US operator Frontier Communications announced plans to accelerate its fibre roll-out in order to reach 10 million premises passed by the end of 2025. In the second quarter, the company added another 157,000 locations to the network, and the operator raised its target for expansion over the full year to 600,000 new homes passed from an earlier goal of 495,000. This would bring it to a total network footprint of 4 million premises by the end of 2021.
The new targets were presented at an analysts meeting alongside the company's second-quarter results. Frontier also said it plans to launch a new 2 Gbps broadband service in Q1 2022 in order to respond to the strong demand for broadband services in the US and compete better with cable offerings. It already offers symmetrical speeds of 1 Gbps.
Fibre broadband services generated USD 268 million in revenue in the second quarter, up 13.6 percent from a year earlier thanks to the expanding footprint. The company added 12,000 consumer fibre customers in the three months, helping the broadband base grow by 3.3 percent year-on-year.
The fibre growth was not enough to offset the continued erosion in legacy copper and wholesale services, with Frontier's total revenues down 7.9 percent year-on-year to USD 1.62 billion. Adjusted EBITDA fell to USD 633 million from USD 703 million a year ago, and the company announced plans for another cost-savings programme to cut USD 250 million annually by 2023.
Capital expenditures increased to USD 385 million in the quarter from USD 225 million in the second quarter of 2020, as fibre expansion initiatives accelerated. The company said it has USD 1 billion in cash and another USD 535 million available on its credit facility to support the accelerated roll-out. With leverage at 2.2x, it has no long-term debt coming due until 2027.
The company increased its budget for cash capex this year to USD 1.8 billion to support the increased fibre build. This is helped by an expected reduction in cash pension and other employee benefit payments this year to USD 70 million from a previous estimate of USD 120 million. The forecast for annual adjusted EBITDA remains at USD 2.4-2.5 billion.
