Frontier Communications Parent, Inc.

Welcome to today's Frontier Communications Q2 2022 earnings call. My name is Jordan and I'll be coordinating your call today. If you'd like to register a question, you may do so by pressing star followed by one on your telephone keypad. I'm now going to hand over to Spencer Kern, Senior Vice President of Investor Relations to begin. Spencer, please go ahead.

Good morning and welcome to Frontier Communications second quarter 2022 earnings call. This is Spencer Kern, Frontier's Head of Investor Relations, and joining me on the call today is John Stratton, Executive Chairman of the Board, Nick Jeffrey, President and Chief Executive Officer, and Scott Beasley, Chief Financial Officer. Today's presentation can be followed within the webcast and is available in the events and presentation section of our Investor Relations website. Let me now refer you to slide two, which contains our safe harbor disclaimer and remind you that this conference call may include forward-looking statements that involve risks and uncertainties that may cause actual results to differ materially from those expressed today. In addition, during this call, we will refer to certain non-GAAP financial measures, which are defined and reconciled in our earnings presentation, press release, and trending schedule. With that, I'll turn the call over to John.

Good morning, everyone, and thank you for joining today's discussion. Let me start with an updated snapshot of where our company is today on slide four. Frontier is well positioned to win in key markets, and we continue to realize our unique opportunity to create significant shareholder value. Our footprint passes a total of 15 million locations across 25 states. 4.4 million of these locations are passed by our superior fiber optic network, and we plan to expand our fiber footprint to at least 10 million locations by 2025. Our reach continues to expand, and we now serve 2.8 million broadband customers across both consumer and commercial businesses. In the last 12 months, we've generated $6 billion of revenue and $2.2 billion of adjusted EBITDA, which represents a 37% adjusted EBITDA margin. As we've said before, fiber is the future of Frontier, This is becoming our reality as fiber products alone generated $2.7 billion of our revenue and $1.1 billion of our EBITDA in the last 12 months. Fiber now represents the majority of customers and EBITDA, and we are relentlessly focused on investing to grow our fiber EBITDA rapidly. Slide five outlines our fundamental industry thesis. that the significant growth in data consumption we've seen over the last two decades will only continue to ramp up, tripling over the next four years alone. We believe fiber is best positioned to meet this long-term demand for data consumption for several reasons. First, fiber is a vastly superior product to cable and wireless alternatives today. It provides faster download speeds, faster upload speeds, and significantly lower latency. Second, the superior nature of fiber is magnified by the usage trends we see in real time. Our average fiber broadband customer consumes nearly one terabyte of data per month, multiples of what cable and wireless customers consume. In an industry where data consumption is expected to triple over the next four years, we believe the market will naturally move towards fiber. Third, Fiber networks have a clear, low-cost path to delivering broadband speeds of up to 10 gigabits per second and beyond, while requiring minimal additional capital investment. Fiber has the best economies of scale of any technology, as data throughput and consumption continue to increase across networks. And lastly, fiber is America's future-proof infrastructure and the ideal recipient of government broadband stimulus. We appreciate the NTIA's recent guidance on the deployment of federal infrastructure funds, which shifts the emphasis from instantly obsolete download and upload speed standards to a more technology-based approach with fiber-preferred network construction. We look forward to actively participating in federal and state subsidy programs to bring fiber to more Americans. And turning to slide six for an update on wave three, As I mentioned at our investor day one year ago, we announced plans to rapidly build fiber to 10 million homes in our footprint, what we have designated as waves one and two. And we said we would assess the value of maximizing our remaining 5 million homes in our footprint, what we refer to as wave three. Over the past year, we've worked hard to execute and scale up our fiber build engine. We've also increased our level of understanding and command of the fundamental levers of the business to a very detailed level. And this has led us to the conclusion that the return profile of Wave 3 is significantly higher than what we had initially modeled one year ago. More specifically, we've identified an additional 1 to 2 million plus locations that are attractive build candidates today without requiring broadband subsidies. This leaves 3 to 4 million remaining locations, which could also meet our return thresholds, dependent upon the distribution of 42 billion in federal infrastructure funding over the next several years. Importantly, our recent capital raise affords us more time to curate our Wave 3 assets. We see an attractive runway for maintaining ownership of these locations and upgrading them to fiber, although we remain open to other strategic options. It is a more attractive footprint and will remain laser-focused on maximizing its value. Turning to slide seven, ESG has always been a critical component of our mission to build Gigabit America, and publishing our inaugural report in June was an important step to share some of the initiatives that go hand-in-hand with our fiber-first transformation. On the environment, We recognize both our opportunity and responsibility to lead out sustainability in the industry and serve as stewards of the environment. Fiber uses less energy than competing technologies like cable. So as we upgrade our copper network to fiber, we're simultaneously on a path to significantly reducing our greenhouse gas footprint. We've also launched frontier green initiatives to decrease energy consumption and reduce waste. including the order of our first ever electric vehicles. On social, valuing diversity, equity, and inclusion is core to our business. This includes our commitment to creating a safe, healthy, and inclusive workplace in which our people can thrive, as well as investing in the communities where our employees live and work. On governance, we are committed to the highest standards. We lead with integrity through diverse board and executive team representation and have direct board oversight of our ESG initiatives. We've also implemented comprehensive compliance and ethics programs and built a pay for performance compensation philosophy into our executive compensation programs. I encourage you to read our report for more detail on how we're applying our ESG initiatives to align our business and practices with our values. We look forward to updating you on our progress. And now on slide eight, Our opportunity demands a relentless focus on our four levers of value creation, fiber deployment, fiber penetration, customer experience, and operational efficiency. Nick and his team have been unwavering in their pursuit of these critical priorities, and we're pleased with the strong momentum we've been able to build in the business. I'll now turn the call over to Nick to review how we've performed in the second quarter.