy, liquidation, dissolution, reorganization or similar proceeding, and therefore your right to participate in those assets, will be effectively subordinated to the claims of the creditors of those subsidiaries, including trade creditors. As of December 31, 2009, on a pro forma basis (and after giving effect to the repayment on February 15, 2010, of $200.0 million of indebtedness that otherwise would have constituted distribution date indebtedness), such subsidiary obligations would have totaled approximately $1,744.0 million, including approximately $481.6 million of indebtedness (including secured indebtedness of $20.6 million) and excluding deferred income tax liabilities and intercompany liabilities. The foregoing amounts of subsidiary and secured indebtedness do not give effect to any future special cash payment financings that may be guaranteed by our subsidiaries or be secured. Although the indenture governing the notes will limit the indebtedness that the combined company’s subsidiaries may incur, such subsidiaries will be able to incur a substantial amount of additional debt, including without limitation Acquired Indebtedness (as defined in the indenture). See “Description of notes—Covenants—Limitations on subsidiary indebtedness.” Moreover, the indenture governing the notes will provide that this covenant will no longer be applicable from and after the first date on which the notes are rated “investment grade.” Termination of this covenant would allow the combined company to engage in certain transactions that would not be permitted while this covenant was in effect even if the notes are subsequently downgraded below investment grade. See “Description of notes—Termination of certain covenants.”

There will be no cross-default or cross-acceleration provisions in the indenture governing the notes, which could affect our ability to satisfy our obligations under the notes.

Because the indenture governing the notes will not contain a cross-default or cross-acceleration provision, holders of the notes will not have the right to accelerate indebtedness represented by the notes should we default on our obligations arising under any of our other indebtedness. In addition, holders of the notes will not have the right to accelerate indebtedness represented by the notes in the event of a bankruptcy or similar event affecting any of our subsidiaries. If such events occur, other of our obligations may have to be satisfied first, and the holders of the notes will have no rights to participate in any distributions or payments. Consequently, we might not have sufficient funds or resources following such events to satisfy our obligations, including the obligations under the notes.

16

The notes are unsecured and will effectively be subordinated to any secured indebtedness.

The notes are unsecured and therefore will be effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness. In the event of a bankruptcy or similar proceeding, the assets that serve as collateral for any secured indebtedness will be available to satisfy the obligations under the secured indebtedness before such assets may be used to satisfy our obligations under the notes. As of December 31, 2009, on a pro forma basis, we would have had approximately $20.6 million of secured indebtedness. The indenture governing the notes will permit us, subject to specified limitations, to incur a substantial amount of additional secured debt, including without limitation Acquired Indebtedness (as defined in the indenture). In particular, future special cash payment financings may be secured.

In the event that the merger is not completed and the notes are subject to the special mandatory redemption, you will not realize the return on the notes that may otherwise have been obtained had the merger been completed.

Concurrently with the closing of this offering, the proceeds of this offering, plus an amount in cash contributed by Frontier that equals the amount of interest that will accrue on the notes from the issue date to October 1, 2010, will be deposited in an escrow account. In the event that the merger agreement governing the merger is terminated or the spin-off and the merger are not completed on or before October 1, 2010, the notes of each series will be redeemed at a special mandatory redemption price equal to 100% of the issue price of that series of notes, plus accrued and unpaid interest on the principal amount of such series of notes to, but not including, the date of redemption, which date of redemption will in no event be later than October 1, 2010 (or the next business day if additional time is required for redemption). See “Description of notes—Special mandatory redemption; Escrow of proceeds.” The merger is subject to a number of conditions that have not yet been satisfied and may not be able to be satisfied, including, as described above, certain regulatory approvals, the receipt of a solvency opinion and the requirement to raise a substantial amount of additional debt financing. In addition, the parties to the merger agreement have the right to terminate the merger agreement under certain circumstances. In the event that the merger is not completed and the notes are redeemed, you may not obtain the return you expect to receive on the notes over your anticipated period of investment.

Until the closing of the transactions, Spinco will have limited assets.

Holders of the notes will not have any recourse to Verizon Communications Inc. or any of its subsidiaries, other than Spinco. Until the completion of the merger, the notes will be the obligation solely of Spinco. Spinco will have no or limited assets until shortly prior to the merger (except for its interest in the escrow account) and, as a result, the sole recourse of the holders prior to the merger will be to the funds deposited in the escrow account.

Between the time of the issuance of the notes and the consummation of the spin-off and the merger, the parties to the merger agreement, the distribution agreement or other spin-off and merger related transaction documents may agree to modify or waive the terms or conditions of such documents without noteholder consent.

Prior to the consummation of the spin-off and the merger, the parties to the merger agreement, the distribution agreement or related transaction documents may agree to amendments or waivers of the terms thereof. Although the escrow agreement provides as a condition to the

17

release of the escrowed funds that Spinco and Frontier certify that the spin-off and the merger are to be consummated substantially as described in the final offering memorandum, that requirement will not preclude the transaction parties from making certain changes to the terms of the transactions or from waiving certain conditions to the transactions. In addition, the certification will be provided by Spinco and Frontier and will not be made in consultation with the trustee, the escrow agent, the initial purchasers or holders of the notes.

The agreements governing our debt, including the notes and our credit facilities, will contain various covenants that impose restrictions on us that may affect our ability to operate our business and to make payments on the notes.

The indenture governing the notes will contain covenants that, among other things, limit our ability and the ability of our subsidiaries to:

• incur indebtedness at our subsidiaries;

• create liens securing indebtedness; and

• merge or consolidate with other companies.

In addition, our credit facilities require us to comply with specified covenants, including financial ratios. Any future indebtedness may also require us to comply with similar covenants. These restrictions on our ability to operate our business could seriously harm our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities.

Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants. Failure to comply with any of the covenants in Spinco, Frontier or our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity for the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations, including our obligations under the notes. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing.

If an active trading market does not develop for the notes, you may be unable to sell the notes or to sell them at a price you deem sufficient.

The notes are new issues of securities for which there is currently no public trading market. Neither Spinco nor Frontier intends to list the notes on any national securities exchange or automated quotation system. In addition, the liquidity of any trading market for the notes, and the market price quoted for the notes, may be adversely affected by changes in the overall market for those securities and by changes in our financial performance or prospects or in the prospects of communications companies generally. Neither Spinco nor Frontier can give you any assurance as to:

• the liquidity of any trading market that may develop;

• the ability of holders to sell their notes; or

• the price at which holders would be able to sell their notes.

18

Even if a trading market develops, the notes may trade at higher or lower prices than the principal amount or purchase price depending on many factors, including:

• prevailing interest rates;

• the number of holders of the notes;

• the interest of securities dealers in making a market for such notes;

• the market for similar notes; and

• the financial performance of the combined company, Spinco or Frontier.

In addition, Frontier and Spinco understand that the initial purchasers currently intend to make a market in the notes. However, they are not obligated to do so and may discontinue making a market in the notes at any time without notice. As a result, neither Frontier nor Spinco can assure you that an active trading market will develop for the notes. If no active trading market develops, the price at which you may be able to sell notes, if at all, may be less than the price you pay for them.

Pursuant to the registration rights agreement, following the merger, Frontier will be required to file an exchange offer registration statement with the SEC with respect to an offer to exchange the notes or to cause to become effective a shelf registration statement providing for the resale of the notes. However, we cannot assure you that an active trading market will develop for the exchange notes or that Frontier will be successful in having any such registration statement declared effective by the SEC.

We may not have sufficient funds to repurchase the notes upon a change of control, and certain strategic transactions may not constitute a change of control.

The terms of the notes will require us to make an offer to repurchase the notes upon the occurrence of a change of control following the merger and a ratings decline (as defined herein) at a purchase price equal to 101% of the respective principal amount of the notes plus accrued interest to the date of the purchase. It is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of notes and will be required to obtain third party financing to do so. We may not be able to obtain this financing on commercially reasonable terms, or on terms acceptable to us, or at all. In addition, the occurrence of certain change of control events may constitute an event of default under the terms of our credit facilities. Such an event of default would entitle the lenders under such credit facilities to, among other things, cause all outstanding debt thereunder to become due and payable.

Frontier continuously evaluates strategic transactions and we will continue to do so as the combined company and we may in the future enter into strategic transactions. Any such transaction could happen at any time, could be material to our business and could take any number of forms, including, for example, an acquisition, merger or a sale of all or substantially all of our assets.

Other than the spin-off and the merger, Frontier and Spinco currently have no agreement or understanding regarding, and are not in active negotiations with respect to, any material strategic transaction, although as part of Frontier’s strategy and if and to the extent permitted under the merger agreement and the tax sharing agreement, Frontier expects to continue to evaluate and may enter into material strategic transactions in the future. Further, subject to limitations in the indenture governing the notes and the tax sharing agreement entered into in connection with the spin-off and the merger, we could, in the future, enter into certain transactions, including acquisitions, refinancings, other recapitalizations and material strategic

19

transactions, that would not result in a change of control or a change of control triggering event within the meaning of the indenture and would not otherwise be prohibited by the covenants and provisions of the indenture. Such transactions could significantly increase the amount of our indebtedness outstanding at such time (including secured debt or subsidiary debt that would be effectively senior to the notes) or otherwise affect our capital structure or credit ratings.

The notes may be issued with original issue discount for U.S. federal income tax purposes.

The notes may be issued with original issue discount for U.S. federal income tax purposes. Consequently, in addition to the stated interest on the notes, U.S. Holders (as defined in “Certain United States federal income tax considerations”) may be required to include amounts representing the original issue discount in gross income on a constant yield basis in advance of the receipt of the cash payments to which such income is attributable. See “Certain United States federal income tax considerations.”

20

EX-99.4

Confidential

2009

2009

Pro Forma

Actual

Actual

Statistics

Frontier

SpinCo

Sub-Total

Synergies

Total

Revenue

$2,118

$3,953

$6,071

$0

$6,071

Adjusted EBITDA

(1)

1,149

1,819

2,968

500

3,468

% EBITDA Margin

54.3%

46.0%

48.9%

57.1%

Bridge to Free Cash Flow:

Interest Expense

(378)

(280)

(659)

-

(659)

Cash Taxes

(60)

(243)

(303)

(190)

(493)

Capital Expenditures

(231)

(558)

(789)

-

(789)

Other

11

-

11

-

11

Free Cash Flow

$491

$738

$1,229

$310

$1,539

Net Debt / Adj. EBITDA

3.9x

1.9x

2.6x

2.3x

Adj. EBITDA / Interest Exp.

3.0x

6.5x

4.5x

5.3x

Dividend ($0.75 / share)

(2)

$0

$0

$742

$0

$742

FCF Dividend Payout Ratio

–

–

60%

–

48%

2009 Key Pro Forma Financial Data

Notes

(1) See adjustments in Appendix, Reconciliation of Non-GAAP Financial Measures.

(2) Based on share price at the $7.75 mid-point of the collar.

(3) Assumes $3.4 billion of debt with blended interest rate of 8.25%.

(4) Adjusted to exclude $52 million of non-cash pension and OPEB expense at SpinCo.

(5) Includes assumed $65M of financing for deal costs.

(4)

(3)

(5)

Exhibit 99.4

Confidential

Non-GAAP Information

Use of Non-GAAP Information

This presentation contains non-GAAP financial information. For a reconciliation of these measures to the

most comparable measure prepared in accordance with GAAP, see the Appendix.   Neither Verizon nor

Verizon’s Separate Telephone Operations have historically used Adjusted EBITDA in connection with the

management of Verizon’s Separate Telephone Operations.  All information regarding Adjusted EBITDA in

this presentation has been prepared by Frontier.

Confidential

Reconciliation of Non-GAAP Financial Measures

Verizon's Separate

Pro Forma

Total

($ in millions)

Frontier

Telephone Operations

Adjustments

Pro Forma

EBITDA

Operating Income

606

$        

542

$                

219

$      

1,367

$   

Add back:

Depreciation and amortization

477

781

253

1,511

EBITDA, as reported

1,083

$     

1,323

$             

472

$      

2,878

$   

Add/(subtract):

34

52

-

86

Severance and early retirement costs

4

-

-

4

Acquisition and integration costs

28

-

(28)

-

Adjusted EBITDA

1,149

$     

1,375

$             

444

$      

2,968

$   

For the year ended December 31, 2009

Non-cash pension and other

postretirement costs

EX-99.5

Exhibit 99.5

Frontier Communications

3 High Ridge Park

Stamford, CT 06905

203.614.5600

www.frontier.com

Frontier Communications Corporation Announces Private Offering of Senior

Notes by New Communications Holdings Inc.

Stamford, Conn. – March 24, 2010 – Frontier Communications (NYSE: FTR) announced today that New Communications Holdings Inc. (“Spinco”), a subsidiary of Verizon Communications Inc. (“Verizon”) formed for the purposes of holding defined assets and liabilities of the local exchange business and related landline activities of Verizon in 14 states, intends to offer, subject to market and other conditions, Senior Notes due 2017 (the “2017 Notes”) and Senior Notes due 2020 (together with the 2017 Notes, the “Notes”) in a private placement that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”).

The gross proceeds of the offering will be deposited into an escrow account. Spinco intends to use the net proceeds from the offering to fund a portion of a special cash payment by Spinco to Verizon, in connection with the spin-off of Spinco to Verizon’s shareholders and the subsequent merger of Spinco with and into Frontier.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any of the Notes or any other securities, nor will there be any sale of the Notes or any other securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The Notes will be issued in reliance on the exemption from the registration requirements provided by Rule 144A under the Securities Act and, outside of the United States, only to non-U.S. investors pursuant to Regulation S under the Securities Act. None of the Notes have been registered under the Securities Act or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.

About Frontier Communications

Frontier Communications Corporation (NYSE: FTR) is a full-service communications provider and one of the largest local exchange telephone companies in the country serving rural areas and small and medium-sized towns and cities. Frontier is included in the S&P 500 Index. Frontier Communications offers telephone, television and Internet services, including wireless Internet data access, as well as bundled offerings,

specialized bundles for small businesses and home offices, and data security solutions. Additional information about Frontier products and services is available at www.frontier.com. More information about the transaction with Verizon may be found at www.frontier.com/ir.

Additional Information and Where to Find It

This news release is not a substitute for the definitive prospectus/proxy statement included in the Registration Statement on Form S-4 that Frontier filed, and the Securities and Exchange Commission (the “SEC”) has declared effective, in connection with the proposed transactions described in the definitive prospectus/proxy statement. INVESTORS IN FRONTIER’S COMMON STOCK ARE URGED TO READ THE DEFINITIVE PROSPECTUS/PROXY STATEMENT BECAUSE IT CONTAINS IMPORTANT INFORMATION, INCLUDING DETAILED RISK FACTORS. The definitive prospectus/proxy statement and other documents filed or to be filed by Frontier with the SEC are or will be available free of charge at the SEC’s website, www.sec.gov, or by directing a request when such a filing is made to Frontier, 3 High Ridge Park, Stamford, CT 06905-1390, Attention: Investor Relations.

Frontier’s stockholders approved the proposed transactions on October 27, 2009, and no other vote of the stockholders of Frontier or Verizon is required in connection with the proposed transactions.

Forward-Looking Language

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. These statements are made on the basis of management’s views and assumptions regarding future events and business performance. Words such as “believe,” “anticipate,” “expect,” “intend” and similar expressions are intended to identify forward-looking statements. Forward-looking statements (including oral representations) involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. These risks and uncertainties are based on a number of factors, including but not limited to: Our ability to complete the acquisition of access lines from Verizon; the failure to obtain, delays in obtaining or adverse conditions contained in any required regulatory approvals for the Verizon transaction; for two years after the merger, we may be limited in the amount of capital stock that we can issue to make acquisitions or to raise additional capital; our indemnity obligation to Verizon may discourage, delay or prevent a third party from acquiring control of us during the two year period following the merger in a transaction that our stockholders might consider favorable; the ability to successfully integrate Verizon’s local exchange business and related activities that we expect to acquire into Frontier’s existing operations; the effects of increased expenses due to activities related to the Verizon transaction; the ability to successfully migrate Verizon’s West Virginia operations from Verizon owned and operated systems and processes to Frontier owned and operated systems and processes; the risk that the growth opportunities and cost synergies from the Verizon transaction may not be fully realized or may take longer to realize than expected; the sufficiency of the assets to be acquired from Verizon to enable us to operate the acquired business; disruption from the Verizon transaction making it more difficult to maintain relationships with customers, employees or suppliers; the effects of greater than anticipated competition requiring new pricing, marketing strategies or new product or service offerings and the risk that we will not respond on a timely or profitable basis; reductions in the number of our access lines that cannot be offset by increases in High Speed Internet subscribers and sale of other products; our ability to sell enhanced and data services in order to offset ongoing declines in revenue from local services, switched access services and subsidies; the effects of ongoing changes in the regulation of the communications industry as a result of federal and state legislation and regulation; the

effects of changes in the availability of federal and state universal funding to us and our competitors; the effects of competition from cable, wireless and other wireline carriers (through voice over internet protocol (VOIP) or otherwise); our ability to adjust successfully to changes in the communications industry and to implement strategies for improving growth; adverse changes in the credit markets or in the ratings given to our debt securities by nationally accredited ratings organizations, which could limit or restrict the availability, or increase the cost, of financing; reductions in switched access revenues as a result of regulation, competition and/or technology substitutions; the effects of changes in both general and local economic conditions on the markets we serve, which can affect demand for our products and services, customer purchasing decisions, collectability of revenue and required levels of capital expenditures related to new construction of residences and businesses; our ability to effectively manage service quality; our ability to successfully introduce new product offerings, including our ability to offer bundled service packages on terms that are both profitable to us and attractive to our customers; changes in accounting policies or practices adopted voluntarily or as required by generally accepted accounting principles or regulators; our ability to effectively manage our operations, operating expenses and capital expenditures, and to repay, reduce or refinance our debt; the effects of bankruptcies and home foreclosures, which could result in difficulty in collection of revenues and loss of customers; the effects of technological changes and competition on our capital expenditures and product and service offerings, including the lack of assurance that our ongoing network improvements will be sufficient to meet or exceed the capabilities and quality of competing networks; the effects of increased medical, retiree and pension expenses and related funding requirements; changes in income tax rates, tax laws, regulations or rulings, and/or federal or state tax assessments; the effects of state regulatory cash management policies on our ability to transfer cash among our subsidiaries and to the parent company; our ability to successfully renegotiate union contracts expiring in 2010 and beyond; declines in the value of our pension plan assets, which could require us to make contributions to the pension plan in 2011 and beyond; our ability to pay dividends in respect of our common shares, which may be affected by our cash flow from operations, amount of capital expenditures, debt service requirements, cash paid for income taxes and our liquidity; the effects of any unfavorable outcome with respect to any of our current or future legal, governmental or regulatory proceedings, audits or disputes; the possible impact of adverse changes in political or other external factors over which we have no control; and the effects of hurricanes, ice storms or other natural disasters. These and other uncertainties related to our business are described in greater detail in our filings with the Securities and Exchange Commission, including our reports on Forms 10-K and 10-Q, and the foregoing information should be read in conjunction with these filings. We undertake no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statement, whether as a result of new information, future events or otherwise unless required to do so by securities laws.

INVESTOR CONTACTS:		MEDIA CONTACT:
David Whitehouse	Gregory Lundberg	Brigid Smith
SVP & Treasurer	Director, Investor Relations	AVP Corp. Comm & Recognition
(203) 614-5708	(203) 614-5044	(203) 614-5042
david.whitehouse@frontiercorp.com	greg.lundberg@frontiercorp.com	brigid.smith@frontiercorp.com

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