Frontier has received $440 million in government grants for broadband deployments, said the company’s chief financial officer and executive vice President Scott Beasley at an investor conference today.
Most of that money came from the Rural Digital Opportunity Fund (RDOF). Frontier was one of the top 10 winning bidders in the RDOF auction, which awarded funding to the company that committed to deploying service to an area for the lowest level of support. Frontier’s winning bids totaled over $370 million, although the final amount that the company received may have been adjusted, as most large winners had some defaults when it was found that an area believed to be unserved already had service available.
The remaining portion of the $440 million in Frontier broadband grants came from American Rescue Plan Act (ARPA) and other state and municipal funding, Beasley said. The ARPA directed $350 billion in funding to states and municipalities that could be used for a variety of infrastructure projects. Some states and municipalities opted to use a considerable portion of that funding for broadband.
The impact of Frontier’s grant funding will extend beyond the locations funded through the grants, Beasley said.
“If you’re getting subsidized to build to, let’s say, 1,000 rural homes in a certain area, you may pass 500 or 1,000 that you weren’t anticipating building,” he said. “But because you’re getting subsidized on that further part, it now makes sense for us to build that nearer part.”
When Frontier emerged from bankruptcy in 2021, its new management team made fiber broadband the company’s strategic focus. A goal was set to have fiber available to 10 million homes by 2025.
According to Beasley, some of the RDOF-funded locations are included in that 10 million. He added, though, that after establishing its initial 10-million-home goal, the company identified an additional one to two million homes that would have a similar internal rate of return to the initial 10 million — a return in the mid to high teens, he said.
Future Frontier Broadband Grants
Frontier continues to pursue additional government funding, Beasley said. He also noted that the company is in the process of challenging the broadband availability data that providers filed last year and which will determine areas eligible for support. Frontier aims to make sure that the broadband maps that are being created are accurate, he said.
As Frontier wins more funding, Beasley anticipates that it will see the same spillover effect that it saw from RDOF and ARPA funding.
“As we win additional funding, that should open up locations we can build to with private capital alone,” he said.
Frontier’s fiber focus has been yielding strong results. The company said today that it has seen broadband subscriber growth for six quarters. The fourth quarter of 2022 was the highest of those, with total adds of 75,000.
Beasley made his comments at the Citi Communications, Media & Entertainment Conference. A replay is available at this link.