Frontier Communications is being urged to begin an immediate review of its business and consider a possible sale, according to a letter from investment firm Jana Partners. The firm, which owns a stake in Frontier, warned the cable company’s shares would continue to lag otherwise.
“We wish for the Board to pursue whatever option generates the greatest risk-adjusted return for shareholders,” Barry Rosenstein and Scott Ostfeld, the firm’s two managing partners said 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.”
This comes as Frontier has been working on its upgrading its fiber network to reach 10 million locations by 2025. At the end of 2023’s third quarter, the company had added about 332,000 new fiber locations for a total of 6.2 million locations. In addition, Frontier gained 75,000 fiber customers bring its total to 1.79 million.
Frontier’s work in fiber broadband could draw interest from wireless carriers should the company go up for sale. In October, Wells Fargo analysts said they believed T-Mobile was interested in purchasing Frontier.
In the letter, the firm also suggested selling off non-core assets as well as exploring strategic partnership and joint venture opportunities. The letter also reportedly said the firm has spoken with potential partners and buyers interested in the company’s review. The parties weren’t named.
The firm said that Frontier’s sluggish stock prices were linked to the fact that the company hasn’t been able to attract new investors since it exited bankruptcy in 2021. Jana Partners said that with the factors working in Frontier’s favor, this “failure” is “alarming.”
Investors are also put off by Frontier’s “highly complex” balance sheet, its debt-funded fiber buildout strategy, and uncertain regulatory environment, according to Jana Partners.
People familiar with the matter told Reuters that Frontier is working with Goldman Sachs to evaluate its options.
“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 Frontier representative told Reuters.