Frontier is regaining share in the SMB and wholesale services segments

Frontier may have set an aggressive target to get fiber to more homes in its territory, but its build is centered around what it calls an “integrated build plan.”

This approach enables Frontier to serve various customer profiles: wholesale wireless backhaul services, enterprises, schools, healthcare facilities and small businesses.

“We go for maximum build efficiency, which means when we build fiber in an area, we go by consumer homes, businesses, multi-dwelling units (MDUs) and addressable cell towers,” said Nick Jeffery, CEO of Frontier during the Goldman Sachs Communacopia + Technology Conference. “We build that efficiently so we can go back later and fire up those locations as we sell into them.”

Ramping commercial revenues

The telco’s efforts to revamp its business services and wholesale segments with its build-out approach are paying off. Frontier’s commercial segment, which includes businesses and wholesale carrier customers, returned to growth in the second quarter for the first time in several years.

During the second quarter of 2023, Frontier reported that business and wholesale revenue of $653 million increased 0.3% year-over-year as growth in fiber was partly offset by expected copper network service declines.

Frontier’s business and wholesale fiber revenue of $284 million increased 7.6% year-over-year as growth in data and voice was partly offset by declines in other segments.

“After we built our sales and marketing engine, the commercial and wholesale segment started to grow,” said Jeffery. “It returned to growth in the last quarter.”

Engaging SMBs

Unlike its larger telco brothers AT&T and Verizon, Frontier focuses on business services power on small to medium-sized businesses (SMBs).

AT&T and Verizon serve huge multinational customers with very sophisticated service needs. The telco found that SMBs purchase the same products as their consumer customer’s purchase.

“We are a tiny part of the enterprise market,” Jeffery said. “The enterprise market in the states is huge, but we have a lot of potential to grow and take share.”

After it built out enough passings to reach these customers, it realigned the sales and marketing teams to serve SMBs effectively.

“Small businesses tend to buy the same kind of connectivity that consumers do—high-speed symmetrical fiber and Ethernet,” Jeffery said. “We rebuilt our business segment from scratch through our integrated build program to ensure we had enough passings, and when we did, we fired up our sales and go-to-market engines.”

Regaining wholesale credibility

Frontier’s wireless backhaul agreement with AT&T was a new watershed moment for the telco’s wholesale division.

In February, Frontier signed a wholesale agreement to give AT&T the ability to deploy wireless infrastructure in Frontier facilities. Frontier’s fiber infrastructure will allow AT&T to add fiber connectivity to its wireless infrastructure outside its wireline footprint.

“We’re now successfully monetizing our wholesale agreement with AT&T,” Jeffery said. “The order book translates into sales because we prebuilt the sites we could go back and later hook up.”

While Jeffery could not name new targets, Frontier is seeing other carriers' interest in new wholesale services. “The AT&T deal itself has--opened the door to other wholesale conversations where we are regaining our credibility as a wholesale supplier,” he said.

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