Frontier Communications said today it is selling its broadband operations and assets in four rural-intensive states that have benefited greatly from the operator's participation in federal funding and grant programs.
While the operator faces criticism for not meeting some timelines associated with government monies, the condition of its rural deployments and the promise they hold for future return on investment most likely played a positive role in the deal.
As described in Light Reading, WaveDivision Capital and Searchlight Capital Partners have teamed to buy Frontier's broadband network and assets in Washington, Oregon, Idaho and Montana for $1.35 billion cash. Frontier's network passes 1.7 million residential and business sites, serving 350,000-plus customers, in this four-state region. Of these, about 500,000 are fiber-to-the-premises-capable, according to the service provider. At the close of its first quarter, Frontier's customer mix included 150,000 fiber broadband; 150,000 copper broadband and 35,000 video connections, the operator said.
Pinpointing Frontier's Federal Funds
This interactive map, created by USAC, shows Frontier's federal funding in Washington, Oregon, Idaho and Montana -- the four-state area covered in the acquisition deal with WaveDivision Capital.
(Source: CAF II map, Universal Service Administrative Co.)
Frontier is one of the nation's most active participants in Federal Communications Commission rural-broadband deployment programs. In January 2019, Frontier told the FCC it had met agency milestone in 27 states, but not CAF II's 60% interim deployment milestone in Nebraska and New Mexico, Benton Foundation reported. Frontier plans to bring coverage to more than 774,000 sites across 29 states, the FCC said.
Advancing on that goal, albeit slowly, the operator added approximately 10,000 locations in the first quarter, bringing the total to 406,000 locations, said Sheldon Bruha, senior vice president and interim CFO at Frontier, during the company's Q1 earnings call, according to a Seeking Alpha transcript. That slow rate was due to weather, Bruha added.
"Connect America Fund buildouts remain an important focus this year," said Bruha said. "We expect the pace will increase, now that we're into spring. We're also building fiber-to-the-home in certain rural markets to a total of 19,000 locations. We were leveraging state funding programs for these builds. Also, we continue to utilize fixed wireless broadband to fulfill some of our CAF requirements."
WaveDivision Capital's goal is to "bring better Internet connections to more homes and businesses throughout North America. We do this by providing investment and expertise to help companies enhance their infrastructure and deliver next generation broadband products," according to its website. Founder Steve Weed sold his prior business, Wave Broadband, last year to TPG Capital for more than $2 billion.
— Alison Diana, Editor, Broadband World News. Follow us on Twitter or @alisoncdiana.