TelecomLead.com analysts say the talks between Verizon and Frontier Communications to acquire the latter will strengthen its fiber broadband strategy.
The proposed deal would boost Verizon’s fiber network. Verizon will be in a better position to compete with AT&T, the Wall Street Journal reported.
The report did not provide details about the deal value, but Frontier was valued at nearly $7 billion as of last close.
FIBER FOCUS
Verizon Communications has added 391,000 broadband customers in the second-quarter of 2024. This compares with addition of 418,000 broadband customers in Q2 2023, indicating that Verizon is not doing well in the broadband business.
Verizon had 11.5 million broadband subscribers at the end of Q2 2024 as compared with 10.7 million broadband subscribers at the end of the fourth quarter of 2023.
Verizon rival AT&T is positioning itself as a fiber and 5G operator. The latest financial performance of AT&T indicates that the telecom operator has started gaining from its investment in fiber and 5G network.
AT&T Fiber has added 239,000 fiber broadband customers in Q2 2024. AT&T says its fiber coverage passed 27.8 million consumer and business locations. AT&T’s consumer broadband revenues was $2.7 billion (up 7 percent) in Q2.
The Capex of AT&T is aimed at passing 30 million-plus consumer and business locations with fiber by the end of 2025.
WHY FRONTIER
Frontier Communications is aiming to add 1.3 million premises for its fiber network coverage in 2024. The expected capital investment of Frontier is $3 billion – $3.2 billion for 2024. Frontier had a second-quarter Capex of $678 million.
Frontier has added 388,000 fiber passings to reach 7.2 million total locations passed with fiber in the second-quarter.
Frontier has added 92,000 fiber broadband customers. Fiber broadband customer growth was 18.6 percent.
Frontier reported revenue of $1.48 billion (up 2.1 percent), operating income of $91 million and net loss of $123 million in the second-quarter.
Consumer revenue of $789 million increased 1.8 percent year-over-year as growth in fiber was partly offset by declines in copper
Frontier’s consumer fiber broadband revenue was $393 million (up 22.8 percent) driven by customer additions of 90,000. Consumer fiber broadband customer churn was 1.40 percent. Frontier’s consumer fiber broadband ARPU was $65.32 (up 3.5 percent).
Frontier’s Business and Wholesale fiber revenue was $317 million (up 11.6 percent) mainly driven by addition of 2,000 customers. Frontier’s Business and Wholesale fiber broadband customer churn was 1.31 percent. Frontier’s Business and Wholesale fiber broadband ARPU was $97.83 (down 2.5 percent) in the second-quarter of 2024.
Baburajan Kizhakedath
