Frontier preps to say adios to California, report says

by Steve Blum • , ,

Less than two years after it flipped the switch and took over Verizon’s wireline systems in California – and the two million subscribers that were on those systems at the time – Bloomberg is reporting that Frontier wants out. According to the story by Nabila Ahmed and Scott Moritz, the company has engaged advisors in an attempt to reduce a crushing debt load by selling off assets (h/t to Fred Pilot at Eldo Telecom Blog for the pointer)…

The company is considering a sale of a package of landline assets in California, Florida and Texas that it acquired from Verizon Communications Inc. in a $10.5 billion deal just two years ago, the people said, asking not to be identified because the matter is private. The assets are likely to be sold in parts rather than as a single package, one of the people said…

Frontier has seen its customer base and margins shrink as rural residents abandon landlines in favor of wireless carriers.

Frontier is being squeezed on all sides. Cable companies “are beating the pants” off it, according to one stock analyst and its DSL business – with services often running slower than wet string and dodgy business practicescontinue to bleed subs.

But who would want to buy those systems?

We can safely rule out a Verizon come back. It’s hard to imagine AT&T wanting to take on more rural copper, when it’s doing its best to replace wires with low speed – 10 Mbps down/1 Mbps up – wireless technology. But if there’s a case for extending that business model into Frontier’s territory – think FirstNet – AT&T might be interested. Mark it low probability, though.

That leaves CenturyLink, which has no significant Californian subscriber base, or one of the smaller rural telcos, of which there are many. Or something completely out of the blue. The question then becomes: who has the capital and expertise needed to succeed in California’s rural telecom market?