Public and private fiber operators tap asset backed security

One tactic that both private and public fiber companies are using to raise capital is to tap asset backed security (ABS), according to the analysts at TD Cowen. ABS is a type of financial investment that uses income-generating assets as collateral and is an alternative to other ways of raising capital, such as corporate bonds. For example, the public company Frontier inked a $2.1 billion ABS deal last August, making it the first public broadband company in the US to secure funds backed by fiber-to-the-home (FTTH) assets. While Frontier is a public company, ABS is also having an impact among private companies. For instance, Metronet has executed four ABS funding raises, ALLO executed an ABS raise in 2023, and now Ziply is exploring a $1.9 billion ABS raise. Cowen wrote, “The FTTH ABS frenzy has only improved access to capital for private operators.”