Activist investment firm Jana Partners has established a fresh position in Frontier Communications and is urging the third-largest provider of fiber broadband services in the United States to explore a sale.
Frontier, despite its strong standing in the fiber broadband sector, is currently undervalued. Jana's managing partner, Scott Ostfeld, believes that its assets would make it an appealing prospect for wireless carriers, private equity-owned entities in the sector, as well as infrastructure and private equity funds.
Despite Frontier's extensive efforts to expand its services to more households and businesses in response to the increasing demand for high-speed internet, the company's debt-funded approach to fiber deployment has not gained favor in the public markets. According to Ostfeld, a sale to a strategic buyer or a private equity firm represents the most favorable course of action for shareholders.
In response to Jana's presentation, a company spokeswoman stated that Frontier is attentive to their perspectives and anticipates gaining a better understanding of their views. She emphasized that the company maintains regular communication with all of its investors.
She further noted, "Our Board of Directors and management team are committed to creating lasting value for our shareholders, employees, and customers, and continue to take measures that enable us to fulfill this goal."
The acquisition of fiber providers has become a prominent investment theme for private equity firms and infrastructure investors globally. Leading entities like KKR, Apollo Global, Searchlight Capital Partners, Macquarie Infrastructure Partners, EQT, Oak Hill, and Ares Capital have been particularly active in this sector.