Search Icon
Frontier Communications Parent, Inc. (NASDAQ:FYBR) - Fiber Expansion Drives Accelerating Growth
Published on September 24, 2024 | Ticker: FYBR

Frontier Communications Parent, Inc. (NASDAQ:FYBR) has emerged as a leading provider of high-speed fiber internet, delivering impressive results in the first quarter of 2024. The company's strategic focus on fiber deployment, fiber penetration, customer experience, and operational efficiency has positioned it for sustained growth.

Business Overview

In 2020, Frontier embarked on an ambitious plan to expand its fiber network, with the goal of passing 10 million locations. The company has made significant progress, having already passed 6.8 million locations with fiber as of March 31, 2024. This rapid fiber expansion has been a key driver of Frontier's financial performance, with fiber now accounting for the majority of the company's business.

Frontier's fiber broadband customer base grew by 18% year-over-year in the first quarter, reaching 2.1 million customers. The company's focus on delivering a superior product and customer experience has resulted in industry-leading Net Promoter Scores (NPS). Additionally, Frontier has seen a significant increase in the adoption of higher-speed tiers, with over 60% of new customers taking speeds of 1 Gbps or faster.

Financials

The company's financial results reflect the success of its strategic initiatives. In the first quarter of 2024, Frontier reported revenue of $1.462 billion, up 2% from the prior year period. This marked a significant inflection point, as the company achieved its first year-over-year revenue growth since 2015. The growth was driven by a 10% increase in fiber revenue, which more than offset declines in legacy products.

Frontier's adjusted EBITDA grew by 5.4% in the first quarter, representing the third consecutive quarter of accelerated EBITDA growth and the fastest pace since 2016. This strong financial performance was supported by the company's continued focus on cost efficiencies, which have resulted in $536 million of cumulative savings since 2021.

Liquidity

The company's liquidity position remains robust, with $2.585 billion in available liquidity as of March 31, 2024. Frontier's balance sheet is also in a healthy state, with approximately 87% of its debt at fixed rates and no significant maturities until 2027.

Outlook

Looking ahead, Frontier is reiterating its guidance for 2024, expecting to deliver mid-single-digit adjusted EBITDA growth for the full year. The company's strategic review process, announced in a previous earnings call, is ongoing, and Frontier plans to provide more details on its longer-term financial goals and a path for driving increased shareholder value at an upcoming investor update.

Frontier's success in the first quarter of 2024 highlights the company's ability to execute on its strategic priorities and capitalize on the growing demand for high-speed fiber internet. As the company continues to expand its fiber footprint and drive customer growth, it is well-positioned to deliver sustained revenue and EBITDA growth, further strengthening its position as a leading provider of fiber-based communications services.

Financial Overview

For the full year 2023, Frontier reported annual revenue of $5.751 billion and net income of $29 million. The company generated annual operating cash flow of $1.344 billion and annual free cash flow of -$1.867 billion.

In the first quarter of 2024, Frontier reported revenue of $1.462 billion, up 2% from the prior year period. The company's net income for the quarter was $1 million, and it generated $335 million in operating cash flow.

Fiber Expansion and Customer Growth

Frontier's strategic focus on fiber deployment has been a key driver of its success. As of March 31, 2024, the company had passed 6.8 million locations with fiber, representing 68% of its initial goal of passing 10 million locations.

The company's fiber broadband customer base grew by 18% year-over-year in the first quarter, reaching 2.1 million customers. Frontier's consumer fiber broadband churn remained low at 1.24%, reflecting the company's strong customer retention efforts.

Frontier's fiber revenue grew by 10% in the first quarter, while copper revenue declined by 7%. This shift in the company's revenue mix, with fiber now accounting for the majority of its business, has been a key driver of its overall revenue growth.

Operational Efficiency and Cost Savings

Frontier's focus on operational efficiency has also been a significant contributor to its financial performance. The company has achieved $536 million in cumulative cost savings since 2021, which has helped to support its adjusted EBITDA growth.

In the first quarter of 2024, Frontier's adjusted EBITDA grew by 5.4%, representing the third consecutive quarter of accelerated EBITDA growth and the fastest pace since 2016. This strong EBITDA performance was driven by the company's revenue growth, as well as its continued focus on cost efficiencies.

Liquidity and Balance Sheet

Frontier's liquidity position remains strong, with $2.585 billion in available liquidity as of March 31, 2024. The company's balance sheet is also in a healthy state, with approximately 87% of its debt at fixed rates and no significant maturities until 2027.

Frontier's capital expenditures in the first quarter of 2024 were $666 million, with an additional $363 million in vendor financing payments related to capital expenditures. The company expects its capital investment to decline for the remaining three quarters of 2024, as it consumes pre-work and inventory built up in 2022 and 2023.

Guidance and Outlook

Frontier is reiterating its guidance for 2024, expecting to deliver mid-single-digit adjusted EBITDA growth for the full year. The company's strategic review process is ongoing, and it plans to provide more details on its longer-term financial goals and a path for driving increased shareholder value at an upcoming investor update.

Conclusion

Frontier Communications Parent, Inc. has demonstrated its ability to execute on its strategic priorities, driving accelerating growth through its fiber expansion and operational efficiency initiatives. The company's focus on delivering a superior fiber-based product and customer experience has resulted in strong customer growth and revenue performance.

As Frontier continues to expand its fiber footprint and optimize its operations, it is well-positioned to deliver sustained revenue and EBITDA growth, further strengthening its position as a leading provider of fiber-based communications services. The company's robust liquidity and healthy balance sheet provide a solid foundation for its future growth and development.

You may be interested in...
Charter Communications, Inc. (CHTR): A Resilient Powerhouse in Broadband and Convergence
Charter Communications was founded in 1993 and has grown from a small regional cable provider to become the second-largest cable operator in the United States, serving over 31 million customer relationships as of June 30, 2024. The company's extensive footprint covers 41 states, reaching more than 57 million homes and businesses through its advanced communications network.
Read More
Verizon (VZ): A Telecom Giant Poised for Continued Growth
Verizon Communications Inc. (VZ) is a leading telecommunications company that has established itself as a dominant player in the industry. With a rich history spanning over two decades, Verizon has continuously evolved to meet the changing demands of consumers and businesses alike. As the company navigates the dynamic landscape of the telecom sector, it has demonstrated its ability to adapt and capitalize on emerging trends, positioning itself for sustained growth.
Read More
Frontier Communications (NASDAQ:FYBR) - Building a Fiber Fueled Future
Frontier Communications Parent, Inc. (NASDAQ:FYBR) is a leading communications and technology provider, offering gigabit speeds to approximately 3.10 million broadband subscribers and operating in 25 states with around 13,000 employees as of September 30, 2024. The company has undergone a remarkable transformation over the past three years, evolving from an underperforming regional telecom player to an emerging national fiber powerhouse.
Read More
Frontier Group Holdings (NASDAQ:ULCC) – Thriving as the Premier Ultra Low-Cost Carrier
Frontier Group Holdings, Inc. (NASDAQ:ULCC), the parent company of Frontier Airlines, Inc., has solidified its position as the premier ultra-low-cost carrier (ULCC) in the United States. With a relentless focus on cost control, innovative revenue initiatives, and a nimble operational strategy, Frontier has navigated the volatile airline industry landscape with remarkable agility, poising itself for continued success.
Read More
Liberty Broadband Corporation (LBRDK): Simplifying the Empire, Strengthening the Core
Liberty Broadband Corporation (LBRDK) has been at the forefront of the media and telecommunications landscape, with a diverse portfolio of investments and strategic partnerships. As the company navigates the ever-evolving industry, it has taken bold steps to streamline its operations and sharpen its focus on its core assets.
Read More