Frontier EVP and CFO Scott Beasley updated investors today at the Citi AppsEconomy Virtual Conference 2022, highlighting that the company saw its first broadband growth in the past 5 years during 4Q 2021.
The company added 45K fiber broadband subscribers in the quarter. When combined with legacy DSL losses, Frontier added 9K net new broadband subscribers. Frontier is currently on an aggressive fiber build strategy that aims to add a total of 6 million locations by the end of 2025, resulting in 10 million locations reached in total.
Beasley reports the company added 600K new fiber locations in 2021, with a goal of adding another million locations by the end of 2022. Beasley reports that the much discussed supply chain challenges facing the broadband industry have not had a significant impact at Frontier.
“We’ve managed through supply chain constraints and been able to perform very well in our fiber build and continue to ramp that up for 2022,” he said.
Frontier Broadband Growth
Frontier has completed ‘wave 1’ of this fiber expansion, which Beasley characterized as a bit of cherry picking, resulting in lower build costs of $500 to $600 per location. They are now beginning ‘wave 2,’ which will take them through 2025, getting them to 6 million new locations. Build costs in wave 2 are a bit higher at $900 to $1,000 per location.
Frontier does see a ‘wave 3’ coming as well, but that’s outside the scope of their current committed-to fiber build. Beasley says Frontier will look to leverage government funding programs and other partnerships to help fund wave 3 builds.
“There could be scenarios where we accelerate the build of some locations in wave 3 into wave 2,’ he said in discussing Frontier broadband growth. “That will likely be a destination of significant government funding as the roughly $45 billion of infrastructure bill funding that goes to broadband will be targeted at locations like wave 3.”
Competitive Threats
Beasley is quite confident that the symmetrical fiber capability the company is building will more than hold its own against rising competition from fixed wireless and LEO satellite broadband providers.
“Against our core gigabit plus offers, 1 gig symmetrical speeds now, we’ve said we’re going to launch 2 gig in the first half of 2022, eventually we’ll move to 10 gig, the core network is 10 gig capable now, we’ve trialed 25 gig successfully in certain parts of the network,” he said. “I don’t think fixed wireless has the capacity to compete with that core infrastructure. It will be competitive in certain niches of the market…but I don’t think it can compete with our core symmetrical speeds and fiber.”
Beasley also sees little threat from satellites, suggesting it will only be a niche serving in ‘ultra-rural’ markets.
