Frontier Communications Parent, Inc. (NASDAQ: FYBR) reported its third-quarter 2024 financial results, showing strong growth in fiber broadband services despite challenges in copper-based products. The company continues to focus on expanding its fiber footprint and improving customer acquisition as it heads into a significant merger with Verizon.
Q3 2024 Financial Highlights:
- Fiber Expansion: Frontier added 381,000 fiber passings, bringing its total fiber locations to 7.6 million. This expansion is a key part of the company’s strategy to enhance its broadband offerings across the U.S.
- Customer Growth: Fiber broadband customer additions totaled 108,000, representing a 19.3% year-over-year growth. This is reflective of the company’s ongoing success in attracting customers to its high-speed broadband offerings.
- Average Revenue per User (ARPU): Consumer fiber broadband ARPU grew 1.4% year-over-year, reaching $65.40.
- Revenue: Total revenue for Q3 2024 increased by 3.7% to $1.49 billion, primarily driven by fiber-based products. However, the overall revenue was partly offset by declines in copper-based products.
- Operating Income and Net Loss: Operating income was reported at $86 million, while the company posted a net loss of $82 million. The net loss was slightly improved compared to the $92 million loss reported in Q3 2023.
- Adjusted EBITDA: Adjusted EBITDA grew 4.4% year-over-year, reaching $549 million. The increase was fueled by revenue growth, along with lower costs of service, although this was partly offset by higher customer acquisition costs.
- Capital Expenditures: Frontier invested a total of $699 million in capital expenditures during the quarter, emphasizing its focus on network expansion and infrastructure development.
- Cash Flow: The company generated $618 million in net cash from operations, underscoring its strong operational performance.
Consumer Fiber Broadband Results:
- Revenue: Consumer fiber revenue grew 12.1% year-over-year, reaching $537 million, largely driven by increased fiber broadband growth.
- Fiber Broadband Revenue: Consumer fiber broadband revenue grew 21.8% year-over-year to $414 million, driven by both an increase in customers and higher ARPU.
- Customer Additions: Frontier added 104,000 new fiber broadband customers, marking a 20.0% growth from the previous year. This strong customer acquisition contributed to the overall fiber broadband customer base.
- Churn: Customer churn slightly increased to 1.49% in Q3 2024, compared to 1.47% in Q3 2023, reflecting the company’s efforts to retain customers amidst its ongoing transformation.
Business and Wholesale Results:
- Revenue: Business and wholesale revenue increased 7.6% year-over-year, totaling $682 million. This growth was driven by fiber services, particularly in data and internet services.
- Fiber Broadband Revenue: Business and wholesale fiber revenue grew 17.4% year-over-year, reaching $330 million. This was fueled by growth in fiber broadband services, particularly in the data services sector.
- Customer Additions: Business and wholesale fiber broadband customer net additions reached 4,000, representing a 9.5% year-over-year increase.
- Churn and ARPU: Business and wholesale fiber broadband churn increased to 1.50% from 1.24% in Q3 2023, while ARPU grew 0.2% year-over-year to $98.71.
Capital Structure and Liquidity:
- Liquidity: As of September 30, 2024, Frontier reported a total liquidity of $2.0 billion, including approximately $1.3 billion in cash and $0.7 billion in available borrowing capacity through its revolving credit facility.
- Debt: The company’s net leverage ratio as of September 30, 2024, stood at approximately 4.6x, with no long-term debt maturities before 2027.
Pending Acquisition by Verizon:
Frontier also provided an update on its pending acquisition by Verizon, announced on September 4, 2024. Verizon has agreed to acquire Frontier for $38.50 per share in an all-cash transaction, valued at approximately $21 billion. The acquisition is expected to close by the first quarter of 2026, pending stockholder approval and necessary regulatory clearances. A special meeting of Frontier’s stockholders will be held on November 13, 2024, to vote on the transaction.
Conclusion:
Frontier’s third-quarter results demonstrate continued momentum in its fiber broadband expansion, with strong revenue growth in both consumer and business segments. Despite some challenges with copper-based products, the company’s strategic focus on fiber is paying off, positioning it for future growth. The pending Verizon acquisition is another key development, potentially unlocking new opportunities for the company’s fiber assets as it transitions to private ownership.
About Frontier
Frontier (NASDAQ: FYBR) is the largest pure-play fiber provider in the U.S. Driven by our purpose, Building Gigabit America®, we deliver blazing-fast broadband connectivity that unlocks the potential of millions of consumers and businesses.
