Executive Summary / Key Takeaways

• Frontier Communications ($FYBR) has undergone a profound transformation, pivoting to a fiber-first strategy that has driven a return to revenue growth for the first time since 2015 and full-year EBITDA growth in 2023, marking a critical inflection point for the company.
• The company's technological leadership, demonstrated by its 10-gig symmetrical capable fiber network and successful 100-gigabit trials, provides a significant competitive moat, enabling superior customer experience and sustained ARPU growth.
• Operational efficiency initiatives have yielded over $600 million in cumulative cost savings, doubling initial targets, and contributing to expanding EBITDA margins and industry-leading customer satisfaction (NPS).
• Frontier's strategic review culminated in a definitive merger agreement with Verizon Communications , valuing Frontier at $38.50 per share, which received FCC approval in May 2025 and is expected to close by Q1 2026, validating the value of its fiber assets.
• With peak capital expenditures behind it and a clear path to fully fund its fiber build to 10 million locations, Frontier is poised for accelerated EBITDA growth in the mid-single digits for 2024, alongside continued fiber customer and ARPU expansion.

The Fiber Imperative: Reshaping Frontier's Destiny

Frontier Communications Parent, Inc. ($FYBR) is a telecommunications provider undergoing a profound transformation, strategically repositioning itself as a pure-play fiber leader dedicated to "Building Gigabit America™". Established in 1935, Frontier historically offered a mix of voice, data, and video services over both regulated and unregulated networks. However, recognizing the escalating demand for high-speed, reliable data, the company initiated a pivotal shift in 2020, embarking on an ambitious fiber-first strategy. This strategic pivot, coupled with a comprehensive operational turnaround, has reshaped Frontier's destiny, moving it from a legacy provider to a formidable competitor in the modern broadband landscape.

The core of Frontier's strategy lies in its differentiated fiber-optic technology. Unlike traditional copper-based networks, fiber offers inherently superior performance, including faster download and upload speeds, lower latency levels, and greater capacity. This technological advantage is not merely theoretical; Frontier's network is already 10-gig symmetrical capable end-to-end. Furthermore, the company successfully trialed speeds of up to 100 gigabits over a single strand of fiber in partnership with Nokia (NOK) at its Fiber Innovation Lab in Texas. This demonstrates that Frontier's existing fiber infrastructure is future-proof, capable of supporting significantly higher speeds with only limited capital investment required for electronics upgrades, positioning it as "the last network any customer will ever have to buy." This technological edge translates into a substantial competitive moat, enabling Frontier to deliver a superior customer experience, command higher ARPU, and secure its market position for decades to come.

In the broader industry landscape, the U.S. broadband market is characterized by intense competition, but also significant white space for fiber expansion. Frontier operates in a highly attractive market structure, with only one or zero gigabit-capable competitors in 86% of its fiber footprint. This favorable competitive environment, combined with the inherent superiority of fiber, allows Frontier to gain market share against legacy cable providers. Customer satisfaction metrics underscore this advantage; Frontier's fiber Net Promoter Score (NPS) has dramatically improved by approximately 20 points over the past year and is now six times higher than its closest legacy cable competitor. This positions Frontier as the industry leader in fixed Internet provider NPS, reflecting its commitment to customer service and the quality of its fiber product. While larger rivals like AT&T (T) and Verizon (VZ) benefit from national scale and diversified offerings, and cable operators like Comcast (CMCSA) and Charter (CHTR) leverage extensive existing infrastructure, Frontier's focused fiber build and superior technology allow it to carve out a strong, defensible position in its target markets.

Operational Excellence and Financial Momentum

Frontier's strategic transformation has been underpinned by relentless operational execution across four key pillars: fiber deployment, fiber penetration, improving customer experience, and operational efficiency. The company's commitment to fiber deployment is evident in its rapid expansion, growing its fiber footprint by approximately 90% since late 2020 to reach approximately 8.80 million total locations passed as of September 30, 2025. This puts the company well on track towards its initial goal of 10 million fiber passings. In the third quarter of 2025 alone, Frontier added approximately 326,000 fiber passings.

This aggressive build-out is translating directly into robust fiber penetration. Frontier added 133,000 fiber broadband customer net additions in Q3 2025, contributing to a total of approximately 2.597 million fiber broadband customers as of September 30, 2025, a 20.4% increase year-over-year. A significant milestone was achieved in Q2 2024, when Frontier crossed the 45% penetration threshold in its base fiber footprint, demonstrating the product's appeal even in mature, competitive markets. This strong penetration is further supported by healthy ARPU growth, which increased by 3.5% year-over-year in Q2 2024. This growth is driven by customers opting for higher broadband speeds—with over 60% of new customers choosing 1 gig or faster—and the increasing adoption of value-added services like whole-home Wi-Fi and premium tech support.

The focus on customer experience has been transformative. Through systematic efforts to eliminate customer irritations and invest in digital self-service tools, Frontier has significantly reduced call volumes and improved customer satisfaction. This operational efficiency extends to cost management, with the company achieving over $600 million in cumulative run-rate cost savings since 2021, doubling its initial target. These savings have been instrumental in driving margin expansion, with adjusted EBITDA margins improving by more than 100 basis points in the first half of 2024.

Financially, Frontier has achieved significant milestones. The company reported positive revenue growth for the first time since 2015 in Q1 2024, followed by its second consecutive quarter of revenue growth and fastest organic growth in over a decade in Q2 2024. For the three months ended September 30, 2025, total revenue reached $1,550 million, up 4.1% from $1,489 million in the prior year period. Data and Internet services revenue, the primary growth engine, increased by 11.6% year-over-year to $1,120 million for the same period. This fiber-driven growth more than offset declines in legacy voice and video services, which saw revenues decrease by 9.6% and 24.1% respectively. Adjusted EBITDA for Q2 2024 was $560 million, representing its fourth consecutive quarter of adjusted EBITDA growth and a 5% increase year-over-year. For the nine months ended September 30, 2025, operating income was $237 million, a decrease from $267 million in the prior year period, primarily due to increased depreciation expense associated with fiber network investments. Net loss for the nine months ended September 30, 2025, was $263 million, compared to $204 million in the prior year.

Frontier's liquidity position remains robust, with approximately $1,871 million as of September 30, 2025, comprising cash and cash equivalents, and available capacity on its delayed draw term loan and revolving credit facilities. The company's landmark fiber securitization deals, including a $750 million transaction in July 2024, have provided a clear pathway to fully fund its build to 10 million locations and attract investment-grade long-term investors. Approximately 87% of Frontier's debt is at fixed rates, and there are no significant maturities until 2027, providing financial stability.

Strategic Outlook and Transformative Merger

Frontier's forward-looking strategy is anchored in sustained fiber expansion and operational optimization. The company plans to add another 1.3 million fiber passings in 2024, maintaining an optimal build pace that balances speed with operational efficiency. Management anticipates adding more fiber broadband customers in 2024 than in 2023, while accelerating ARPU growth to a sustainable 3% to 4% range. This growth will be fueled by core product pricing, customer migration to higher speed tiers, and an expanding portfolio of value-added services.

Capital expenditures are expected to decline, with 2023 identified as the peak CapEx year. For 2024, cash capital investment, including vendor financing payments, is projected to be between $3.0 billion and $3.2 billion, representing a decline from 2023. This reduction is attributed to the consumption of pre-work and inventory, a lower-cost build mix, and normalizing payment terms with suppliers. The capital investment mix is also shifting towards higher success-based customer acquisition CapEx as gross additions increase. Management remains confident that the fiber build will deliver Internal Rates of Return (IRRs) in the mid-to-high teens, well above its cost of capital. In the long term, at a fiber build of 10 million homes passed and 45% penetration, Frontier expects to generate approximately $4 billion in EBITDA and $3 billion in recurring cash flows after maintenance and customer connection CapEx.

A pivotal development in Frontier's trajectory is its definitive merger agreement with Verizon Communications Inc., announced on September 4, 2024. Under the terms, Verizon will acquire Frontier for $38.50 per share in cash, a transaction unanimously approved by Frontier's Board and its stockholders. The FCC approved the transaction on May 16, 2025, and the merger is expected to close by the first quarter of 2026. This acquisition validates the significant value created by Frontier's fiber assets and its strategic transformation. It is anticipated to substantially expand Verizon's fiber reach and subscriber base, accelerating the industry-wide transition from copper to high-speed fiber networks.

However, the path forward is not without risks. Frontier's fiber build plans are exposed to potential disruptions from supply chain delays, inflationary pressures, and tight labor markets. Regulatory changes, particularly concerning the Broadband Equity, Access and Deployment (BEAD) Program, could impact the company. The NTIA's BEAD Restructuring Policy Notice on June 6, 2025, modified program requirements, potentially favoring non-fiber solutions and affecting Frontier's success in securing awards. While Frontier is actively pursuing BEAD funding, significant flows are not expected until 2025 and beyond. The expiration of the Affordable Connectivity Program (ACP) also presents a modest headwind, impacting approximately 4% of Frontier's customer base, though the company has transition plans in place to mitigate the financial impact. Furthermore, a cyber incident in April 2024 caused operational disruption, though it did not have a material financial impact.

Conclusion

Frontier Communications has successfully executed a remarkable turnaround, transforming itself into a leading fiber broadband provider. Its unwavering commitment to a fiber-first strategy, coupled with disciplined operational execution and technological innovation, has driven a return to sustainable revenue and EBITDA growth. The company's superior fiber network, demonstrated by its 10-gigabit capabilities and 100-gigabit trials, provides a distinct competitive advantage, fostering strong customer loyalty and robust ARPU growth in a market increasingly demanding high-speed connectivity.

The impending merger with Verizon Communications underscores the strategic value of Frontier's fiber assets and its successful transformation. As Frontier moves towards the completion of its 10 million fiber passings goal and integrates into Verizon, the foundation laid through its "Building Gigabit America" initiative is set to unlock substantial long-term value. Despite facing industry-wide challenges such as regulatory shifts and competitive pressures, Frontier's strategic positioning, operational efficiencies, and technological leadership provide a compelling investment thesis, promising continued growth and enhanced shareholder returns within a consolidating and fiber-centric telecommunications landscape.