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Frontier seeks $800m for fibre build

US broadband provider Frontier is after fresh funding to maintain the momentum of its ambitious network deployment.

The company this week announced it will launch a new debt offer totalling $800 million, repayable by 2030. In a brief statement, Frontier said it intends to use the sum to fund capital investments and operating costs arising from its fibre rollout and the growth of its fibre customer base, and for general corporate purposes.

Led by former Vodafone UK CEO Nick Jeffery, Frontier is on a mission to pass 10 million premises by the end of 2025, up from 4 million at the end of last year. That doesn’t come cheap: it expects full-year capex to reach $2.4-$2.5 billion in 2022, up from $1.7 billion last year. It’s worth the cost to Frontier though. Investing in fibre has been its raison d’etre since its emergence from bankruptcy protection last April. It is the central pillar of the company’s entire strategy.

It’s also carrying around a lot less debt these days. When it filed for Chapter 11 in April 2020, debts totalled $21.9 billion, with assets of $17.4 billion. At the end of March this year, total debt was almost $8 billion; assets totalled $16.8 billion. Net debt stood at $5.8 billion.

All of which is a long-winded way of saying that Frontier is in much better financial shape than it was before, and investors are likely to feel more comfortable buying up $800 million worth of debt.

The pay-off for all this fibre investment is customer growth, and here things seem to be moving in the right direction. In its most recent quarterly financial report, which came out last Friday, Frontier revealed broadband net additions in Q1 were 20,000, compared to net customer losses of 14,000 a year earlier. Its fibre customer base increased 10.4 percent year-on-year, driven by net additions of 54,000.

As well as a renewed sense of purpose, Frontier has also added to its management team, with Jeffery appointing in April his former Vodafone UK colleague Vishal Dixit as chief strategy officer. Dixit was director of strategy and wholesale at Voda, and was credited with spearheading the operator’s turnaround, which included expanding its fibre network. In his new job, his primary responsibility is to accelerate Frontier’s so-called ‘fibre-first’ strategy.

And then of course there’s the corporate rebrand. An exercise in distilling the essence of an entire company’s values into a snazzy new logo, while making sure brand consultants can afford nice holidays. Frontier did one of these in April, and while the new look represents a break from Frontier’s debt-ridden past, it is nonetheless reminiscent of Jeffery’s former employer, albeit a vaguely cyberpunk-looking reinterpretation of it. These things are highly subjective of course, but here is a side-by-side comparison so readers can judge for themselves:

 

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