Frontier's fiber strategy gained momentum in Q3 as the operator added a record 104,000 residential fiber subs paired with revenue increases. Those gains come as Frontier shareholders prepare to vote on Verizon's acquisition offer.
Frontier Communications posted record fiber subscriber additions in Q3 2024, a new high-water mark that surfaces as Frontier nears a key shareholder vote on Verizon's proposed acquisition of the Dallas-based broadband operator.
Frontier said it added 104,000 residential fiber subs in the period, improving on a prior record of 90,000 in Q2 2024. With business customers included, Frontier added 108,000 fiber subs in Q3, representing a year-over-year increase of 19.3%.
Factoring in a loss of 55,000 residential copper subs and 6,000 business copper customers, Frontier added 47,000 total broadband subs in the period.
Frontier ended the quarter with 2.82 million residential broadband subs, comprised of 2.15 million fiber subs and 666,000 residential copper customers. Frontier did not disclose how the end of the FCC's Affordable Connectivity Fund (ACP) impacted the quarter, but New Street Research estimates that the operator lost 2,000 ACP-related broadband subs in Q3, and expects that loss to widen to 4,000 subs in Q4.
Frontier added 381,000 new fiber passings in Q3, keeping it on pace to build to 1.3 million locations for full-year 2024. Frontier ended Q3 with 7.6 million fiber passings, edging it closer to a stated goal to build fiber to 10 million passings by 2026.
Total consumer fiber revenues, which include Frontier's declining video and voice businesses, rose 12.1% to $537 million. Q3 consumer fiber broadband revenues jumped 21.8% to $414 million, aided by a 1.4% increase in average revenue per user (ARPU), which came in at $65.40.
Consolidated business and wholesale revenues rose 7.6% to $682 million. Business and wholesale fiber revenues climbed 17.4% to $330 million.
Shareholder vote on Verizon offer set for November 13
Frontier shareholders are scheduled to vote on Verizon's acquisition proposal of $38.50 per share on November 13. Frontier needs a majority vote, which is in question as a portion of shareholders push for a higher price. CNBC reported this week that Verizon does not plan to raise its bid for Frontier.
"Assuming that's correct, Frontier's shareholders' choice is really between $38.50 per share in cash or a go-it-alone future with the risks and opportunities that journey presents," MoffettNathanson analyst Nick Del Deo explained in a research note (registration required).
"If Frontier remains independent after November 13th, these [Q3] results will provide strong support for management's strategy and execution prowess," New Street Research analyst Jonathan Chaplin said in a research note.
New Street believes shareholders should reject Verizon's current offer. "We believe Verizon would be doing their shareholders a disservice if they walked away for want of another $10; they would still be getting the asset at an incredible discount to intrinsic value. We suspect the asset is theirs for $48.50 (although, if it were ours, we wouldn't sell for a penny less than $63 today)," Chaplin explained.
Frontier's share price, which continues to hover below Verizon's current offer of $38.50, indicates that there's little confidence that Verizon will reconsider boosting its price. Frontier stock was up just 1 cent, to $34.96 per share, in Wednesday morning trading.
Frontier did not host a call to discuss Q3 earnings or provide a financial outlook due to the pending transaction.
Last week, Frontier issued a 32-page presentation that spelled out why it believes the proposed transaction is fair and is in the best interests of Frontier shareholders along with risks Frontier would face if it were to continue as a standalone company.
You May Also Like
