Frontier (FTR) Divests Communication Towers For $80 Million
Zacks Investment Research | Jan 22, 2019 08:25PM ET
Frontier Communications Corporation (NASDAQ:FTR) recently sold a portfolio of 100 wireless communication towers primarily in Connecticut, New York and California for $80 million. The assets were sold to Everest Infrastructure Partners — a Pittsburgh, PA-based investment firm specializing in infrastructure investments.
With the acquisition, Everest Infrastructure Partners presently owns 300 cell tower assets in 45 states across the country. The buyout is the biggest of its kind by the real estate investment firm and has reportedly increased its tower holdings by about 50%. The acquired assets include numerous valuable locations in terrain and zoning-challenged environments, adjacent to Frontier’s central office facilities with easy access to transport services.
The divesture is part of the long-term strategy of the company to strengthen its balance sheet as it remains significantly challenged by slow economic recovery in its service territories. Moreover, Frontier seems to be grappling with the loss of legacy fixed telephony business to wireless and other offerings. The persistent decline in access lines continues to tighten local service revenues, which accounts for the bulk of Frontier’s total revenues.
In addition, high outstanding debt is a perennial concern for Frontier. Adjusted earnings have declined almost 200% from 2012 to 2017 as the company battles intense price wars. From 2013 to 2017, its cost of sales has witnessed a CAGR of 18.6%. We believe, if unchecked, higher costs and operating expenses will prove detrimental to the company's margins and profitability. It looks relatively more leveraged than the Zacks Investment Research
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