Frontier Communications' planned exit from Chapter 11 restructuring cleared an important hurdle after its plan received the FCC's blessing on January 14.
The thumbs-up arrives about nine months after Frontier filed for Chapter 11 bankruptcy protection in the hope of cutting $10 billion of debt and emerging with the financial footing to support renewed investments and fresh growth. Just prior to the filing last year, Frontier told investors that a "significant under-investment in fiber" and network upgrades played a big role in fueling the company's problems, and that it intends to right that by accelerating fiber deployments in its footprint.
Tied into the approval, the FCC also granted Frontier a waiver that enabled the company to bid in phase one of the Rural Digital Opportunity Fund (RDOF) while the process was still ongoing. Frontier bid for and won a small piece of the phase one RDOF auction as other players, including Charter Communications and SpaceX, came away with the bulk of the location wins.
'Virtual separation' concerns
The FCC approved the deal despite concerns lodged by the Communications Workers of America (CWA) and The Utility Reform Network (TURN) that Frontier was setting up a "virtual separation" of the company that divided aeras between "InvestCo" states that would receive new fiber deployments and "ImproveCo" states that would not. They asked the FCC to investigate those concerns before rendering a decision.
"CWA believes that the public interest will be harmed if Frontier fails to invest equitably across its footprint and service to Frontier customers is allowed to further deteriorate – especially in any service areas deemed 'ImproveCo,' which may represent as much as 25% of households in Frontier's current service areas," the CWA said in a statement issued Friday.
In its ruling this week, the FCC said it found no merit in those concerns, holding that it expects Frontier is "more likely to improve service quality and invest in infrastructure than it would be absent its prompt emergence from bankruptcy." The FCC also pointed out that Frontier remains subject to service quality requirements in all states, including in New York, where Frontier has committed to a three-year service quality improvement plan as part of the state's approval of the company's reorg.
Frontier expects to emerge from Chapter 11 in the early part of 2021, noting that it now has regulatory approvals or favorable determinations from the FCC and 13 states: Arizona, Georgia, Illinois, Minnesota, Mississippi, Nebraska, Nevada, New York, Ohio, South Carolina, Texas, Utah and Virginia. The U.S. Bankruptcy Court for the Southern District of New York confirmed Frontier's plan in August 2020.
"We continue to make important progress in our constructive engagement with regulators across our service territories, and this approval from the FCC marks a major milestone," Bernie Han, Frontier's president and CEO, said in a statement. "We continue to await approval in just four states and are working to expedite those approvals to enable the Company to emerge from Chapter 11."
Nick Jeffery is set to leave his post as chief exec at Vodafone UK to join Frontier and succeed Han as CEO starting March 1, 2021.
— Jeff Baumgartner, Senior Editor, Light Reading, special to Broadband World News