Frontier Communications is all heads down as it works to reach its target of deploying fiber to 10 million locations by the end of 2025. That said, it’s also got an eye on the horizon beyond that goal, with executives stating on Q4 2022 earnings that subsidy dollars or a potential joint venture (JV) could help it expand further. In an exclusive call with Fierce following earnings, CEO Nick Jeffery added it would also entertain an open access network deal to reach more locations.
Jeffery, of course, came to Frontier in 2021 from a position as CEO of Vodafone UK, meaning he’s already very familiar with the open access model popular among operators in Europe.
“In terms of open access infrastructures generally, if there is one available that we could use, yes, we’d look at it,” he stated. “It can be a capital smart way of operating. If someone else is putting in the capital and we’re using it to sell to customers, yeah, I’m kind of happy with that.”
While open access networks have struggled to catch on in the U.S., AT&T recently announced plans to build an open access wholesale fiber network through its Gigapower joint venture with BlackRock. Frontier already has enterprise fiber and wireless infrastructure connectivity deals in place with AT&T.
Asked specifically about whether it would be interested in riding on the Gigapower network, Jeffery said he believes it will take some time before that infrastructure becomes available. “Let’s see how that plays out,” he said, adding “And of course, it’s a relatively small build at least in terms of what they’ve so far announced.”
In terms of whether Frontier would open its own network for an open access deal, Jeffery said that’s “unlikely.”
Beyond open access, Frontier Executive Chairman John Stratton said during Q4 earnings the operator is also eyeing subsidy funding and a potential JV move, stating the latter has already been discussed internally.
“The headline is we’re looking at all the options,” Jeffery told Fierce.
Frontier added 1.2 million new fiber passings in 2022 to end the year with a total of 5.2 million. In 2023, it is planning to spend around $2.8 billion in capex to add another 1.3 million and hit 6.5 million in total by the close of December.
Analysts on the earnings call noted the 1.3 million figure is lower than the 1.6 million new passings target Frontier originally set for 2023. But Jeffery pointed out that number still marks an acceleration from 2022’s figure. He added the fact that Frontier actually exceeded its original 2022 target of 1 million passings gave it flexibility to moderate its 2023 goal to further hone its internal support operations. In the end, it’ll still end up at the 6.5 million passings target it had set for 2023 when it emerged from bankruptcy.
“We’ve got a ton of operational gas in the tank if we want to crank that up and go faster when it makes sense to do so from the whole business perspective, not just build,” he explained. “Anyone can build networks, but if you don’t sell it, you don’t service, you don’t deliver to customers, you don’t do it efficiently, you don’t deliver return on capital, that’s not good business.”
Consolidated revenue in Q4 2022 of $1.44 billion was down slightly year on year from $1.54 billion, while net income fell nearly 18% to $155 million. Consumer fiber revenue grew nearly 8% to $436 million, but overall consumer revenue fell 2.3% to $746 million as fiber broadband gains were more than offset by voice and video losses.
The operator set a new quarterly record with the addition of 73,000 fiber broadband customers. Including copper losses, Frontier posted a total of 8,000 broadband net additions in Q4.
An ongoing cost reduction initiative reached a total of $336 million in cumulative savings as of Q4, as the operator works to reach $400 million by the end of 2024. CFO Scott Beasley said during earnings future cost cutting efforts will focus on getting field technicians the tools they need to operate more effectively, investing in self-service capabilities and automating certain back office functions.