reports
- Blair Levin
BEAD Data Shows CMSCA Active in Many States
With all but four states having started and/or completed their prequalification process for eligibility for BEAD funding, there is new data showing high levels of participation by CMSCA and CHTR, with significant levels of participation by T and FBYR (to be acquired by VZ.) In this note we discuss that data and state of play as the states move forward and the Department of Commerce aims for a decision in about a month (which we think is likely to be delayed) for resolving how the BEAD should be...
- Jonathan Chaplin
Further thoughts on tariff impacts on Fiber and Cable
We published our quick take on tariff impacts on Mobile and Broadband stocks last week. We haven’t learned much over the last week that would change our initial take for Wireless, or for Broadband revenues and costs. We hosted a lunch with Shentel yesterday that provided some new insights on the impact to fiber capex, with implications for Cable.
- Blair Levin
What Does Carr’s DEI Merger Ban Mean for TMUS, Media and Other Deals
Immediately after the election, investors were excited about the prospect of easier government approvals of transactions. However, as we have previously discussed, that is not the way the review process is working out. A further indication of the transaction barriers came up over the weekend, as multiple articles appeared stating that FCC Chair Carr would block any deal that requires FCC approval where a party has a DEI program. We have previously written about how Carr’s view on DEI would app...
- Blair Levin
NSR Policy: What Does BEAD State Bidding Tell Us?
Last week, we provided several notes analyzing how Congressional Republicans and the Administration, as well as others, were debating changes in the BEAD program. While that rhetoric pointed to significant changes ahead, the states have been proceeding under the existing rules set in the Biden Administration, making significant progress in ways generally not reflected in the DC discussions. In this note, we summarize the state activity and ISP bidding to date. We analyze what the state activi...
- Blair Levin
NSR Policy: BEAD Adjustments Certain but Details Still Cloudy
Yesterday, we published a note on whether T, VZ/FYBR and CHTR or Musk will come out on top with revisions to the BEAD program that Republicans are contemplating. As we noted, there are numerous changes we felt confident Republicans would do, such as removing a fiber preference, that will have no material impact on publicly traded companies. But there are several other changes that could, including whether the federal government will impose a high-cost threshold on states that will shift funds f...
- Blair Levin
Will T, VZ/FYBR and CHTR or Musk Come Out on Top with BEAD Revisions?
While the Trump Administration and Congressional Republicans have sent some signals about how they will revise the $42.5 Billion Biden Broadband Equity, Access and Deployment (BEAD) program, there has been no definitive word yet on key issues regarding those revisions. That may change today, when there is a congressional hearing on the program. In this note, we review the potential changes from the investor perspective, with a focus on the relative benefits to wireline broadband providers (par...
- Blair Levin
NSR Policy: Verizon Now Faces Trump Transaction Tax
Yesterday, FCC Chairman Carr revealed that he had sent a letter to Verizon, suggesting that the FCC’s review of the VZ/FYBR deal will now include a review of Verizon’s DEI program. In this note, we analyze the implications of Carr’s raising that issue late in the process of the merger review.
- Blair Levin
- Jonathan Chaplin
Carriers could spend $180BN on spectrum over the next four years
In this note we cover the potential timing of all the major spectrum auctions and transactions that could occur during the current administration, the amount of financial capacity the carriers have for purchasing this spectrum, and the intrinsic value of the spectrum. The analysis has important implications for EchoStar and for the three national carriers.
- Jonathan Chaplin
Autumn for Broadband 4Q24
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 again with net adds flat vs. last year. We expect organic net adds to recover next year due to lack of ACP headwind. Though the recovery could be impacted by immigration related headwinds.
- Jonathan Chaplin
Frontier Post-4Q24 Model Update
This note focuses on changes to the model following 4Q24 results. Yesterday, we published a comprehensive review of results. The price at close is fixed. We don’t have a view on the current deal spread. We see no impediments to closing of the transaction. Stock is rated neutral with price target of $38.50 (same as deal price).
- Jonathan Chaplin
FYBR 4Q24 Quick Take: Strong financial results; adds a little soft
Fiber deployment and fiber net adds were below expectations (relatedly). Adds in base markets beat expectations but adds in new markets missed. Revenue and EBITDA beat expectations due mostly to another very strong quarter in the business segment. Fiber EBITDA margins are closing in on 50%. We see no risk to deal close; Verizon should be happy with these results. Change to rating and target reflects fact that the deal is a fait accompli, and the price is set.
- 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
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