An industry analyst who is still optimistic about the future of Frontier said that Frontier Communications will not be able to avoid all the supply chain restrictions that plague the telecommunications industry. The situation should be improved significantly.
Based on Frontier’s latest network modernization plan, MoffettNathanson analyst Nick Del Deo said in a recent report: “At this stage, certain parts of the FTTH supply chain are very tight, which brings some risks to Frontier’s deployment plan. However, over time, we believe that the materials and labor markets will respond to changes in demand, especially during the peak deployment period of 2023-2025.”
Del Deo pointed out that optical fiber manufacturers are currently expanding production capacity and hope that the labor market will respond to the “market signals” that herald the acceleration of optical network deployment.
Although supply chain restrictions have affected most participants in the telecommunications industry, AT&T warned earlier this month that it would have to lower its FTTP deployment plan in 2021–to reduce the number of household coverage targets from approximately 3 million households to 2.5 million—partly because of problems with the fiber supply.
Frontier currently has no or anticipated supply chain problems, and in early August announced an accelerated FTTP network upgrade and expansion plan. The operator plans to let its FTTP network pass 10 million locations (Locations) by the end of 2025. Frontier plans to increase the number of FTTP sites to 4 million by the end of 2021, and then according to the revised multi-year “Wave 2” plan, an additional 6 million FTTP sites will be added by the end of 2025.
If everything goes according to plan, by 2025, about two-thirds of Frontier’s broadband footprint will use fiber. Del Deo pointed out in an earlier report that the rest part is still at a standstill, and speculated that Frontier may eventually seek similar upgrades on its own, with government assistance in some areas for upgrades, or even some assets will be divested or swapped.
Frontier pointed out in a recent Analyst Day that the funds for the upgrade plan will continue until early 2023, but the company acknowledged that Wave 2 still needs additional funds. Del Deo said that Frontier may try to fill this gap by issuing shares on the open market, selling shares to strategic partners, issuing preferred shares, or selling some assets that have not been included in the current upgrade plan.