FTRCQ Frontier Communications Corporation Class B

Frontier Communications Joins Voluntary Agreements as Industry Prepares Multi-Year Extension of Landmark Energy-Efficiency Commitments

Frontier Communications has joined as a signatory of two landmark voluntary agreements to continue the ongoing improvement of the energy efficiency of its set-top boxes, as well as modems and routers used for broadband Internet services.

Pursuant to these agreements, the nation’s largest consumer pay-TV and broadband service providers and equipment manufacturers have committed that 90% of their annual set-top box and small network equipment (SNE) purchases and retail sales meet rigorous energy-efficiency levels. These agreements have saved consumers more than $2 billion in electric costs and avoided nearly 12 million metric tons of CO2 emissions since 2013. The signatories previously announced plans to extend the agreements into a new term starting next year and are working to secure further improvements in energy efficiency with the Natural Resources Defense Council (NRDC) and the American Council for an Energy-Efficient Economy (ACEEE).

Frontier serves customers in 29 states, and is a top provider of wireline broadband and pay-TV video service in California. Its addition boosts the SNE agreement’s coverage of the nation’s residential broadband Internet market from 84% to 89%. Frontier also increases the set-top box agreement’s coverage of the nation’s residential pay-TV market from 92% to 93%. Nearly all Americans who subscribe to broadband or pay-TV services will benefit from the voluntary agreements.

Other signatories of both voluntary agreements include AT&T/DIRECTV, Cablevision, CenturyLink, Charter/Time Warner Cable/Bright House Networks, Comcast, Cox Communications, and Verizon and manufacturers ARRIS/Pace and Technicolor. Manufacturers Actiontec, D-Link, NETGEAR, and Ubee Interactive have signed the SNE agreement. More information about the voluntary agreements is available at http://www.energy-efficiency.us/

About Frontier Communications

Frontier Communications Corporation (NASDAQ: FTR) is a leader in providing communications services to urban, suburban, and rural communities in 29 states. Frontier offers a variety of services to residential customers over its fiber-optic and copper networks, including video, high-speed internet, advanced voice, and Frontier Secure® digital protection solutions. Frontier Business offers communications solutions to small, medium, and enterprise businesses. More information about Frontier is available at www.frontier.com.

EN
27/11/2017

Underlying

Reports on Frontier Communications Corporation Class B

Vikash Harlalka
  • Vikash Harlalka

FYBR Quick Hit: ABS debt priced

Frontier announced pricing for its latest ABS debt this afternoon, raising $750MM. The offering consists of $530MM Class A-2 notes at 6.2%, $73MM Class B notes at 7.0%, and $147MM Class C notes at 11.2%. The average cost of debt is 7.4%, which is in-line with our expectation, and ~140bps lower than their last ABS debt issuance. These new tranches of debt have an anticipated repayment period of 7 years (vs. 5 years on the last issuance).

Jonathan Chaplin
  • Jonathan Chaplin

FYBR: Cash flow in steady state

Frontier management has set targets for EBITDA of $4BN and operating FCF of $3BN on a footprint with 10MM fiber locations, in steady state. We built a simple model to vet this outcome. Our model arrives at slightly lower EBITDA and UFCF; however, modest cost cuts get us to the target, and cost cuts are likely. In addition to vetting steady-state targets, the model illuminates how value is created in the fiber business. We built it so that you can easily change assumptions and see the impact on v...

Jonathan Chaplin
  • Jonathan Chaplin

ACP Part V: FCC releases survey results

The FCC released a survey that included more than 5,000 ACP households today. The FCC repeated the mistake of prior surveys by asking whether households were new to broadband with ACP as opposed to subscribers that are new to broadband with one of the subsidy programs that followed the pandemic (stimulus checks; EBB; ACP). They also asked the important question, which is “what will you do when ACP ends”. Our quick analysis here focuses mostly on the social costs of ACP going away. We will ...

Jonathan Chaplin
  • Jonathan Chaplin

FYBR: updating capex and funding through 2026

The Company’s new Capex disclosure provides a clear map for cash capex for the fiber project for the remainder of the 10MM location plan, which will take them into 2026. Stronger confidence in the capex trajectory for the next three years lends confidence to the FCF trajectory and funding requirements (we have eliminated a variable). This should make it easier for investors on the sidelines to underwrite the investment case.

Jonathan Chaplin
  • Jonathan Chaplin

Frontier Model Update

This note focuses on changes to the model following 4Q23 results. Earlier today, we published a review of results and additional thoughts following the earnings call. Our net adds, revenue and EBITDA are slightly higher. Capex and FCF burn are also higher. Our long-term thesis remains unchanged. Price target is $54.

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