Beleaguered wireline service provider Frontier Communications is on the cusp of filing for bankruptcy as part of a new restructuring plan, according to multiple business media reports.
Reports suggest the US telecom operator, which appointed Bernie Han as its new CEO only seven weeks ago, met with creditors and advisors to inform them of the plan to declare bankruptcy as soon as March, in order to implement a new recovery strategy and seek their support for that move.
Frontier, which has been losing customers and reporting shrinking revenues for several years, ended September 2019 with $17.56 billion in debt. For the three months to the end of September, it reported revenues of just under $2 billion, down 6% year-on-year, and a net loss of $345 million. The operator ended September with just over 19,100 employees.
It had 3.81 million consumer customers (most of which take a broadband service over fiber or copper lines) at the end of the third quarter of 2019, down from 4.15 million a year earlier, and 381,000 business customers, down from 422,000.
The company, which currently offers services in 29 US states, is in the process of selling its operations in Washington, Oregon, Idaho and Montana for $1.352 billion in cash.
The main worry for Frontier is that, in a communications market dominated by mobile services, it has no cellular business. Other US operators, including AT&T and Verizon, are rationalizing their wireline operations, but have their significant mobile and enterprise operations to fuel the business.
Frontier applied to take part in the US auction of 28GHz spectrum in early 2019 but did not qualify for the bidding process.
Verizon can look back at its $10.5 billion sale of wireline operations to Frontier in 2016 as a canny bit of business. For Frontier, that now looks like a defining moment, and not in a good way.
Frontier's share price stands at $0.64, down from $2.39 a year ago, $7.77 two years ago and $102.90 five years ago (see chart below). The company's market value stands at about $65 million. Han has his work cut out for him.
— Ray Le Maistre, Editor-in-Chief, Light Reading