Executive Summary / Key Takeaways

• Fiber-First Transformation: Frontier Communications has successfully reinvented itself as a fiber-first leader, achieving full-year EBITDA growth in 2023 for the first time in over a decade and positive revenue growth in Q1 2024, driven by aggressive fiber deployment and superior customer experience.
• Technological Moat & Market Share Gains: The company's future-proof fiber network offers significant advantages in speed, latency, and upgradability over legacy technologies, enabling industry-leading customer satisfaction (NPS 6x higher than cable competitors) and consistent market share gains against rivals, including in areas with Fixed Wireless Access (FWA) competition.
• Accelerating Financial Momentum: Strong operational execution has translated into accelerating financial performance, with Q3 2025 revenue up 4% year-over-year, fiber revenue growing 12% in the first nine months of 2025, and cumulative cost savings exceeding $600 million, contributing to a projected mid-single-digit EBITDA growth in 2024.
• Strategic Acquisition by Verizon: A definitive merger agreement with Verizon Communications Inc. (VZ) for $38.50 per share in cash, expected to close by Q1 2026, validates Frontier's fiber assets and strategic direction, offering a substantial premium to shareholders and expanding fiber access across the U.S.
• Robust Liquidity and Future Potential: With approximately $1.87 billion in liquidity as of September 30, 2025, and a clear path to fully fund its 10 million fiber passing goal, Frontier is well-positioned for continued investment and, in its long-term model, anticipates generating substantial recurring cash flows to reduce leverage and return capital to investors.

The Fiber Renaissance: Rebuilding a Communications Giant

Frontier Communications Parent, Inc. (NASDAQ:FYBR) has undergone a profound transformation, shedding its legacy as a traditional telecom provider to emerge as a leading fiber-optic communications powerhouse. Incorporated in 1935, the company embarked on a strategic pivot in late 2020, committing to an ambitious "fiber-first" strategy dubbed "Building Gigabit America™." This initiative aims to construct the digital infrastructure essential for the nation's evolving connectivity needs, focusing on fiber deployment, customer acquisition, service enhancement, and operational efficiency. This strategic shift has been critical in an industry increasingly defined by escalating data demand, the foundational requirements for artificial intelligence (AI) infrastructure, and a growing trend towards market convergence.

The U.S. telecommunications landscape is intensely competitive, with major players like AT&T (T), Verizon, Comcast (CMCSA), and Charter Communications (CHTR) vying for market share. Frontier strategically positions itself as the largest pure-play fiber provider in the U.S., leveraging inherent structural advantages such as the ability to utilize existing overhead cables and ducts for fiber deployment, which competitors often lack. This allows for more efficient and cost-effective network expansion. While larger rivals benefit from national scale and diversified offerings, Frontier's regional agility and deep local presence in 25 states foster strong customer loyalty and enable tailored service delivery. The company operates in a favorable market structure, with 86% of its fiber footprint facing one or fewer gigabit-capable competitors, a distinct advantage in driving penetration.

Technological Edge: The Future-Proof Network

At the heart of Frontier's investment thesis is its core fiber-optic technology, which offers significant, quantifiable advantages over traditional copper-based alternatives like cable. Fiber provides inherently faster download and upload speeds, lower latency, and a fundamentally more reliable connection. Unlike cable, which often requires frequent upgrades to keep pace with technological advancements, fiber is "infinitely upgradable". This "future-proof" nature means the underlying fiber infrastructure can support exponential increases in data consumption with minimal additional capital expenditure, primarily requiring only electronics upgrades.

Frontier's network is already 10 gigabit symmetrical capable end-to-end. Demonstrating its commitment to innovation, 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 trial underscores the network's capacity to support future technologies with limited capital outlays, as the fiber system is already in the ground. The Fiber Labs team has been a hub of innovation, securing more patents in the last three years than in Frontier's entire history. These technological differentiators are not merely theoretical; they translate directly into superior customer experience and market performance. Over 60% of Frontier's new customers are now opting for speeds of 1 gigabit or faster, indicating a clear demand for high-performance connectivity. The company's Net Promoter Score (NPS) for fiber has dramatically improved by approximately 20 points over the past year, now standing six times higher than its closest legacy cable competitor and ranking as the highest among all fixed internet providers. This technological leadership provides Frontier with a robust competitive moat, driving customer acquisition, supporting Average Revenue Per User (ARPU) growth, and solidifying its market positioning as a leader in high-speed broadband. Furthermore, Frontier's fiber infrastructure is recognized as a "critical leg of the whole AI revolution", highlighting its foundational role in supporting the immense compute power and connectivity demands of the burgeoning AI industry.

Operational Excellence Driving Financial Momentum

Frontier's strategic pivot is evident in its operational achievements. As of September 30, 2025, the company had passed approximately 8.80 million total locations with fiber, adding 326,000 passings in Q3 2025 alone. This aggressive build-out is complemented by strong customer acquisition, with 133,000 fiber broadband net additions in Q3 2025. The company has also achieved a significant milestone, surpassing 45% penetration in its base fiber footprint by Q2 2024, demonstrating fiber's strong market appeal even against established cable and Fixed Wireless Access (FWA) competition.

Customer experience improvements have been a cornerstone of the transformation. Frontier has systematically addressed customer pain points, resulting in a 50% reduction in call volumes over the last three years and 75% of customer interactions now being digital. This focus has led to lower churn rates for fiber broadband, which stood at 1.41% in Q3 2025, down from 1.49% in the prior year period. Simultaneously, Frontier has driven Average Revenue Per User (ARPU) growth, with consumer fiber broadband ARPU increasing 5% year-over-year to $68.59 in Q3 2025. This growth is fueled by customers upgrading to higher broadband speeds, rolling off promotional pricing, and inflationary price adjustments, partially offset by increased retention efforts. The company is also expanding its portfolio of value-added services, with over 50% of new customers purchasing at least one such service in Q2 2024.

Operational efficiency initiatives have yielded substantial benefits, with cumulative run-rate cost savings exceeding $600 million by Q3 2025. These savings are derived from streamlining processes, reducing truck rolls, digitizing customer interactions, and optimizing the real estate footprint. The company is also developing self-install capabilities, which are expected to significantly reduce the cost to connect new customers from the current higher end of the $600-$800 range, potentially even below $600 over time.

Financial Performance: A Story of Inflection and Growth

Frontier's operational successes are clearly reflected in its financial statements, marking a significant inflection point for the company. For the three months ended September 30, 2025, total revenue increased 4% year-over-year to $1,550 million, and for the nine months ended September 30, 2025, total revenue grew 4% to $4,600 million. This growth was predominantly driven by the robust performance of its fiber segment. Fiber revenue for the nine months ended September 30, 2025, surged 12% year-over-year to $2,808 million, significantly offsetting declines in legacy copper, voice, and video services.

Consumer revenue, a key growth engine, increased 4% to $2,464 million for the first nine months of 2025, propelled by a 26% rise in consumer fiber broadband revenues. Business and wholesale revenues also saw a 3% increase to $2,086 million over the same period, driven by data and internet services growth.

While operating income for the nine months ended September 30, 2025, saw a slight decrease to $237 million due to increased depreciation from fiber network investments, the company reported an operating income of $117 million for the third quarter of 2025, up from $86 million in the prior year period. Net loss for Q3 2025 was $76 million, an improvement from $82 million in Q3 2024. Adjusted EBITDA has shown consistent growth, with Q2 2024 marking the fourth consecutive quarter of adjusted EBITDA growth, and the company achieved full-year EBITDA growth in 2023 for the first time in over a decade.

Liquidity remains robust, with approximately $1.87 billion available as of September 30, 2025, comprising cash and equivalents, and available capacity on its delayed draw term loan (DDTL) and revolving credit facilities. The company's balance sheet is healthy, with 88% of its total debt at fixed rates and no significant maturities until 2027.

A landmark fiber securitization in August 2023, raising $2.1 billion, and a subsequent $750 million issuance in July 2024, have provided a clear pathway to fully fund its fiber build and reduce its cost of capital over time.
Cash flows provided from operating activities increased to $1,500 million for the nine months ended September 30, 2025.

Strategic Outlook and Future Value Creation

Frontier's forward-looking strategy is anchored by its commitment to fiber expansion and the impending merger with Verizon. The company expects to consummate the acquisition by Verizon Communications Inc. by the first quarter of 2026, with Verizon acquiring Frontier for $38.50 per share in cash. This transaction, which has received both stockholder and FCC approval, is a testament to the value created by Frontier's fiber assets and its strategic transformation.

Operationally, Frontier plans to maintain an optimal build pace, targeting another 1.3 million fiber passings in 2024, moving closer to its initial goal of 10 million total locations. Management has indicated that "peak-build CapEx is behind us", with capital investment expected to be lower in 2024 than in 2023, guided to approximately $3.0 billion to $3.2 billion. This shift reflects a move towards consuming pre-work and inventory, with an increasing portion of spend allocated to success-based customer acquisition CapEx as net additions grow. The company anticipates adding more fiber broadband customers in 2024 than in 2023, with ARPU growth projected to be in the 3-4% range, driven by continued customer migration to higher speeds and value-added services.

For 2024, Frontier has raised the low end of its adjusted EBITDA guidance, now expecting $2.22 billion to $2.25 billion, representing a 5% growth at the midpoint. This growth is expected to accelerate throughout the year, with positive year-over-year EBITDA growth in every quarter. Full-year revenue growth is also anticipated, fueled by accelerating consumer revenue and a relatively stable performance from the business and wholesale segments. Looking further ahead, Frontier's long-term steady-state model projects that at 10 million homes passed and 45% penetration, the company could generate approximately $4 billion in EBITDA and $3 billion in recurring cash flows (after maintenance and customer connection CapEx), providing ample capacity for debt reduction and future shareholder returns. The company is also actively pursuing Broadband Equity, Access and Deployment (BEAD) program funds, with awards expected to begin flowing in 2025 and beyond, further expanding its addressable market.

Risks and Challenges on the Horizon

Despite its strong trajectory, Frontier faces several pertinent risks. The successful completion of the merger with Verizon is subject to various closing conditions, and potential termination fees exist for either party under specified circumstances. The ambitious fiber build-out is exposed to risks such as supply chain delays, inflationary pressures on costs, tight labor markets, and increased borrowing costs. While Frontier's exposure to the Affordable Connectivity Program (ACP) is relatively low at approximately 4% of its customer base, the program's uncertain future could impact a segment of its customer base.

Uncertainties surrounding the BEAD program, including recent restructuring policies by the NTIA that could impact award eligibility and cost obligations, present potential challenges to future subsidy funding. The company also faces ongoing litigation, including lawsuits related to the Verizon merger, and general business disputes. Cybersecurity remains a critical concern, as evidenced by a cyber incident in April 2024 that caused operational disruption, though it had no material financial impact. Furthermore, compliance with evolving privacy regulations could lead to increased costs and operational complexities.

Conclusion

Frontier Communications has orchestrated a remarkable turnaround, transforming itself into a formidable fiber-first communications leader. The company's relentless execution of its "Building Gigabit America™" strategy, underpinned by a superior and future-proof fiber network, has driven significant operational and financial momentum. This includes achieving industry-leading customer satisfaction, consistent market share gains, and a clear path to sustainable revenue and EBITDA growth. The impending acquisition by Verizon Communications Inc. serves as a powerful validation of Frontier's strategic vision and the intrinsic value of its fiber assets, promising a substantial return for shareholders. While challenges such as merger completion risks, build-out execution, and regulatory uncertainties persist, Frontier's robust liquidity, disciplined capital allocation, and technological leadership position it strongly to continue its growth trajectory and unlock long-term value in the evolving digital economy.