Jana Partners has built a new shareholder position in Frontier and advocates that the telco should be sold.
Scott Ostfeld, Jana’s managing partner, said in a Reuters report that Frontier's depressed valuation and strong position in the fiber broadband sector would make it an attractive asset for wireless carriers and private equity-owned assets in the industry, as well as for infrastructure and private equity funds.
Further, Ostfeld said that a “large communications company” has partnered with the firm and is investing with it but would not reveal the name of the company.
Even as Frontier has been expanding fiber broadband to more homes and business locations, the report revealed that the debt-funded fiber buildout strategy fails to win over public market investors. Hence, a sale to a strategic buyer or private equity firm is now the best option for shareholders.
Focus on long-term value
A Frontier spokeswoman said Frontier was aware of Jana's proposal and is looking "forward to understanding their views,” adding that the telco talks to all investors on a regular basis.
"Our Board of Directors and management team are focused on driving long-term value for our shareholders, employees, and customers and continue to take actions that enable us to deliver on this objective," the spokeswoman said.
Private equity fiber hunger
Frontier isn’t the only fiber provider that has garnered interest from equity firms. Private equity has continued to interest fiber-centric providers in recent years.
KKR, Apollo Global, Searchlight Capital Partners, Macquarie Infrastructure Partners, EQT, Oak Hill and Ares Capital have all made significant investments in the fiber sector.
Consolidated Communications planned all-cash sale to Searchlight Capital Partners and British Columbia Investment Management for $3.1 billion is one of the most recent deals to be consummated.
In 2022, Apollo Global paid $7.5 billion for assets from Lumen Technologies to create Brightspeed.
Earlier, Cincinnati Bell, now altafiber, was acquired by Macquarie Infrastructure Partners for $2.9 billion, making it a private company. Since then, altafiber has passed over 300,000 addresses with fiber, totaling over 1.1 million homes with fiber.