Frontier CFO: Cost per passing “not the most important value driver” of fiber build

Frontier Communications said it expects its cost per passing to fall in the $1,000 to $1,100 range in 2023. Though that number is higher than expected, CFO Scott Beasley argued cost per passing is “not the most important value driver” of building fiber, pointing instead to average revenue per unit (ARPU) and penetration. Beasley explained how some of Frontier’s deployment locations have higher build costs due to terrain, but noted penetration rates are “better than expected." As for ARPU, Frontier earlier in 2023, began charging for “value-added services,” such as whole-home Wi-Fi and the eero Secure VPN – services that were previously included in broadband plans. The operator also decided to cut back on its use of gift card promotions. In terms of installation costs, Frontier’s long-term goal is to reach a cost-to-connect of roughly $600 per customer, though Beasley noted the company is “above that now” for a few reasons. “We’re still becoming more efficient in our installation capacity,” he said, pointing out how Frontier’s technician workforce is being retrained from repairing copper to installing fiber. So, the operator is “still getting up the learning curve, particularly in new geographies.” “We're far behind a lot of peers in terms of our ability, both in our network and in our IT systems, to be able to do self-install, but we're getting up the curve there,” he added. “As we get closer to the peer benchmarks of self-install, we should come back down to that $600 per passing range.”