(Reuters) — Verizon, the No. 1 U.S. wireless service provider, said it would buy Carl Icahn-owned XO Communications’ fiber-optic network business for about $1.8 billion.

Verizon said the deal will include XO’s fiber-based Internet protocol and Ethernet networks that will help serve its enterprise and wholesale customers.

Carl Icahn, the chairman and sole shareholder of XO Holdings, which owns XO Communications, said the deal does not represent a significant annualized return on investment but was the best achievable outcome.

Icahn, who started buying senior debt of XO in 2001, said he helped bring the company out of bankruptcy in 2003 and has since had to inject additional capital several times to keep it operating.

Verizon expects more than $1.5 billion in cost savings after the deal, the company said on Monday.

Most Americans own a mobile phone and a saturated U.S. wireless market has Verizon and its rivals turning to new businesses.

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

Verizon also said it would simultaneously lease available XO wireless spectrum, with an option to buy it by the end of 2018.

Citigroup Global Markets Inc acted as financial adviser to Verizon, while Evercore served as XO’s financial adviser.

Debevoise & Plimpton LLP acted as legal adviser to Verizon, and Thompson Hine LLP was XO’s legal adviser.

(Reporting by Abhirup Roy and Lehar Maan in Bengaluru; Editing by Shounak Dasgupta)

AI. Messaging. Bots. Arm yourself for the next paradigm shift at MobileBeat 2016. July 12-13 at The Village in San Francisco. Reserve your place here.

Verizon is a global broadband and telecommunications company and a component of the Dow Jones Industrial Average. It started in 1983 as Bell Atlantic (based in Philadelphia) with a footprint... All Verizon news »

Track Verizon's Landscape to stay on top of the industry. Access the entire ecosystem, track innovation & deals. Learn more.