Frontier will gain revenue benefits from CAF-II program, says Jefferies

Frontier, a telecommunication company (telco) that's focused on serving Tier 2 and Tier 3 markets, may see a large revenue gain in the next year by expanding broadband services through the second phase of the Connect America Fund (CAF-II). Financial analyst firm Jefferies said in a research report that out of all of the telcos that accepted CAF-II funding, Frontier should benefit the most with "2016 revenue/EBITDA up +2.8 percent /+6.8 percent relative to the prior support mechanism."

The telco accepted $283 million in CAF-II support from the Federal Communications Commission, which it says will enable it to build out broadband service to over 650,000 rural locations that it could not economically reach before. In addition, Frontier will also get CAF-II funding from Verizon in California and Texas, two markets it will enter into when it completes the acquisition of the telcos assets in those two states.