(NYSE: VZ) said Wednesday it reached a deal to shed its traditional telephone line business in 14 states in a deal valued at $8.6 billion.

The deal includes Verizon’s North Carolina coverage areas, which includes much of the Durham area.

(NYSE: FTR), based in Stamford, Conn., will buy the Verizon assets for $5.3 billion in common stock, the companies said. Frontier will also assume about $3.3 billion in debt as part of the deal, which is expected to close within 12 months.

Last year, Verizon sold much of its landline business in New England to Charlotte, N.C.-based FairPoint Communications (NYSE: FRP).

The agreement gives Frontier 4.8 million access lines to residential and small business customers and narrows Verizon’s focus on faster-growing wireless, broadband and Internet services. The deal will triple Frontier’s size and make it the nation’s largest communications provider focused on providing voice, broadband and video services to rural and smaller city markets.

The sale includes all of Verizon’s wireline assets in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin as well as some assets in California.

Under the agreement, Verizon said it will spin off the assets into a separate entity that will merge with Frontier. Verizon shareholders will own about 68 percent of the new company, while Frontier shareholders will own 32 percent. Verizon shareholders will receive one share of Frontier stock for every 4.2 shares of Verizon stock held as of the record date for the spinoff. The amount of equity issued will depend on the stock price in the 30 days before closing, but the stock portion will be collared between $7 and $8.50 per share, Verizon said. Frontier shares closed Tuesday at $7.57.

Maggie Wilderotter, Frontier’s chairman and chief executive, said in a statement, "This is a truly transformational transaction for Frontier. With more than 7 million access lines in 27 states, we will be the largest provider of voice, broadband and video services focused on rural to smaller city markets in the United States." Wilderotter said the company is "confident that we can dramatically accelerate the penetration of broadband in these new markets. "

Frontier said it expects to save $500 million annually, by leveraging existing networks and infrastructure. About 11,000 Verizon employees who support the local landlines will move to Frontier with union contracts intact, Verizon said.