reports
- Jonathan Chaplin
FYBR: Verizon acquisition approved!
Shareholders representing 63% of the shares voted in favor of the transaction this morning. We congratulate the Frontier and Verizon management teams for getting the deal done. While we think Frontier should have received more, we recognize that most large shareholders will lock in a very substantial gain while removing uncertainty with this transaction. This is a strong win for Verizon, who will secure a great asset at a great price.
- Jonathan Chaplin
Frontier vs Ziply – did BCE overpay
When examining the very significant premium that Ziply is receiving from BCE over what Frontier has been offered by Verizon, investors have asked two further questions: first, why was BCE willing to pay a higher price for Ziply than they were willing to pay for Frontier (they bid on both assets); second, how do we know they aren’t just overpaying for Ziply. We cover both questions in this brief note.
- Jonathan Chaplin
Frontier vs Ziply – accounting for future opportunities
Investors are inevitably comparing the price that Verizon has offered for Frontier to the price that BCE has offered for Ziply. We have been asked whether buyers would give the operators credit for locations they haven’t deployed fiber to yet. If so, the price for Ziply isn’t so compelling, given their plans to more than double their fiber footprint. The answer: absolutely not! We walk through our thought process in this brief note.
- Blair Levin
NSR Policy: Summarizing Policy Implications of Trump/Republican Victor...
In the previous two months, we published multiple notes on the implications of the election, projecting forward on what would likely happen to market impacting policies in the event of either a Trump or Harris Victory. Here, we link to those notes—you can quickly skip the Harris parts—as well as summarizing key points relating to the likely impact of a Trump victory. We note that the notes involving Musk were the ones we think most underrated (at least they were initially) and important. We a...
- Jonathan Chaplin
Autumn for Broadband 3Q24
In this installment of our Autumn for Broadband series, we provide a quick update on trends in the broadband market based on what we have seen from the companies that have reported so far. Adjusted for ACP, trends have improved quite significantly. We continue to expect further recovery next year, once the ACP headwind has passed.
- Jonathan Chaplin
Frontier Post-3Q24 Model Update
This note focuses on changes to the model following 3Q24 results. Earlier today, we published a comprehensive review of results. Our view of the company remains unchanged, whether as a standalone company or as an acquisition target. Intrinsic value is $64 (but they may only get $48.50 in a deal now).
- Jonathan Chaplin
FYBR 3Q24 Quick Take: Subscribers beat; EBITDA in line; all eyes on th...
Fiber deployment and fiber net adds were both exceptional. EBITDA was in-line, despite the strong growth (higher SAC from higher growth will have been a drag on EBITDA). If Frontier remains independent after November 13th, these results will provide strong support for management’s strategy and execution prowess.
- Jonathan Chaplin
BCE + Ziply: quick thoughts following the call
In this note we run through a full analysis of BCE’s acquisition of Ziply, and the implications for Frontier. BCE is paying a 55-117% premium to what Verizon is paying for Frontier, for an asset that is very similar. The Ziply transaction will make it harder to Frontier investors to accept $38.50, and easier for Verizon to offer more.
- Jonathan Chaplin
- Jonathan Chaplin
- Jonathan Chaplin
FYBR Quick Hit: ISS recommends that voters abstain
ISS has delivered a detailed analysis of the deal. They conclude that the board and management managed the deal process well, but that given the long time to close, investors will benefit from more time to assess it. They recommend that investors abstain from the vote. This has the same effect as voting against the deal.
- Jonathan Chaplin
- Jonathan Chaplin
FYBR: Company worth at least $63 / share, based on mgmt. forecast
We are grateful for management’s most recent arguments in favor of the current deal price. Management asserts that a DCF is the best approach to value the Company, given a dearth of good comps. We will focus this response on management’s approach to the DCF. We show that, based on management’s own forecasts, a DCF yields a standalone value of at least $63 / share. We show that the Company is worth at least $131 / share to Verizon. We will respond to management’s thoughts on comps in the nex...
- Jonathan Chaplin
- Blair Levin
What if Elon Can Deliver a Gig? Where it Matters and Where it Doesn’t
As part of our election impact series, we recently published an analysis of how Elon Musk might influence telecommunications policy under a potential Trump Administration to benefit his Starlink service. While the note prompted significant feedback, nothing in the reaction causes us to reconsider what we wrote. Still, the reaction prompted us to do a second note laying out several paths a Trump Administration could take that would benefit Starlink related to the BEAD program and would work to d...
- Jonathan Chaplin
FYBR Quick Hit: Glendon Letter Confirms Intention to Vote Against the ...
Glendon Capital, which owns ~10% of Frontier’s shares have issued a letter this morning stating that they will be voting against the deal at the current price. This is the third shareholder to publicly express opposition. We expect more similar announcements in due course. We have been recommending investors vote against the deal at $38.50. Here is our comprehensive analysis of what we think the asset is worth to Verizon and what Verizon can afford to pay,
- Jonathan Chaplin
VZ: quick thoughts following the analyst day
The event just wrapped. The big things for us were the new targets for fiber and FWA, the new articulation of their FWA strategy (this is a big deal), new capex guidance, a change in leverage targets, and our struggles with how they articulate capital allocation priorities. On broadband strategy, there were surprises in how they articulated their fiber strategy and their FWA strategy, with implications for Verizon, Frontier and other broadband assets, and for Cable.
- Jonathan Chaplin
FYBR Quick Hit: Another Shareholder Voting Against the Deal
This morning, another shareholder, Carronade Capital has come out with a letter urging Frontier shareholders to vote against the deal. Carronade, which owns ~2MM shares of Frontier, has said that the Verizon offer of $38.50 doesn’t represent fair value of Frontier. They believe Frontier has an intrinsic value of at least $48.60 per share on a standalone basis before a fair share of synergies from the transaction.
- Blair Levin
NSR Policy: Musk and BEAD: Further Thoughts
As part of our election impact series, we recently published an analysis of how Elon Musk might influence telecommunications policy under a potential Trump Administration to benefit his Starlink service. Few notes we have written have stirred the level of surprise and consideration that note produced. Nothing in the reaction causes us to reconsider what we wrote but we repeatedly heard one question that we believe deserves further elaboration. That question is how could Musk, at this late date, ...
- Jonathan Chaplin
Verizon’s New Fiber Strategy: What to expect from the analyst day
Verizon will lay out their new fiber strategy at their analyst day on Tuesday. In this report, we try to anticipate what they might do. We suspect they will extend the build in Frontier markets, accelerate the build in their own markets, and possibly explore out-of-market builds off-balance-sheet. Taken together, these efforts could increase fiber locations to 38-43MM over the next few years.
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