Frontier is raising $1.05B to fuel fiber rollout, copper migration

Frontier Communications is looking to raise $1.05 billion through a fiber securitization offering, as the company continues its fiber expansion efforts.

Frontier said the notes, which qualify as green bonds, will be backed by some of its fiber assets and associated customer contracts in the Dallas area. The company may increase the size of the offering, depending on market conditions.

In a statement Frontier said the money will be used to, among other things, “defease certain existing indebtedness and for general corporate purposes, including potential investments or expenditures, such as capital expenditures and research and development, in line with Frontier’s fiber expansion and copper migration strategies.”

Frontier’s securitization bid comes over a year after the company announced it will raise $1.2 billion through a debt offering to help its fiber deployments.

The operator has said it plans to reach 1.3 million fiber passings in 2023 and that it’s focused on converting existing copper customers to fiber rather than decommissioning copper.

During Q1 earnings, Frontier CEO Nick Jeffery said it will likely be three to five years before the company starts the decommissioning process. In the meantime, Frontier is making “very targeted investments” in its copper network, for instance in areas where weather events disproportionately degrade performance.

“I think when we think about the next use of an incremental dollar, it’s much better spent building fiber in the short run versus copper decommissioning,” Jeffery said in May.

Copper is currently front and center in the telecom space, given the Wall Street Journal’s report that found at least 2,000 old telco cables in the U.S. contain degraded lead. Stocks from AT&T, Verizon, Frontier and other telcos all took a downturn after the report’s publication.

For Frontier’s part, so far it hasn’t disclosed any cable lead findings in its network. Despite the ongoing issue, New Street Research said Frontier is expected to raise $2 billion or more in the asset-backed securities (ABS) market, by including only fiber assets with no lead risk in their securitization pool or reserving a portion until the lead issue is resolved.