Frontier Communications is hot on the trail of making more inroads into the business and wholesale fiber services market.
Speaking to investors during the recent Raymond James Institutional Investors Conference, Scott Beasley, Frontier's CFO, said that the company is enhancing its capabilities to target new opportunities. It is also finding success in serving small to medium business customers with its fiber-based network services.
Frontier is strengthening its salesforce to support new wholesale and business services opportunities.
“We have invested heavily in our sales force for business and wholesale,” Beasley said. “Our wholesale sales force had been traditionally underinvested, and we’ve beefed up our sales team by bringing in some great industry leaders in enterprise and wholesale, and we're seeing the benefits of that.
Pursuing wireless backhaul
One of the key elements of its enhanced sales team is to pursue fiber-to-the-tower (FTTT) opportunities better.
Proof of the company’s efforts was highlighted last year when Frontier reached an agreement that would enable AT&T to access Frontier’s fiber network to support mobile backhaul requirements. AT&T will deploy wireless network assets in certain of Frontier’s central offices and use Frontier’s fiber-to-the-tower (FTTT) infrastructure to connect to AT&T’s wireless cell towers.
As was the case with a similar 2021 agreement that enabled AT&T to leverage Frontier’s fiber assets to reach business customers where the former didn’t have its own fiber, this collaboration will enable AT&T to extend its 5G and related wireless services reach into areas where it doesn’t have a fiber footprint.
While he did not mention AT&T or other new wireless carrier customers, Beasley said Frontier provides services to several Tier 1 wireless operators.
“We are actively involved with the major wireless carriers in helping build fiber to the tower by upgrading our network to get faster speeds to their towers,” he said. “We’re pleased with the volume of tower quoting activity and expect it to be a nice tailwind for us.”
Different business approach
Besides its wholesale services unit, Frontier is seeing potential in the business market.
While Frontier reported that fourth-quarter Business and Wholesale revenue was $635 million, down 3.6% year-over-year due to declines in fiber and copper, the company pointed out that its losses are far less than its larger Tier 1 wireline peers.
Frontier’s Business and Wholesale fiber revenue decreased 2.5% year-over-year to $278 million as growth in data and voice was offset by declines in other segments, primarily driven by one-time benefits in the fourth quarter of 2022 that did not repeat during the fourth quarter.
“In business and wholesale, we are outperforming the industry,” Beasley said. “The industry has some known headwinds, but last year our business and wholesale revenue was down 1.5 percent versus industry headwinds of mid to high single digit declines.”
Frontier attributes its ability to narrow losses in business and wholesale to the growth of its fiber network. The provider’s fiber business grew four percent in 2023.
Beasley said Frontier expects “fiber services to continue to grow and offset a portion of the legacy declines with overall stability of 2 percent growth year-over-year.”
Frontier sees why it is faring better than its Tier 1 counterparts. Unlike other providers, Frontier mainly serves small to medium businesses (SMBs) unlike larger providers.
“We serve a small part of the market and we can compete and gain share even if there's structural headwinds,” Beasley said. “We’re also not exposed to large enterprise customers, and so we shifted our strategy to focus on small to medium businesses and the smallest portion of the enterprise.”
Some of Frontier's largest customers from its business unit are regional health care systems, where it has a large portion of on-net fiber coverage. Additionally, Frontier’s new management team has reinvigorated the segment with new energy and incentives, and the company is seeing benefits from those moves.
Beasley said all of the new elements “combined give us confidence we’ll be in rough stability in business and wholesale going forward.”
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