Frontier Communications emerged from bankruptcy today, and the newly listed public company will begin trading on the Nasdaq exchange on Tuesday, May 4 under the ticker “FYBR.”
The company provided an investor update on its new strategy, which has everything to do with deploying more fiber. Frontier plans to double its fiber network to ultimately pass more than 6 million homes and businesses. In 2021, it plans to extend its fiber to pass 495,000 more locations. It’s already extended the network to pass an additional 100,000 new locations in the first quarter.
Frontier’s network, comprised of fiber and copper connections, spans 25 states. It counts 180,000 fiber route miles.
Incoming Executive Chairman John Stratton said, “Strategically, we’re most focused on the expansion of our fiber network with our initial emphasis on building over 3 million new fiber passings in the very near term. We believe that Frontier has the foundation to become the largest U.S. pure-play fiber provider.”
The company considers its fiber footprint in two separate categories: base fiber and fiber expansion.
Its base fiber network, which is fiber that is in the ground today, passes 3.2 million homes and businesses. The company began its fiber expansion in January 2020, and to date it has added more 200,000 passings. So, its total fiber footprint, now, is 3.4 million passings.
However, the lion’s share of its connectivity is built on copper, which passes 11.8 million locations.
“As we upgrade our copper passings, you should expect copper to decline as DSL will generally not be offered after the upgrade and the locations will be reclassified as fiber,” said Stratton.
Frontier currently has 41.5% fiber penetration in its footprint and counts 1.3 million fiber customers. It’s targeting a 50% fiber penetration over time.
Stratton said, “Companies that are able to achieve higher penetration are clearly more valued by the market. When we acquired much of our fiber from Verizon, penetration was in the high 40s, which then dropped in subsequent years due to significant operational challenges.”
Frontier has identified over 10 million additional locations where it can build out fiber “with attractive financial returns.” Chief Financial Officer CFO Sheldon Bruha, said, “Our builds on the early part of this is really focused on the highest RoI. We are focusing on some of the high priority states: the California, Texas, Florida, Connecticut markets would fall into that prioritization. And even within that we’re trying to densify as much as possible these builds to build on scale within those footprints.”
The company’s new CEO Nick Jeffery said, “Almost the entirety of our homes passed face one or no broadband competitors, giving us a significant opportunity.” Specifically, 88% of Frontier’s fiber footprint and 87% of its copper footprint has one or no competitors. “We have 3.4 million total fiber passings today and plan to at least double this footprint over the coming years,” said Jeffery.
An analyst asked Jeffery if the company's aggressive fiber buildout was feasible on a fairly quick timeline. Jeffery touted the experience of the company’s new Chief Network Officer Veronica Bloodworth. “Veronica came from AT&T where she was building fiber at the rate of about 3 million homes passed per year and brings substantial operational experience,” said Jeffery. “I’ve asked her to think about how we can at least double the build rate next year and also work through with me the physical and capital constraints to find the optimal rate of build to maximize shareholder value.”
Jeffery, who has only been at Frontier for about 40 days, gave an elevator pitch for himself about how he turned around Vodafone UK. He said Frontier is in a much bigger market, has less “competitor intensity” and a simpler product portfolio.
Much of his focus will be on operations. He described his work as “inch by inch, mile by mile improving customer service, making sure operational excellence is delivered throughout the build process, making sure we put together the many small but significant improvements in IT systems. And then a final thing – an absolute obsession with competition and winning in the market.”
He offered a final word on fiber: “People don’t buy fiber, they buy what fiber does for them.”