“Running an auction would be a mistake now,” New Street analysts wrote. “But running a strategic review and adding a strong advisor to the board now makes lots of sense.”
They said the companies most likely to buy Frontier – AT&T, Verizon and T-Mobile – are aware there is “only one fiber asset in every market.”
“If one of them was forward thinking, they would strike preemptively rather than wait for an auction process in which their peers would compete,” said New Street analysts. “The Company and the board should be prepared for that.”
And by adding a “well-qualified” new member, Frontier’s board can decline deals from “opportunistic buyers that would undervalue the asset.”
Analysts at TD Cowen noted the strategic review puts several options on the table for Frontier, including accelerating its fiber-to-the-home build, a joint venture to go beyond the 10 million locations target as well as the opportunity to “aggressively participate in government funding” through the Broadband Equity, Access and Deployment (BEAD) program.
As for whether Frontier might sell itself, TD Cowen said the company “still needs to be valued properly as we consider the fiber in the ground and the fiber that has yet to be deployed.”