Frontier Exits Bankruptcy, Vows Fiber Overhaul as Earnings Slip Again

Frontier Communications is eyeing fiber as it emerges from bankruptcy.

The Connecticut-based carrier shared its first quarter earnings report on the day it had penciled in for its chapter 11 exit. The company stated that it plans to re-enter the Nasdaq on May 4. Frontier has reportedly trimmed some $11 billion in debt and obtained a liquidity of about $1.3 billion.

Frontier reported declining revenue in its earnings report. Quarterly revenue came in at $1.68 million, which was down 6.3% from the year-ago quarter. Frontier’s $749 million in commercial revenue declined $61 million from the first quarter of 2020. In addition, the company reported 319,000 commercial customers; that fell from 360,000 in Q1 2020. Frontier cited “voice declines in our retail portion” for the decreases.

Fiber Growth

However, Frontier forecast an optimistic outlook for its fiber strategy. Frontier said it could reach 11.8 million homes and business with copper broadband last quarter. That compared to 3.2 million with fiber broadband, but executives pointed to positive growth in its fiber network. The company extended its fiber network to approximately 100,000 more locations in the first quarter. That total exceeds more than all of 2020’s new fiber locations. Moreover, Frontier on Friday set guidance that it will reach 495,000 locations in 2021.

According to the earnings report, Frontier’s business fiber broadband customers totaled 120,000 last quarter, after hovering at 117,000 for the previous two quarters. On the other hand, business copper broadband customers dropped from 154,000 to 140,000.

Frontier’s Nick Jeffery

“Frontier is now positioned with operational momentum and industry-leading leverage ratios to capitalize on the major growth forecast in the U.S. fiber market,” Frontier president and CEO Nick Jeffery said. “At this pivotal moment in the company’s evolution, we look forward to rapidly expanding our fiber footprint, delivering enhanced customer service offerings and value, and accelerating our efforts to build Gigabit America.”

Bankruptcy Background

Frontier filed for bankruptcy in April 2020. It engaged in a long restructuring process, which included selling its Northwest operations and assets to WaveDivision Capital. That business now operates as Ziply Fiber.

Frontier cleared its final regulatory hurdle two weeks ago when the California Public Utilities Commission voted in favor of the ILEC emerging from chapter 11 bankruptcy. Frontier agreed to invest $1.75 billion in California over the next four years in order to appease regulators. That investment includes connecting some 350,000 locations to fiber with at least 10% of those going to small rural areas.

The Federal Communications Commission officially approved the restructuring in January, to the chagrin of a prominent union.

“Our early progress in implementing operational initiatives that enhance customer retention, simplify our internal processes, and reduce costs reflect a solid start to the year,” said CFO Sheldon Bruha. “Looking ahead, our expected emergence later today provides the opportunity to aggressively reinvest in expanding our fiber business and strengthening the customer experience.”

The company hired former Vodafone UK CEO Nick Jeffery as its new chief executive as a result of its restructuring plan. In addition, former Verizon executive John Stratton and former AT&T executive Veronica Bloodworth have joined the leadership.