Frontier Communications(FYBR) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION (Unaudited) Item 1. Financial Statements This section presents the unaudited consolidated financial statements of Frontier Communications Parent, Inc. and its subsidiaries, including the balance sheets, statements of operations, comprehensive loss, equity, and cash flows, along with detailed notes explaining significant accounting policies, recent transactions, and financial instrument details Consolidated Balance Sheets | ASSETS ($ in millions) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Cash and cash equivalents | $412 | $750 | | Total current assets | $1,025 | $1,260 | | Property, plant and equipment, net | $16,785 | $15,678 | | Total assets | $21,265 | $20,614 | | LIABILITIES AND EQUITY ($ in millions) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Total current liabilities | $2,870 | $2,289 | | Long-term debt | $11,860 | $11,551 | | Total liabilities | $16,504 | $15,673 | | Total equity | $4,761 | $4,941 | | Total liabilities and equity | $21,265 | $20,614 | Consolidated Statements of Operations | ($ in millions) | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :---------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Revenue | $1,539 | $1,480 | $3,050 | $2,942 | | Total operating expenses | $1,495 | $1,389 | $2,930 | $2,761 | | Operating income | $44 | $91 | $120 | $181 | | Net loss | $(123) | $(123) | $(187) | $(122) | | Basic net loss per share | $(0.49) | $(0.49) | $(0.75) | $(0.49) | Consolidated Statements of Comprehensive Loss | ($ in millions) | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Net loss | $(123) | $(123) | $(187) | $(122) | | Other comprehensive loss, net of tax | $(4) | $(4) | $(9) | $(9) |\ | Comprehensive loss | $(127) | $(127) | $(196) | $(131) | Consolidated Statements of Equity | ($ in millions) | Balance at January 1, 2025 | Stock plans, net | Net loss | Other comprehensive loss, net of tax | Balance at June 30, 2025 | | :-------------- | :------------------------- | :--------------- | :------- | :----------------------------------- | :----------------------- | | Common Stock (Shares) | 249,695 | 604 | - | - | 250,299 | | Common Stock (Amount) | $3 | - | - | - | $3 | | Additional Paid-In Capital | $4,299 | $16 | - | - | $4,315 | | Retained Earnings | $562 | - | $(187) | - | $375 | | Accumulated Other Comprehensive Income | $77 | - | - | $(9) | $68 | | Total Equity | $4,941 | $16 | $(187) | $(9) | $4,761 | Consolidated Statements of Cash Flows | ($ in millions) | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :------------------------------------------ | :------------------------------------- | :------------------------------------- | | Net cash provided from operating activities | $996 | $709 | | Net cash used by investing activities | $(1,597) | $(207) | | Net cash provided from (used by) financing activities | $254 | $(495) | | Increase (Decrease) in cash, cash equivalents, and restricted cash | $(347) | $7 | | Cash, cash equivalents, and restricted cash at June 30, | $564 | $1,246 | Notes to Consolidated Financial Statements (1) Summary of Significant Accounting Policies This section outlines the company's foundational accounting principles, including its business description as a communications service provider, basis of financial statement presentation, use of estimates, going concern assessment, and policies for cash equivalents, investments, revenue recognition, property, plant and equipment, intangible assets, impairment, lease accounting, income taxes, and stock plans - Frontier Communications Parent, Inc. is a communications services provider in 25 states, with approximately 3.2 million broadband subscribers and 12,800 employees as of June 30, 2025[22] - The company operates in one reportable segment, providing regulated and unregulated voice, data, and video services to consumer, business, and wholesale customers[24] - Management believes the company has the ability to meet its obligations for at least one year from the Form 10-Q issuance date, preparing financial statements on a going concern basis[27] - Revenue for data, internet, voice, video, and access services is recognized as services are provided, with advance billings deferred and unbilled portions accrued[32] - The company accepted $37 million in annual support through 2032 under the RDOF Phase I program to build broadband networks in rural communities, with deployment milestones starting December 31, 2025[41] (2) Merger Agreement Frontier entered into a Merger Agreement with Verizon Communications Inc. on September 4, 2024, for Verizon to acquire Frontier at $38.50 per share in cash. The merger, unanimously approved by Frontier's Board, is subject to regulatory approvals and is expected to close by Q1 2026. Certain outstanding stock awards will convert to cash or Verizon RSUs - Frontier entered into a Merger Agreement with Verizon Communications Inc. on September 4, 2024, for Verizon to acquire Frontier[51] - Each common stock share will be converted into the right to receive $38.50 in cash[52] - The merger is expected to close by the first quarter of 2026, following approvals from stockholders (obtained Nov 13, 2024), HSR (expired Feb 14, 2025), and FCC (approved May 16, 2025)[54] - Upon termination under specified circumstances, Frontier may pay Verizon a $320 million fee, or Verizon may pay Frontier a $590 million fee for regulatory approval failures[56] (3) Recent Accounting Pronouncements Frontier is evaluating the impact of two new accounting standards: ASU 2024-03, requiring detailed expense disaggregation disclosures effective after December 15, 2026, and ASU 2023-09, improving income tax disclosures effective after December 15, 2024 - ASU No. 2024-03 requires detailed expense disaggregation disclosures, effective for annual periods beginning after December 15, 2026[58] - ASU No. 2023-09 mandates improved income tax disclosures, effective for annual periods beginning after December 15, 2024[60] (4) Revenue Recognition Frontier categorizes its revenue into Data and Internet, Voice, Video, Other, and Subsidy. Data and Internet services showed significant growth, while Voice and Video services declined. Consumer and Business/Wholesale segments both contributed to overall revenue growth Revenue by Category (Three Months Ended June 30) | ($ in millions) | 2025 | 2024 | | :-------------- | :---- | :---- | | Data and Internet services | $1,085 | $983 | | Voice services | $282 | $312 | | Video services | $68 | $88 | | Other | $87 | $83 | | Subsidy and other revenue | $17 | $14 | | Total revenue | $1,539 | $1,480 | Revenue by Customer Segment (Three Months Ended June 30) | ($ in millions) | 2025 | 2024 | | :-------------- | :---- | :---- | | Consumer | $825 | $789 | | Business and wholesale | $697 | $677 | | Subsidy and other revenue | $17 | $14 | | Total revenue | $1,539 | $1,480 | - Estimated future revenue from unsatisfied performance obligations totals $1,147 million, with $643 million expected in the remaining six months of 2025[66] (5) Accounts Receivable Accounts receivable, net, increased to $430 million as of June 30, 2025, from $379 million at December 31, 2024. The allowance for doubtful accounts increased slightly to $67 million. The provision for bad debts for the six months ended June 30, 2025, was $21 million | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Retail and Wholesale | $446 | $388 | | Other | $51 | $57 | | Less: Allowance for doubtful accounts | $(67) | $(66) | | Accounts receivable, net | $430 | $379 | - The provision for bad debts was $21 million for the six months ended June 30, 2025, a slight increase from $20 million in the prior year[68] (6) Property, Plant and Equipment Net property, plant and equipment increased to $16,785 million as of June 30, 2025, from $15,678 million at December 31, 2024. Capital expenditures for the six months ended June 30, 2025, were $1,602 million, with $31 million in capitalized interest | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Property, plant and equipment | $21,151 | $19,318 | | Less: Accumulated depreciation | $(4,366) | $(3,640) | | Property, plant and equipment, net | $16,785 | $15,678 | - Capital expenditures for the six months ended June 30, 2025, were $1,602 million, an increase from $1,292 million in the prior year[72][264] - Depreciation expense for the six months ended June 30, 2025, was $741 million, up from $625 million in the prior year[73] (7) Intangibles Total other intangibles, net, decreased to $3,104 million as of June 30, 2025, from $3,264 million at December 31, 2024, primarily due to amortization. No impairment was identified for intangibles or property, plant and equipment | ($ in millions) | June 30, 2025 Net Carrying Amount | December 31, 2024 Net Carrying Amount | | :-------------- | :-------------------------------- | :------------------------------------ | | Customer Relationships - Business | $497 | $533 | | Customer Relationships - Wholesale | $2,582 | $2,691 | | Trademarks & Tradenames | $25 | $40 | | Total other intangibles | $3,104 | $3,264 | - Amortization expense for the six months ended June 30, 2025, was $161 million, consistent with the prior year[75] (8) Fair Value of Financial Instruments The fair value of Frontier's total long-term debt was estimated at $12,123 million as of June 30, 2025, compared to a carrying amount of $11,896 million. Carrying amounts for other financial instruments approximate fair value due to short maturities | ($ in millions) | June 30, 2025 Carrying Amount | June 30, 2025 Fair Value | December 31, 2024 Carrying Amount | December 31, 2024 Fair Value | | :-------------- | :---------------------------- | :----------------------- | :-------------------------------- | :--------------------------- | | Total debt | $11,896 | $12,123 | $11,569 | $11,749 | (9) Long-Term Debt Frontier's total principal outstanding long-term debt increased to $11,896 million as of June 30, 2025, from $11,569 million at January 1, 2025, primarily due to new borrowings by subsidiaries. The company has various secured and unsecured debt instruments, including term loans, first and second lien notes, and fiber network revenue term notes Long-Term Debt Activity (Six Months Ended June 30, 2025) | ($ in millions) | January 1, 2025 | Principal Payments and Retirements | New Borrowings | June 30, 2025 | | :-------------- | :-------------- | :--------------------------------- | :------------- | :------------ | | Secured debt issued by Frontier | $8,436 | $(3) | - | $8,433 |\ | Secured debt issued by subsidiaries | $2,383 | - | $330 | $2,713 |\ | Unsecured debt issued by subsidiaries | $750 | - | - | $750 |\ | Principal outstanding | $11,569 | $(3) | $330 | $11,896 | - The weighted average interest rate on principal outstanding debt was 6.801% at June 30, 2025, down from 6.996% at December 31, 2024[80] - Frontier Holdings amended its Revolving Facility and Term Loan Facility in 2025, lowering interest margins and revising prepayment requirements[89][91] - A new $1.5 billion Delayed Draw Term Loan (DDTL) Facility was established on December 31, 2024, for Frontier Tampa Bay FL Fiber 1 LLC, secured by fiber network assets[96] - On July 1, 2024, Frontier Issuer LLC completed the issuance of $750 million in secured fiber network revenue term notes with a weighted average yield of approximately 7.4%[98] (10) Restructuring and Other Charges Restructuring and other charges for the six months ended June 30, 2025, totaled $52 million, a decrease from $60 million in the prior year. These costs primarily include severance, employee costs from workforce reductions, and consulting/legal fees related to the Verizon merger - Restructuring charges and other costs for the six months ended June 30, 2025, were $52 million, down from $60 million in the prior year[105][106] - Current period charges included $31 million for severance and employee costs and $21 million for consulting and legal costs related to the Verizon merger[105] (11) Investment and Other Income, Net Investment and other income, net, increased by $38 million to $14 million for the three months ended June 30, 2025, primarily due to a non-recurring pension remeasurement loss in the prior year. However, for the six-month period, it decreased by $25 million to $63 million, mainly due to reduced post-retirement remeasurement gain and lower interest/dividend income | ($ in millions) | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Interest and dividend income | $7 | $20 | $16 | $38 | | Pension benefit | $6 | $9 | $12 | $21 | | OPEB costs | $(1) | $(1) | $(2) | $(2) | | OPEB remeasurement gain (loss) | - | $18 | $(8) | $27 | | Pension remeasurement gain (loss) | - | $(72) | $44 | $2 | | All other, net | $2 | $2 | $1 | $2 | | Total investment and other income (loss), net | $14 | $(24) | $63 | $88 | - The three-month increase was primarily due to a $72 million pension remeasurement loss in Q2 2024, partially offset by a $13 million reduction in interest and dividend income[109] - The six-month decrease was mainly due to a $35 million reduction in post-retirement remeasurement gain and a $22 million reduction in interest and dividend income, partially offset by a $42 million increase in pension remeasurement gain[110] (12) Stock Plans Frontier operates under the 2024 Management Incentive Plan, with 8,336,901 shares available for awards as of June 30, 2025. The plan issues time-based Restricted Stock Units (RSUs) and performance-based Stock Units (PSUs), with compensation expense recognized over their vesting periods. The 2022 PSU awards paid out at 133.7% of target - As of June 30, 2025, there were 8,336,901 shares available to grant under the 2024 Management Incentive Plan[112] Restricted Stock Units Activity (Six Months Ended June 30, 2025) | (in thousands) | Number of Shares | Weighted Average Grant Date Fair Value (per share) | | :------------- | :--------------- | :----------------------------------------------- | | Balance at January 1, 2025 | 2,058 | $24.45 | | Granted | 859 | $35.88 | | Vested | (720) | $24.99 | | Forfeited | (56) | $25.19 | | Balance at June 30, 2025 | 2,141 | $28.84 | - Total unrecognized compensation cost for unvested restricted stock awards was $49 million, expected to be recognized over approximately 2 years[113] - PSU awards for 2025 are based on Adjusted Fiber EBITDA and Fiber Revenue (50% each), while 2024 PSUs also include Relative Total Shareholder Return (TSR). The 2022 PSU awards paid out at 133.7% of target[116][117][119] (13) Income Taxes Frontier recorded an income tax benefit of $16 million for the three months and $27 million for the six months ended June 30, 2025, on pre-tax losses. The effective tax rates were 11.6% and 12.8% respectively. A valuation allowance of $374 million ($295 million net of federal benefit) was recorded as of June 30, 2025, due to pre-tax book losses Effective Tax Rate Reconciliation | | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :------------------------------------------ | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Consolidated tax provision at federal statutory rate | 21.0 % | 21.0 % | 21.0 % | 21.0 % | | State income tax provisions, net of federal income tax benefit | (7.6) % | (9.9) % | (7.0) % | (10.5) % | | Effective tax rate | 11.6% | 6.7 % | 12.8 % | 5.3 % | - A valuation allowance of $374 million ($295 million net of federal benefit) was recorded as of June 30, 2025, due to recent pre-tax book losses[130] - The company will evaluate the effects of the newly enacted One Big Beautiful Bill Act (OBBB) in the third quarter, which makes many 2017 TCJA provisions permanent[131] (14) Net (Loss) Earnings Per Share Frontier reported a basic and diluted net loss per share of $(0.49) for the three months ended June 30, 2025 and 2024. For the six months ended June 30, 2025, the net loss per share was $(0.75), compared to $(0.49) in the prior year. Certain RSUs and PSUs were excluded from diluted EPS calculation as their effect would be antidilutive | ($ in millions and shares in thousands, except per share amounts) | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :---------------------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Total basic net loss attributable to Frontier common shareholders | $(123) | $(123) | $(187) | $(122) | | Basic net loss per share attributable to Frontier common shareholders | $(0.49) | $(0.49) | $(0.75) | $(0.49) | - Approximately 1,043,000 RSUs and 898,000 PSUs for the three months ended June 30, 2025, were excluded from diluted EPS calculation due to their antidilutive effect[133] (15) Comprehensive Income Comprehensive income includes net income and other gains/losses affecting equity and pension/OPEB liabilities. Accumulated other comprehensive income, net of tax, decreased to $68 million at June 30, 2025, from $77 million at January 1, 2025, primarily due to reclassifications of OPEB costs to net loss Accumulated Other Comprehensive Income (OPEB Costs) | ($ in millions) | Balance at January 1, 2025 | Amounts reclassified from accumulated other comprehensive loss to net loss | Balance at June 30, 2025 | | :-------------- | :------------------------- | :----------------------------------------------------------------------- | :----------------------- | | OPEB Costs | $77 | $(9) | $68 | Reclassified Amounts from Accumulated Other Comprehensive Income to Net Loss | ($ in millions) | For the three months ended June 30, 2025 | For the six months ended June 30, 2025 | Affected Line Item in the Statement Where Net Income (Loss) is Presented | | :-------------- | :--------------------------------------- | :------------------------------------- | :--------------------------------------------------------------------- | | Prior-service credits (costs) | $6 | $12 | Income (loss) before income taxes | | Tax impact | $(2) | $(3) | Income tax benefit | | Net income | $4 | $9 | Net income | (16) Retirement Plans Frontier's pension plan assets increased by $99 million to $2,427 million at June 30, 2025. The company recognized a $44 million pension remeasurement gain for the six months ended June 30, 2025, related to a voluntary separation plan. Total pension benefit cost for the six months ended June 30, 2025, was a benefit of $34 million, compared to a cost of $10 million in the prior year Pension Benefits Cost Components (Six Months Ended June 30) | ($ in millions) | 2025 | 2024 | | :-------------- | :---- | :---- | | Service cost | $22 | $23 | | Interest cost | $64 | $63 | | Expected return on plan assets | $(76) | $(84) | | Pension remeasurement gain | $(44) | $(2) | | Net periodic pension (benefit) costs | $(34) | - | | Pension special termination benefit enhancements | - | $10 | | Total pension (benefit) cost | $(34) | $10 | - Pension plan assets increased by $99 million to $2,427 million at June 30, 2025, driven by market value changes and contributions, offset by benefit payments[141] - A remeasurement gain of $44 million was recognized for the six months ended June 30, 2025, due to special termination benefit enhancements[142] Postretirement Benefit Cost Components (Six Months Ended June 30) | ($ in millions) | 2025 | 2024 | | :-------------- | :---- | :---- | | Service cost | $2 | $3 | | Interest cost | $14 | $15 | | Amortization of prior service credit gain | $(12) | $(13) | | OPEB remeasurement (gain) loss | $8 | $(27) | | Total periodic postretirement (benefit) cost | $12 | $(22) | (17) Commitments and Contingencies Frontier is involved in various legal proceedings and governmental investigations, including lawsuits related to the Verizon merger, which the company believes are without merit. The company accrued an incremental $66 million for legal disputes and settlements in Q2 2025. Frontier is actively pursuing broadband stimulus funds (BEAD, RDOF) but faces uncertainties regarding program requirements and potential penalties for non-compliance - Frontier accrued an incremental $66 million for legal disputes and settlements in Q2 2025, primarily for intellectual property and pole attachment matters[149] - Lawsuits and demand letters have been filed by stockholders regarding the Verizon merger, alleging disclosure deficiencies, which the company believes have no merit[150][151] - The company is actively pursuing awards under the IIJA's BEAD program, with NTIA allocating approximately $25.5 billion to states in Frontier's footprint[153][298] - NTIA's BEAD Restructuring Policy Notice on June 6, 2025, modified program requirements, rescinding preliminary awards and prohibiting additional points for 100% fiber projects, which could impact Frontier's participation[154][299] - Frontier was awarded approximately $371 million over ten years under the RDOF Phase I program to build broadband to 127,000 locations, with buildout required by December 31, 2028[160][297] (18) Segment Information Frontier operates as a single operating segment, with its CEO assessing performance and allocating resources on a consolidated basis. Expenses are categorized into revenue generating, operating, support departments, depreciation and amortization, investment and other income (loss), interest expense, and income taxes for enhanced transparency - The company operates in a single operating segment, with the CEO as the chief operating decision maker[167] Consolidated Financial Results by Expense Category (Three Months Ended June 30) | ($ in millions) | 2025 | 2024 | | :-------------- | :---- | :---- | | Revenue | $1,539 | $1,480 | | Revenue generating departments | $289 | $267 | | Operating departments | $528 | $525 | | Support departments | $221 | $199 | | Depreciation and amortization | $457 | $398 | | Investment and other income (loss) | $14 | $(24) | | Interest expense | $(197) | $(199) | | Income tax benefit | $(16) | $(9) | | Net loss | $(123) | $(123) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Frontier's financial performance, strategic priorities, and future outlook. It highlights the company's focus on fiber network expansion, customer growth, and operational efficiency, while also discussing the impact of the pending Verizon merger, financial results, liquidity, capital resources, and regulatory developments Business Overview - Frontier is a leading communications and technology provider, focused on expanding its fiber-optic network to meet increasing data demand, aiming to pass 10 million total locations with fiber[181][182][183] - As of June 30, 2025, the company passed approximately 8.5 million total locations with fiber and added 334,000 fiber passings in Q2 2025[183][187] - Key objectives achieved in Q2 2025 include 126,000 fiber broadband customer net additions and over $600 million in cumulative run-rate cost savings from operational efficiency initiatives[187] - The pending merger with Verizon, announced September 4, 2024, for $38.50 per share, is expected to close by Q1 2026[184] Financial Overview – Operating Income | ($ in millions) | For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :-------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------- | :------------------------------------- | | Operating income | $44 | $91 | $120 | $181 | - Operating income decreased by $47 million (three months) and $61 million (six months) primarily due to increased depreciation expense from fiber network investments[190][191] - Overall revenue grew by $59 million (three months) and $108 million (six months), driven by fiber data and internet services, offsetting declines in voice and video[191] (a) Results of Operations Customer Trends Broadband Customer Metrics (As of or for the three months ended June 30) | (Customer and Employee Metrics in thousands) | June 30, 2025 | June 30, 2024 | | :----------------------------------------- | :------------ | :------------ | | Fiber Broadband | | | | Consumer customers | 2,472 | 2,053 | | Business and wholesale customers | 153 | 134 | | Consumer net customer additions | 120 | 90 | | Consumer customer churn | 1.29% | 1.40% | | Consumer customer ARPU | $68.54 | $65.32 | | Copper Broadband | | | | Consumer customers | 526 | 721 | | Business and wholesale customers | 76 | 102 | | Consumer net customer losses | (45) | (50) | | Consumer customer churn | 2.26% | 2.02% | | Consumer customer ARPU | $65.11 | $58.26 | | Consumer Customer Metrics | | | | Customers | 3,283 | 3,154 | | Net customer additions | 51 | 14 | | ARPC | $84.43 | $83.57 | | Customer Churn | 1.61% | 1.65% | | Other Metrics | | | | Employees | 12,765 | 12,960 | - Consumer fiber broadband net customer additions increased to 120,000 (Q2 2025) from 90,000 (Q2 2024), with churn improving to 1.29% from 1.40%[201][203] - Consumer copper broadband net customer losses decreased to 45,000 (Q2 2025) from 50,000 (Q2 2024), but churn increased to 2.26% from 2.02% due to inflationary price increases[204][206] - Overall consumer customers increased by 4% YoY, driven by fiber broadband growth, with average monthly revenue per customer (ARPC) increasing by 1% to $84.43[207][208][211] REVENUE Revenue by Technology (Three Months Ended June 30) | ($ in millions) | 2025 | 2024 | $ Increase (Decrease) | % Increase (Decrease) | | :-------------- | :---- | :---- | :-------------------- | :-------------------- | | Fiber | $939 | $840 | $99 | 12 % | | Copper | $583 | $626 | $(43) | (7)% | | Revenue from contracts with customers | $1,522 | $1,466 | $56 | 4 % | | Subsidy revenue | $17 | $14 | $3 | 21 % | | Total revenue | $1,539 | $1,480 | $59 | 4 % | - Fiber revenue increased by 12% (three months) and 13% (six months) due to fiber network expansion and sales focus, while copper revenue declined by 7% (three months) and 8% (six months)[213][214] Revenue by Customer Segment (Three Months Ended June 30) | ($ in millions) | 2025 | 2024 | $ Increase (Decrease) | % Increase (Decrease) | | :-------------- | :---- | :---- | :-------------------- | :-------------------- | | Consumer | $825 | $789 | $36 | 5 % | | Business and Wholesale | $697 | $677 | $20 | 3 % | | Revenue from contracts with customers | $1,522 | $1,466 | $56 | 4 % | | Subsidy and other revenue | $17 | $14 | $3 | 21 % | | Total revenue | $1,539 | $1,480 | $59 | 4 % | - Consumer revenues increased by 5% (three months) and 4% (six months), driven by fiber data growth and price increases, offsetting declines in voice, video, and copper broadband[219] - Business and wholesale revenues increased by 3% for both periods, primarily from data and internet services, with a shift towards higher broadband speeds[221] Revenue by Product and Service Type (Three Months Ended June 30) | ($ in millions) | 2025 | 2024 | $ Increase (Decrease) | % Increase (Decrease) | | :-------------- | :---- | :---- | :-------------------- | :-------------------- | | Data and Internet services | $1,085 | $983 | $102 | 10% | | Voice services | $282 | $312 | $(30) | (10)% | | Video services | $68 | $88 | $(20) | (23)% | | Other | $87 | $83 | $4 | 5% | | Subsidy and other revenue | $17 | $14 | $3 | 21% | | Total revenue | $1,539 | $1,480 | $59 | 4% | - Data and Internet services revenue increased by 10% (three months) and 11% (six months), driven by fiber broadband and network access growth[226] - Voice services revenue declined by 10% for both periods due to customer losses and fewer bundles, partially offset by higher ARPU[228] - Video services revenue declined by 23% (three months) and 22% (six months) due to traditional video customer losses, despite price increases[229] OPERATING EXPENSES Operating Expenses (Three Months Ended June 30) | ($ in millions) | 2025 | 2024 | $ Increase (Decrease) | % Increase (Decrease) | | :-------------- | :---- | :---- | :-------------------- | :-------------------- | | Cost of Service | $532 | $516 | $16 | 3 % | | Selling, general, and administrative expenses | $490 | $449 | $41 | 9 % | | Depreciation and amortization | $457 | $398 | $59 | 15 % | | Restructuring costs and other charges | $16 | $26 | $(10) | (38)% | | Total operating expenses | $1,495 | $1,389 | $106 | 8 % | - Cost of service increased by $16 million (three months) and $15 million (six months) due to outside service rate increases and storm-related costs, partially offset by lower video content costs[238] - Selling, general, and administrative (SG&A) expenses increased by $41 million (three months) and $46 million (six months), primarily due to higher third-party commissions and legal dispute settlements[241] - Depreciation and amortization expenses increased by $59 million (three months) and $116 million (six months) due to higher property, plant and equipment in service[242] - Restructuring costs and other charges decreased by $10 million (three months) and $8 million (six months) due to lower severance, employee costs, and consulting/legal fees[244] OTHER NON-OPERATING INCOME AND EXPENSE Other Non-Operating Income and Expense (Three Months Ended June 30) | ($ in millions) | 2025 | 2024 | $ Increase (Decrease) | % Increase (Decrease) | | :-------------- | :---- | :---- | :-------------------- | :-------------------- | | Investment and other income, net | $14 | $(24) | $38 | (158)% | | Interest expense | $(197) | $(199) | $2 | (1)% | | Income tax benefit | $(16) | $(9) | $(7) | 78% | - Investment and other income, net, increased by $38 million for the three months ended June 30, 2025, primarily due to a $72 million pension remeasurement loss in the prior year, partially offset by reduced interest and dividend income[248] - Interest expense increased slightly by $2 million (three months) and $1 million (six months) due to a higher debt balance[250] - Income tax benefit increased to $16 million (three months) and $27 million (six months) in 2025, compared to $9 million and $7 million in 2024, respectively[251] (b) Liquidity and Capital Resources - As of June 30, 2025, Frontier had approximately $2,340 million in liquidity, comprising $412 million cash, $1,170 million available DDTL facility, and $758 million available revolving credit facility[254] - Working capital deficit increased to $1,845 million at June 30, 2025, from $1,029 million at December 31, 2024, mainly due to decreased cash and increased current liabilities[258] - Net cash provided from operating activities increased by $287 million to $996 million for the six months ended June 30, 2025[260] - Net cash used by investing activities increased significantly to $1,597 million for the six months ended June 30, 2025, primarily due to higher capital expenditures and the non-recurrence of short-term investment sales[263] - Net cash provided from financing activities increased by $749 million to $254 million for the six months ended June 30, 2025, driven by net proceeds from long-term debt borrowings and decreased vendor financing payments[267] - The company was in compliance with all debt covenants as of June 30, 2025[290] - Frontier does not maintain any material off-balance sheet arrangements[292] Item 3. Quantitative and Qualitative Disclosures about Market Risk Frontier's primary market risks are interest rate and equity price exposures, mainly related to its pension plan assets and floating rate debt. The company has minimal exposure to interest rate changes, with 89% of total debt at fixed rates. A 100 basis point increase in SOFR would result in approximately $13 million of additional annual interest expense - As of June 30, 2025, 89% of Frontier's total debt had fixed interest rates, limiting exposure to interest rate changes[313] - A 100 basis point increase in SOFR would result in approximately $13 million of additional annual interest expense[314] - The fair value of debt was approximately $12.1 billion at June 30, 2025, with a weighted average borrowing rate of 6.801% and an average maturity of approximately 4 years[315] - The pension plan assets increased by $99 million to $2,427 million at June 30, 2025, primarily due to market value changes[319] Item 4. Controls and Procedures Frontier's management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025. There have been no material changes to internal control over financial reporting during the first six months of 2025 - Disclosure controls and procedures were effective as of June 30, 2025[321] - No material changes to internal control over financial reporting occurred during the first six months of 2025[322] PART II. OTHER INFORMATION Item 1. Legal Proceedings Frontier is involved in various legal proceedings in the normal course of business, including class actions and governmental investigations. The company believes the ultimate resolution of these matters will not have a material adverse effect on its financial position, results of operations, or cash flows, after considering insurance and indemnities - Frontier is party to various legal proceedings, including individual actions, class actions, and governmental investigations[324] - Management believes the ultimate resolution of these matters will not have a material adverse effect on the company's financial position, results of operations, or cash flows[324] Item 1A. Risk Factors There have been no material changes to the Risk Factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the Risk Factors described in the Annual Report on Form 10-K for the year ended December 31, 2024[325] Item 5. Other Information During the three months ended June 30, 2025, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[326] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, as well as the iXBRL formatted financial statements and cover page - Exhibits include certifications of the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32), and iXBRL formatted financial statements (101) and cover page (104)[327] SIGNATURE