According to a letter from investment firm Jana Partners, Frontier Communications is being pushed to conduct an immediate evaluation of its operations and evaluate a possible sale.
The firm, which owns a stake in Frontier, warned that otherwise, the cable company’s stock would continue to underperform.
“We wish for the Board to pursue whatever option generates the greatest risk-adjusted return for shareholders,” the firm’s two managing partners, Barry Rosenstein and Scott Ostfeld, wrote in the letter. “We believe that a bona fide evaluation of strategic alternatives would lead the Board to conclude that a sale transaction offers the best risk-adjusted outcome for shareholders.”
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This comes as Frontier works to expand its fiber network to cover 10 million locations by 2025. The corporation had installed around 332,000 new fiber spots by the end of the third quarter of 2023, for a total of 6.2 million locations. Furthermore, Frontier added 75,000 fiber users, bringing its total to 1.79 million.
If Frontier becomes public, cellphone providers might be interested in its fiber broadband work. Wells Fargo analysts stated in October that they suspected T-Mobile was interested in acquiring Frontier.
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The firm also proposed selling non-core assets and seeking strategic partnership and joint venture opportunities in the letter. According to the letter, the firm has spoken with possible partners and buyers who are interested in the company’s review. The parties were not identified.
Frontier’s poor stock prices, according to the firm, are due to the company’s inability to attract new investors after it emerged from bankruptcy in 2021. According to Jana Partners, with the factors in Frontier’s favor, this “failure” is “alarming.”
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According to Jana Partners, investors are particularly scared off by Frontier’s “highly complex” balance sheet, debt-funded fiber buildout strategy, and uncertain regulatory environment.
According to those familiar with the situation, Frontier is evaluating its options with Goldman Sachs.
“The board is committed to acting in the best interests of shareholders and remains willing to consider any strategic alternatives that may maximize shareholder value,” a spokesperson for Frontier told Reuters.
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