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What changed in Frontier Communications Parent, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Frontier Communications Parent, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+317 added−295 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-23)

Top changes in Frontier Communications Parent, Inc.'s 2024 10-K

317 paragraphs added · 295 removed · 223 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

51 edited+16 added−34 removed46 unchanged
Biggest changeA wide range of factors could materially affect future developments and performance, including but not limited to: our significant indebtedness, our ability to incur substantially more debt in the future, and covenants in the agreements governing our current indebtedness that may reduce our operating and financial flexibility; declines in Adjusted EBITDA and revenue relative to historical levels that we are unable to offset; economic uncertainty, volatility in financial markets, and rising interest rates could limit our ability to access capital or increase the cost of capital needed to fund business operations, including our fiber expansion plans; our ability to successfully implement strategic initiatives, including our fiber buildout and other initiatives to enhance revenue and realize productivity improvements; our ability to secure necessary construction resources, materials and permits for our fiber buildout initiative in a timely and cost-effective manner; inflationary pressures on costs, including tight labor markets, increased fuel and electricity costs, and potential disruptions in our supply chain, which could adversely impact our financial condition or results of operations and hinder our fiber expansion plans; our ability to effectively manage our operations, operating expenses, capital expenditures, debt service requirements and cash paid for income taxes and liquidity; the impact of potential information technology or data security breaches or other cyber-attacks or other disruptions; the impact of laws and regulations relating to the handling of privacy and data protection; competition from cable, wireless carriers, satellite providers, wireline carriers, fiber “overbuilders” and Over-the-Top video providers, and the risk that we will not respond on a timely or profitable basis; our ability to successfully adjust to changes in the communications industry, including the effects of technological changes and competition on our capital expenditures, products, and service offerings; our ability to retain or attract new customers and to maintain relationships with existing customers, including wholesale customers; our reliance on a limited number of key supplies and vendors; declines in revenue from our voice services, switched and nonswitched access and video and data services that we cannot stabilize or offset with increases in revenue from other products and services; our ability to secure, continue to use or renew intellectual property and other licenses used in our business; our ability to hire or retain key personnel; our ability to dispose of certain assets or asset groups or to make acquisition of certain assets on terms that are attractive to us, or at all; the effects of changes in the availability of federal and state universal service funding or other subsidies to us and our competitors and our ability to obtain future subsidies; our ability to comply with the applicable CAF II and RDOF requirements and the risk of penalties or obligations to return certain CAF II and RDOF funds; 11 our ability to defend against litigation or government investigations and potentially unfavorable results from current pending and future litigation or investigations; our ability to comply with applicable federal and state consumer protection requirements; the effects of governmental legislation and regulation on our business, including costs, disruptions, possible limitations on operating flexibility and changes to the competitive landscape resulting from such legislation or regulation; the impact of regulatory, investigative, and legal proceedings and legal compliance risks; our ability to effectively manage service quality in the states in which we operate and meet mandated service quality metrics or regulatory requirements; the effects of changes in income tax rates, tax laws, regulations, or rulings, or federal or state tax assessments, including the risk that such changes may benefit our competitors more than us, as well as potential future decreases in the value of our deferred tax assets; the effects of changes in accounting policies or practices; our ability to successfully renegotiate union contracts; the effects of increased medical expenses and pension and postemployment expenses; changes in pension plan assumptions, interest rates, discount rates, regulatory rules, and/or the value of our pension plan assets; the impact of adverse changes in economic, political and market conditions in the areas that we serve, the U.S. and globally, including but not limited to, disruption in our supply chain, inflation in pricing for key materials or labor, or other adverse changes resulting from epidemics, pandemics, and outbreaks of contagious diseases, natural disasters, economic or political instability, terrorist attacks and wars, including the ongoing war in Ukraine and the Israel-Hamas war, or other adverse widespread developments; potential adverse impacts of climate change and increasingly stringent environmental laws, rules and regulations, and customer expectations and other environmental liabilities; market overhang due to substantial common stock holdings by our former creditors; certain provisions of Delaware law and our certificate of incorporation that may prevent efforts by our stockholders to change the direction or management of our company; and certain other factors set forth in our other filings with the SEC.
Biggest changeA wide range of factors could materially affect future developments and performance, including but not limited to: the risk that the Merger may not be completed in a timely manner or at all; the possibility that any or all of the various conditions to the consummation of the Merger may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); the possibility that competing offers or acquisition proposals for the Company will be made; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement relating to the Merger, including in circumstances which would require the Company to pay a termination fee; the effect of the pendency of the Merger on our ability to attract, motivate or retain key executives and employees, our ability to maintain relationships with our customers, suppliers and other business counterparties, or our operating results and business generally; risks related to the Merger diverting management’s attention from the Company’s ongoing business operations; the risk that the Company’s stock price may decline significantly if the Merger is not consummated; our significant indebtedness, our ability to incur substantially more debt in the future, and covenants in the agreements governing our current indebtedness that may reduce our operating and financial flexibility; declines in Adjusted EBITDA and revenue relative to historical levels that we are unable to offset; economic uncertainty, volatility in financial markets, and rising interest rates could limit our ability to access capital or increase the cost of capital needed to fund business operations, including our fiber expansion plans; our ability to successfully implement strategic initiatives, including our fiber buildout and other initiatives to enhance revenue and realize productivity improvements; our ability to secure necessary construction resources, materials and permits for our fiber buildout initiative in a timely and cost-effective manner; inflationary pressures on costs, including tight labor markets, increased fuel and electricity costs, and potential disruptions in our supply chain, which could adversely impact our financial condition or results of operations and hinder our fiber expansion plans; our ability to effectively manage our operations, operating expenses, capital expenditures, debt service requirements and cash paid for income taxes and liquidity; the impact of potential information technology or data security breaches or other cyber-attacks or other disruptions; the impact of laws and regulations relating to the handling of privacy and data protection; competition from cable, wireless carriers, satellite providers, wireline carriers, fiber “overbuilders” and Over-the-Top video providers, and the risk that we will not respond on a timely or profitable basis; our ability to successfully adjust to changes in the communications industry, including the effects of technological changes and competition on our capital expenditures, products, and service offerings; 10 our ability to retain or attract new customers and to maintain relationships with existing customers, including wholesale customers; our reliance on a limited number of key supplies and vendors; declines in revenue from our voice services, switched and nonswitched access and video and data services that we cannot stabilize or offset with increases in revenue from other products and services; our ability to secure, continue to use or renew intellectual property and other licenses used in our business; our ability to dispose of certain assets or asset groups or to make acquisition of certain assets on terms that are attractive to us, or at all; the effects of changes in the availability of and requirements for receiving federal and state universal service funding, grants or other subsidies to us and our competitors and our ability to obtain future subsidies; our ability to comply with the applicable CAF II and RDOF requirements and the risk of discontinuance of funding, penalties, or obligations to return certain CAF II and RDOF funds; our ability to defend against litigation or government investigations and potentially unfavorable results from current pending and future litigation or investigations; our ability to comply with applicable federal and state consumer protection requirements; the effects of governmental legislation and regulation on our business, including costs, disruptions, possible limitations on operating flexibility and changes to the competitive landscape resulting from such legislation or regulation; the impact of regulatory, investigative, and legal proceedings and legal compliance risks; our ability to effectively manage service quality in the states in which we operate and meet mandated service quality metrics or regulatory requirements; the effects of changes in income tax rates, tax laws, regulations, or rulings, or federal or state tax assessments, including the risk that such changes may benefit our competitors more than us, as well as potential future decreases in the value of our deferred tax assets; the effects of changes in accounting policies or practices; our ability to successfully renegotiate union contracts; the effects of increased medical expenses and pension and postemployment expenses; changes in pension plan assumptions, interest rates, discount rates, regulatory rules, and/or the value of our pension plan assets; the impact of adverse changes in economic, political and market conditions in the areas that we serve, the U.S. and globally, including but not limited to, disruption in our supply chain, inflation in pricing for key materials or labor, the imposition of trade tariffs or other adverse changes resulting from epidemics, pandemics, and outbreaks of contagious diseases, natural disasters, economic or political instability, terrorist attacks and wars, including the ongoing war in Ukraine and the Israel-Hamas war, or other adverse widespread developments; potential adverse impacts of climate change and increasingly stringent environmental laws, rules and regulations, and customer expectations and other environmental liabilities; potential adverse impacts from natural disasters, wildfires and other severe weather events impacting our network operations and customer base in certain markets; market overhang due to substantial common stock holdings by our former creditors; certain provisions of Delaware law and our certificate of incorporation that may prevent efforts by our stockholders to change the direction or management of our company; and certain other factors set forth in our other filings with the SEC. 11 This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative and is not intended to be exhaustive.
Our wholesale customers include local, long distance, wireless, cable and other carriers. These companies need to access locations within Frontier’s footprint to offer their services. Wholesale customers buy both voice and data services to supplement their own network infrastructure. Services We offer a broad portfolio of communications and technology services for consumer and business customers.
Our wholesale customers include local, long distance, wireless, cable and other carriers. These companies need Frontier’s network to access locations within our footprint to offer their services. Wholesale customers buy both voice and data services to supplement their own network infrastructure. Services We offer a broad portfolio of communications and technology services for consumer and business customers.
The following table shows our fiber passings as of December 31, 2023, 2022, 2021 and 2020: (1) Fiber passings represent our estimate of the number of locations, such as single-family units, apartment and condominium units, and small and medium businesses passed by our fiber distribution network in areas where we offer service and that are open to Frontier sales efforts. Fiber Penetration: We strive to deliver new best-in-market products to meet customer demands and increase penetration across our fiber footprint.
The following table shows our fiber passings as of December 31, 2024, 2023, 2022, 2021 and 2020: (1) Fiber passings represent our estimate of the number of locations, such as single-family units, apartment and condominium units, and small and medium businesses passed by our fiber distribution network in areas where we offer service and that are open to Frontier sales efforts. Fiber Penetration: We strive to deliver new best-in-market products to meet customer demands and increase penetration across our fiber footprint.
The current status of material regulatory initiatives is as follows: Connect America Fund (“CAF”)/ Rural Digital Opportunity Fund (“RDOF”): In 2015, Frontier accepted the FCC’s CAF Phase II offer, which provided $313 million in annual support through 2021 in return for the Company’s commitment to make broadband available to households within the CAF II areas in our then-existing 25 states.
The current status of material regulatory initiatives is as follows: Connect America Fund (“CAF”)/ Rural Digital Opportunity Fund (“RDOF”): In 2015, Frontier accepted the FCC’s CAF Phase II offer, which provided $313 million in annual support through 2021 in return for the Company’s commitment to make broadband available to households within the CAF II areas in our existing 25 states.
Additionally, we also provide service using fixed wireless broadband and which is deployed for some business ethernet services. Competition Competition within the wireline communications industry is intense. Technological advances as well as regulatory and legislative changes have enabled a wide range of historically non-traditional communications service providers to compete with traditional providers such as Frontier.
Additionally, we provide service using fixed wireless broadband and which is deployed for some business ethernet services. Competition Competition within the wireline communications industry is intense. Technological advances as well as regulatory and legislative changes have enabled a wide range of historically non-traditional communications service providers to compete with traditional providers such as Frontier.
Additionally, we have developed partnerships with leading OTT providers to offer their services to our customers. 5 Many of our competitors are larger, have stronger brand recognition, have more service offerings, and have greater financial resources than we currently do. All these factors create potential downward pressure on the demand for and pricing of our services.
Additionally, we have developed partnerships with leading OTT providers to offer their services to our customers. Many of our competitors are larger, have stronger brand recognition, have more service offerings, and have greater financial resources than we currently do. All these factors create potential downward pressure on the demand for and pricing of our services.
We connect to households and business locations in our service territory using fiber-optic, copper, or wireless technologies. In some cases, we provide direct fiber into a residence (fiber-to-the-home) or business premise. In other cases, a location is served with a combination of fiber and copper. We provide data, video, and voice services to customers over both architectures.
We connect to households and business locations in our service territory using fiber-optic, copper, or fixed wireless technologies. In some cases, we provide direct fiber into a residence (fiber-to-the-home) or business premise. In other cases, a location is served with a combination of fiber and copper. We provide data, video, and voice services to customers over both architectures.
Complying with such laws, as well as other legislative and regulatory action related to privacy, could result in increased costs of compliance, claims against the Company or investigations related to compliance, and increased uncertainty in the use and availability of certain consumer data. Video Programming Federal, state, and local governments extensively regulate the video services industry.
Complying with such laws, as well as other legislative and regulatory action related to privacy, could result in increased costs of compliance, claims against the Company or investigations related to compliance, and increased uncertainty in the use and availability of certain consumer data. 7 Video Programming Federal, state, and local governments extensively regulate the video services industry.
The IIJA also funds several other programs dedicated to broadband expansion and upgrades, including a $2 billion tribal broadband program, a $60 million Digital Equity fund, a $2 billion Rural Utilities Service loan and grants program, and a $1 billion middle mile grants program, in addition to other smaller amounts or amounts less directly related to deployment and adoption.
The IIJA funds several programs dedicated to broadband expansion and upgrades, including a $2 billion tribal broadband program, a $60 million Digital Equity fund, a $2 billion Rural Utilities Service loan and grants program, and a $1 billion middle mile grants program, in addition to other smaller amounts or amounts less directly related to deployment and adoption.
Among other things, these privacy-related rules obligate carriers to implement procedures to: protect specified customer information from inappropriate disclosure; obtain customer permission to use specified information in marketing; authenticate customers before disclosing account information; and periodically certify compliance with certain rules.
Among other things, these privacy-related rules obligate carriers to implement procedures to: protect specified customer information from inappropriate disclosure; obtain customer permission to 6 use specified information in marketing; authenticate customers before disclosing account information; and periodically certify compliance with certain rules.
Stockholders may request printed copies of these materials by writing to: 1919 McKinney Avenue, Dallas, Texas 75201 Attention: Corporate Secretary. ‎ 10 Forward-Looking Statements This Annual Report on Form 10-K contains "forward-looking statements," related to future events.
Stockholders may request printed copies of these materials by writing to: 1919 McKinney Avenue, Dallas, Texas 75201 Attention: Corporate Secretary. ‎ 9 Forward-Looking Statements This Annual Report on Form 10-K contains "forward-looking statements," related to future events.
And out on the road, we are using telematics in our fleet to help reinforce our safety practices to ensure safety is always part of the everyday working life in all corners and throughout the company. Our commitment to safety is guided by our Occupational Safety & Health Program and reinforced by our Environmental Health and Safety Methods and Procedures.
And out on the road, we are using telematics in our fleet to help reinforce our safety practices to ensure safety is part of our everyday working life in all corners of the company. Our commitment to safety is guided by our Occupational Safety & Health Program and reinforced by our Environmental Health and Safety Methods and Procedures.
Forward-looking statements address our expectations or beliefs concerning future events, including, without limitation, our future operating and financial performance, our ability to implement strategic initiatives, such as our fiber build and fiber penetration and our ability to realize cost savings initiatives, our ability to comply with the covenants in the agreements governing our indebtedness, our capital expenditures, and other matters.
Forward-looking statements address our expectations or beliefs concerning future events, including, without limitation, the proposed Merger with Verizon, our future operating and financial performance, our ability to implement strategic initiatives, such as our fiber build and fiber penetration and our ability to realize cost savings initiatives, our ability to comply with the covenants in the agreements governing our indebtedness, our capital expenditures, and other matters.
We achieved our annualized gross run rate cost savings target of $500 million in 2023 – double our initial target of $250 million. As of December 31, 2023, we had realized $527 million of gross annualized cost savings. Customers We deliver communications and technology services to consumer and business customers.
We achieved our annualized gross run rate cost savings target of $500 million in 2023 – double our initial target of $250 million. As of December 31, 2024, we had realized $597 million of gross annualized cost savings. Customers We deliver communications and technology services to consumer and business customers.
Consumer Our consumer customers are residential customers in single or multi-family units. We provide broadband, video, voice and other value-added services and products to our consumer customers over both fiber and copper-based networks.
Consumer Our consumer customers include customers in single or multi-family units. We provide broadband, video, voice and other value-added services and products to our consumer customers over both fiber and copper-based networks.
Advanced Hardware and Network Solutions: We offer our SMB and larger enterprise customers various hardware and network solutions utilizing cloud functionality, including end-to-end solutions like cloud managed services and Managed Wireless LAN. We offer third-party communications equipment tailored to their specific business needs through partnering with other providers. Bundles: We also provide packages of services.
See “Regulatory Environment” below. 4 Advanced Hardware and Network Solutions: We offer our SMB and larger enterprise customers various hardware and network solutions utilizing cloud functionality, including end-to-end solutions like cloud managed services and Managed Wireless LAN. We offer third-party communications equipment tailored to their specific business needs through partnering with other providers. Bundles: We also provide packages of services.
Other trademarks, trade names or service marks appearing in this report are the property of their respective owners. 8 Human Capital Management We are building a high-performing and diverse workforce committed to our purpose, Building Gigabit America TM . As of December 31, 2023, we had approximately 13,300 employees.
Other trademarks, trade names or service marks appearing in this report are the property of their respective owners. Human Capital Management We are building a high-performing and diverse workforce committed to our purpose of Building Gigabit America TM . As of December 31, 2024, we had approximately 13,000 employees.
We compare our performance against the Bureau of Labor Statistics for our industry category as well as research data and practices in similar industries to help with our assessments and, along with team-member feedback, to make improvements. Across Frontier, senior leaders are increasingly embracing the importance of safety and promoting it across the organization.
We compare our performance against the Bureau of Labor Statistics for our industry category as well as research data and practices in similar industries to help with our assessments and, along with team-member feedback, to make improvements. Across Frontier, senior leaders have embraced the importance of safety and promoting it across the organization.
We are targeting terminal penetration of 45% or higher in markets we have passed with fiber. In 2023, we added a record 318,000 fiber broadband customer net additions, resulting in fiber broadband customer growth of 19% as compared to 2022.
We are targeting terminal penetration of 45% or higher in markets we have passed with fiber. In 2024, we added a record 385,000 fiber broadband customer net additions, resulting in fiber broadband customer growth of 19% as compared to 2023.
Approximately 28% of our unionized employees are covered by collective agreements that are scheduled to expire in 2024. We consider our relations with our employees to be good. In addition, our workforce is currently supplemented by approximately 120 contract workers, primarily in construction planning.
Approximately 43% of our unionized employees are covered by collective agreements that are scheduled to expire in 2025. We consider our relations with our employees to be good. In addition, our workforce is currently supplemented by approximately 126 contract workers, primarily in construction planning.
Thereafter, the FCC has been reviewing carriers’ CAF II program completion data, and if the FCC determines that the Company did not satisfy certain applicable CAF Phase II requirements, Frontier could be required to return a portion of the funds previously received and may be subject to certain other fines, requirements and obligations.
Thereafter, USAC and the FCC have been reviewing carriers’ CAF II program completion data, and should USAC or the FCC determine that the Company did not satisfy certain applicable CAF Phase II requirements, Frontier could be required to return a portion of the funds previously received and may be subject to certain other fines, requirements and obligations.
These services are billed monthly in advance. Long-distance service to and from points outside our operating properties are provided by interconnection with the facilities of other carriers.
These services are billed monthly in advance. Long-distance service to and from points outside our operating properties are provided by interconnection with the facilities of other carriers. Our long-distance services are billed in advance for unlimited use service and billed in arrears for usage-based services.
Item 1. Business Overview Frontier is a leading communications and technology provider offering gigabit speeds to 2.9 million broadband subscribers in 25 states as of December 31, 2023. We are building critical infrastructure across the country with our fiber-optic network and cloud-based solutions, enabling secure high-speed connections.
Item 1. Business Overview Frontier is a leading communications and technology provider offering broadband services to 3.1 million broadband customers in 25 states as of December 31, 2024. We are building critical infrastructure across the country with our fiber-optic network and cloud-based solutions, enabling secure high-speed connections.
Revenue by Product Revenue by Customer Revenue by Technology In 2023, we advanced our purpose of Building Gigabit America and made substantial progress in executing on our four key strategic priorities: build fiber, sell fiber, improve the customer experience, and simplify operations. 2 Key milestone accomplishments against these four strategic priorities in 2023 include: Fiber Deployment: We met our 2023 build plan, adding approximately 1.3 million new fiber locations.
Revenue by Product Revenue by Customer Revenue by Technology In 2024, we advanced our purpose of Building Gigabit America and made substantial progress in executing on our four key strategic priorities: fiber deployment, fiber penetration, improving the customer experience, and operational efficiency. 2 Key milestone accomplishments against these four strategic priorities in 2024 include: Fiber Deployment: We met our 2024 build plan, adding approximately 1.3 million new fiber locations.
Intellectual Property We own or have licenses to various trademarks, trade names and intellectual property rights that are necessary for the operation of our business. We own or have the rights to use various trademarks, service marks and trade names referred to in this report.
Under this organizational and reporting structure, we have one reportable segment. Intellectual Property We own or have licenses to various trademarks, trade names and intellectual property rights that are necessary for the operation of our business. We own or have the rights to use various trademarks, service marks and trade names referred to in this report.
As of December 31, 2023, we had approximately 6.5 million total locations passed with fiber, and more than doubled our fiber footprint since we started our build in 2020. Our build plan is solidified by multi-year agreements with key labor and equipment partners.
As of December 31, 2024, we had approximately 7.8 million total locations passed with fiber, more than doubling our fiber footprint since we started our build in 2020. Our build plan is solidified by multi-year agreements with key labor and equipment partners.
We believe that our operations are in substantial compliance with applicable environmental laws and regulations. Segment Information Our operations are managed and reported to our CEO, our chief operating decision maker, on a consolidated basis. The CEO assesses performance and allocates resources based on the consolidated results of operations. Under this organizational and reporting structure, we have one reportable segment.
We believe that our operations are in substantial compliance with applicable environmental laws and regulations. Segment Information Our operations are managed and reported to our CEO, our chief operating decision maker (“CODM”), on a consolidated basis. The CEO assesses performance and allocates resources based on the consolidated results of operations.
To the extent that Frontier is unable to meet the milestones or construct to all locations by the required deadlines, Frontier could be required to return a portion of funds previously received and may be subject to certain other fines, requirements and obligations.
To the extent that Frontier is unable to fulfill the RDOF requirements, meet the milestones or construct to all locations by the required deadlines, funding provided to us can be discontinued and Frontier could be required to return a portion of funds previously received and may be subject to certain fines, requirements and obligations.
During 2023, restructuring initiatives and organizational realignment resulted in the separation of approximately 1,400 employees. Approximately 68% of our total employees are represented by unions and are subject to collective bargaining agreements. The term of our collective bargaining agreements is typically three years and at any point in time we generally have several agreements under negotiation and on extension.
Approximately 66% of our total employees are represented by unions and are subject to collective bargaining agreements. The term of our collective bargaining agreements is typically three years and at any point in time we generally have several agreements under negotiation and on extension.
Further, many of our competitors are not subject to the same regulations as traditional communications providers and have lower cost structures than we do. The industry has also experienced substantial consolidation in recent years, leading to competitors with significant scale. However, for the majority of our locations passed, we currently face competition from no more than one wireline competitor.
Further, many of our competitors are not subject to the same regulations as traditional communications providers such as Frontier and have lower cost structures than we do. The industry has also experienced substantial consolidation in recent years, leading to competitors with significant scale.
You should consider these important factors, as well as the risks set forth under Item 1A. “Risk Factors,” in evaluating any statement in this report or otherwise made by us or on our behalf. ‎ 12
Any of the foregoing events, or other events, could cause our results to vary from management’s forward-looking statements included in this report. You should consider these important factors, as well as the risks set forth under Item 1A. “Risk Factors,” in evaluating any statement in this report or otherwise made by us or on our behalf. ‎ 12
Given our footprint, we believe we are well positioned to capitalize on attractive demographic trends. Competition for consumer customers is based on price, bandwidth, quality, and speed of service, including promotions as well as bundling of service offerings. Our focus is to improve our customer experience by efficiently responding to their specific needs.
Competition for consumer customers is based on price, bandwidth, quality, and speed of service, including promotions as well as bundling of service offerings. Our focus is to improve our customer experience by efficiently responding to their specific needs. We believe this will improve overall service quality and encourage migration to higher speed Internet services.
Failure to meet either may result in penalties or other obligations, including subjecting the Company to additional reporting and compliance obligations. As part of its required regulatory approval to emerge from Chapter 11, the Company has also agreed to and been required by certain states to comply with additional service quality, expenditures, reporting, and other requirements.
Failure to meet either may result in penalties or other obligations, including subjecting the Company to additional reporting and compliance obligations. In some of our markets, the Company has also agreed to and been required by certain states to comply with additional service quality, expenditures, reporting, and other requirements. We also are required to report certain financial information.
Under the FCC’s RDOF Phase I auction, Frontier was awarded approximately $371 million over ten years to build gigabit-capable broadband over a fiber-to-the-premises network to approximately 127,000 locations in eight states (California, Connecticut, Florida, Illinois, New York, Pennsylvania, Texas, and West Virginia).
On January 30, 2020, the FCC adopted an order establishing the RDOF competitive reverse auction to provide support to serve high-cost areas. Frontier was awarded approximately $371 million over ten years to build gigabit-capable broadband over a fiber-to-the-premises network to approximately 127,000 locations in eight states (California, Connecticut, Florida, Illinois, New York, Pennsylvania, Texas, and West Virginia).
Fiber broadband customer net additions continued to outpace copper broadband customer net losses, resulting in 75,000 total broadband customer net additions in 2023. ‎ 3 These record fiber broadband net additions resulted in rising fiber broadband customer penetration across our footprint. o In our base fiber footprint, which consists of the 3.2 million locations that we passed with fiber at the end of 2019, penetration increased to 44.5% at the end of 2023, up from 43.2% at the end of 2022. o In our Expansion Fiber footprint, which consists of the new locations that we passed with fiber since the beginning of 2020, our target penetration is 15% - 20% after 12 months, 25% - 30% after 24 months, and at least 45% at terminal state. o We have met or exceeded our targets for fiber locations constructed in 2020, 2021 and 2022. For 2020, our 12-, 24-, and 36-month expansion fiber penetration were 22%, 31%, and 35%, respectively. For 2021, our 12- and 24-month expansion fiber penetration were 18% and 25%, respectively. For 2022, our 12-month expansion fiber penetration was 18%. Customer Experience: In 2023, we continued to focus on improving our customer service by systematically removing reasons why customers needed to call us and introducing new digital self-service tools.
Fiber broadband customer net additions continued to outpace copper broadband customer net losses, resulting in 151,000 total broadband customer net additions in 2024. ‎ 3 These record fiber broadband net additions resulted in rising fiber broadband customer penetration across our footprint. o In our base fiber footprint, which consists of the 3.2 million locations that we passed with fiber at the end of 2019, penetration increased to 46.2% at the end of 2024, up from 44.5% at the end of 2023. o In our expansion fiber footprint, which consists of the new locations that we passed with fiber since the beginning of 2020, penetration increased to 19.6% at the end of 2024, up from 17.5% at the end of 2023. Customer Experience: In 2024, we continued to focus on improving our customer service by systematically removing reasons why customers needed to call us and introducing new digital self-service tools.
We also are required to report certain financial information. At the federal level and in a number of the states in which we operate, we are subject to price cap or incentive regulation plans under which prices for regulated services are capped.
At the federal level and in a number of the states in which we operate, we are subject to price cap or incentive regulation plans under which prices for regulated services are capped. Some of these plans have limited terms and, as they expire, we may need to renegotiate with various states.
As customers continue to migrate to OTT video models, broadband is a core growth component for attracting and retaining consumer customers as well as our smaller business customers.
To differentiate ourselves from other service providers, Frontier delivers end-to-end solutions such as cloud managed services and managed wireless LAN. As customers continue to migrate to OTT video models, broadband is a core growth component for attracting and retaining consumer customers as well as our smaller business customers.
Some of these plans have limited terms 6 and, as they expire, we may need to renegotiate with various states. These negotiations could impact rates, service quality, and/or infrastructure requirements, which could also impact our earnings and capital expenditures. In other states, we are subject to regulation that limits levels of earnings and returns on investments.
These negotiations could impact rates, service quality, and/or infrastructure requirements, which could also impact our earnings and capital expenditures. In other states, we are subject to regulation that limits levels of earnings and returns on investments. We continue to advocate for competitive neutral policies and no or reduced regulation in all states.
Frontier, along with all telecommunications providers, is subject to federal and state rules governing certain of our operations and services, including the privacy of specified customer information.
In some of the states where we operate in, we have already been successful in reducing or eliminating price regulation on end-user services. Frontier, along with all telecommunications providers, is subject to federal and state rules governing certain of our operations and services, including the privacy of specified customer information.
These services are generally offered on a month-to-month basis and the service is billed primarily on a minutes-of-use basis. Switched access charges are based on access rates filed with the Federal Communications Commission (“FCC”) for interstate services, and with the respective state regulatory agency for intrastate services. See “Regulatory Environment” below.
Switched access charges are based on access rates filed with the Federal Communications Commission (“FCC”) for interstate services, and with the respective state regulatory agency for intrastate services.
During these calls, we discuss new products and programs, recognize individuals who go above and beyond, and answer our employees’ questions live. Performance Management: In 2023, we enhanced our end-to-end performance management program for non-union teammates to reinforce goal setting, alignment to our strategic priorities, development planning, performance coaching and feedback culminating in our pay-for-performance culture. Frontline Training: We added new programs to further develop our customer-facing teammates including training on our products, services and technology. Diversity, Equity and Inclusion: We began launching our Employee Impact Groups (EIGs) in 2023 to promote a culture of inclusion and innovation.
During these calls, we discuss new products and programs, recognize individuals who go above and beyond, and answer our employees’ questions live. Performance Management: Our end-to-end performance management program for non-union teammates reinforces goal setting, alignment to our strategic priorities, development planning, performance coaching and feedback enhancing our pay-for-performance culture. Employee Development: We launched a new professional development program, Frontier Forward.
Together, they provide a framework for identifying, controlling and reducing risks. As a standard practice , we maintain environmental, health, and safety compliance programs, including ongoing safety training for our field technicians. New Headquarters We relocated our headquarters from Norwalk, Connecticut to Dallas, Texas in August 2023.
Together, they provide a framework for identifying, controlling and reducing risks. As a standard practice, we maintain environmental, health, and safety compliance programs, including ongoing safety training for our field technicians. Our Workforce Our employee base decreased by approximately 2% from approximately 13,300 employees as of December 31, 2023 to approximately 13,000 as of December 31, 2024.
Over time, we expect our business mix will shift significantly, with a larger percentage of revenue coming from fiber as we implement our expansion plan.
We generated revenue of approximately $5.9 billion for the year ended December 31, 2024 with approximately 57% of our revenue attributable to our fiber-optic products and 42% of our revenue related to our copper products. Over time, we expect our business mix will shift significantly, with a larger percentage of revenue coming from fiber as we implement our expansion plan.
In addition, we operate in many dense, urban markets with favorable demographic characteristics that correlate to higher broadband usage. As an example, we have a strong presence in Texas and Florida, the two states in the U.S. with the highest population gains from 2010 to 2021.
As an example, we have a strong presence in Texas and Florida, the two states in the U.S. with the highest population gains from 2010 to 2021. Given our footprint, we believe we are well positioned to capitalize on attractive demographic trends.
Intent to stay and sense of belonging were highlighted as strengths, reflecting the positive impact of our equity, diversity and inclusion, and performance management efforts. Employee Forums: Our leadership team hosts regular all-hands meetings to share progress on priorities and solicit feedback from employees. For example, our CEO’s bi-monthly “Listen Live” events are open to all employees.
In 2024, we continued to advance our culture through: Employee Forums: Our leadership team hosts regular all-hands meetings to share progress on priorities and solicit feedback from employees. For example, our CEO’s monthly “Listen Live” events are open to all employees.
Among other results: o We Introduced new digital self-service tools including our conversational AI-chat bot and newly redesigned app. o Fiber broadband churn improved 6 basis points from 1.38% in 2022 to 1.32% in 2023. o We reduced calls into call centers by 2 million from 2022 to 2023. Operational Efficiency: Across the company, we have identified opportunities to simplify and digitize our operations.
Among other results: o Fiber broadband churn remained low at 1.36% in 2024. o We reduced customer contacts into call centers by 1 million from 2023 to 2024. Operational Efficiency: Across the company, we have identified opportunities to simplify and digitize our operations.
We also offer satellite TV video service to our customers under various agency relationships with satellite providers and Over the Top (“OTT”) video through partnerships with OTT video providers. Access Services: We offer a range of access services. Our switched access services allow other carriers to use our facilities to originate and terminate their local and long-distance voice traffic.
Access Services: We offer a range of access services. Our switched access services allow other carriers to use our facilities to originate and terminate their local and long-distance voice traffic. These services are generally offered on a month-to-month basis, and the service is billed primarily on a minutes-of-use basis.
The labels must include various information including plan price, rates, data allowance, if any, speed, latency, and other enumerated disclosures. Privacy Our businesses are subject to federal and state laws and regulations that impose various restrictions and obligations related to privacy and the handling of customers’ personal information.
Privacy Our businesses are subject to federal and state laws and regulations that impose various restrictions and obligations related to privacy and the handling of customers’ personal information. Privacy-related legislation has been adopted in a number of states in which we operate.
Federal Funding Initiatives: The Federal government has undertaken several measures to facilitate enhanced access to high-speed broadband, including through several new funding programs. As these large amounts of federal funding flow through the broadband ecosystem, we will evaluate and pursue funding opportunities that make sense for our business.
As these large amounts of federal funding flow through the broadband ecosystem, we will evaluate and pursue funding opportunities that make sense for our business. Frontier does not know what funding it may receive the impact these programs may have, or changes that may be made to these programs, if any, in the future.
As compared to our consumer customers, business customers often require more sophisticated and more data-centered solutions (e.g., IP PBX, ethernet and SIP trunking). To differentiate ourselves from other service providers, Frontier delivers end-to-end solutions such as cloud managed services and managed wireless LAN.
Competition for business customers is also based on price, bandwidth, quality, and speed of service, including pricing and promotions and bundled offerings. As compared to our consumer customers, business customers often require more sophisticated and more data-centered solutions (e.g., IP PBX, ethernet and SIP trunking).
The IIJA provides $65 billion for broadband-related initiatives, including $42.5 billion that the National Telecommunications and Information Administration (“NTIA”) will distribute to the states to support broadband deployment to unserved and underserved locations.
The IIJA also provides $65 billion to fund broadband connectivity programs, including broadband deployment to unserved and underserved locations.
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We are prioritizing our activities to locations that we believe will provide the highest investment returns. We generated revenue of approximately $5.8 billion for the year ended December 31, 2023 with approximately 52% of our total revenue attributable to activities related to our fiber-optic products with 47% of revenue related to our copper products.
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We prioritize our activities to locations that we believe will provide the highest investment returns. As we implement our fiber expansion plan, we expect our business mix will shift significantly, with a larger percentage of revenue coming from fiber. On September 4, 2024 we entered into a merger agreement (the “Merger Agreement”) with Verizon Communications Inc.
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Our long-distance services are billed in advance for unlimited use service and billed in arrears for usage-based services. 4 Video Services: We provide video services under the Frontier TV brand in portions of California, Indiana, Texas, Florida, Connecticut, North Carolina, South Carolina, Illinois, New York, and Ohio.
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(“Verizon”), pursuant to which, subject to certain terms and conditions therein, Verizon will acquire Frontier for $38.50 per share in cash (the “Merger”), representing a premium of 43.7% to Frontier’s 90-Day volume-weighted average share price (VWAP) on September 3, 2024, the last full trading day prior to published market speculation regarding a potential sale of Frontier.
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We believe this will improve overall service quality and encourage migration to higher speed Internet services. Competition for business customers is also based on price, bandwidth, quality, and speed of service, including pricing and promotions and bundled offerings.
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Subject to receipt of certain required regulatory approvals and other customary conditions specified in the Merger Agreement, we currently expect the Merger to close by the first quarter of 2026. See Note 2 - ‘‘Merger Agreement’’ to the Consolidated Financial Statements included in Part II of this Annual Report for more detail.
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We continue to advocate for competitive neutral policies and no or reduced regulation in all states. In some of the states where we operate in, we have already been successful in reducing or eliminating price regulation on end-user services.
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Video Services: We provide video services under the Frontier TV brand in some of our markets, including portions of California, Indiana, Texas, Florida, and Connecticut. We also offer satellite TV video service to our customers under various agency relationships with satellite providers and Over the Top (“OTT”) video through partnerships with OTT video providers.
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On January 30, 2020, the FCC adopted an order establishing the RDOF competitive reverse auction to provide support to serve high-cost areas.
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However, for the majority of our locations passed, we currently face competition from no more than one wireline competitor. In addition, we operate in many dense, urban markets with favorable demographic characteristics that correlate to higher broadband 5 usage.
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As part of its RDOF order, the FCC indicated it would hold a follow-on auction for the unawarded funding following the Phase I auction. However, it remains uncertain whether any such follow-on auction will occur given the recent passage of significant federal funding for broadband infrastructure.
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Fines and penalties could also be assessed to the extent Frontier were ever to decide to surrender RDOF locations previously awarded. Federal Funding Initiatives: The Federal government has undertaken several measures to facilitate enhanced access to high-speed broadband, including through several new funding programs.
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Frontier does not know what funding it may receive or the impact these programs may have, if any, in the future. Specifically, as part of the Consolidated Appropriations Act of 2021 passed in December 2020, Congress provided $3.2 billion nationally to help support access to broadband services.
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In November 2021, Congress passed the Infrastructure Investment and Jobs Act (“IIJA”).
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In furtherance of this objective, the FCC created the Emergency Broadband Benefit to provide an up to $50 (up to $75 on tribal lands) monthly benefit for qualifying low-income consumers to purchase broadband. Frontier participated in the program and is now participating in the successor Affordable Connectivity Program (“ACP”) that commenced December 31, 2021.
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The National Telecommunications and Information Administration (NTIA) is administering the principal last mile infrastructure funding program in the amount of $42.5 billion, the Broadband Equity, Access & Deployment Program (BEAD), and will distribute funding through direct grants to states, who will then award the funds based on competitive grant programs.
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In March 2021, Congress passed the American Rescue Plan Act of 2021 (“ARPA”), which created a new $10 billion Coronavirus Capital Projects Fund that is available to the states for critical capital projects, including broadband infrastructure products, that directly enable work, education, and health monitoring.
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The NTIA has allocated approximately $25.5 billion to states in Frontier’s footprint. The requirements and funding under these programs is subject to change. We are closely tracking implementation of the BEAD program, including state determinations regarding subsidy award criteria.
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The ARPA also dedicated $350 billion to State and Local Coronavirus Fiscal Recovery Funds, which give states and localities the discretion to target a portion of the funding to broadband infrastructure, among many other permissible expenditure categories.
Added
We are actively pursuing awards of these stimulus funds, however, we continue to evaluate our opportunities as the process is complex and any awards that we ultimately receive under the IIJA may require significant up-front capital expenditures or other costs.
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States and localities have used and are continuing to use some of this funding for broadband infrastructure through a combination of competitive grants or direct distributions to providers. The ARPA also included $7.2 billion nationally for schools and libraries (the Emergency Connectivity Fund) that provides support for connectivity that enables remote learning.
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Talent Engagement and Development We continue to invest in making Frontier a great place to work, where people develop through support, challenge, respect, and reward. When we create a culture that allows our people to be themselves, we find that they become their best selves. And that makes us a better company.
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The FCC established rules prioritizing funding for off-campus services and devices, and the FCC is continuing to distribute funding under this program. For information on the tax-related legislative response to the COVID-19 pandemic, see “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. In November 2021, Congress passed the Infrastructure Investment and Jobs Act (“IIJA”).
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Through the program, we are offering every leader and employee opportunities to learn, grow and develop in their career. This year, we also offered a range of mentoring opportunities and development workshops response to employee feedback. 8  Frontline Training: We added new programs to further develop our customer-facing teammates including training on our products, services and technology.
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Each state will receive a 7 minimum of $100 million, with the remainder of program funding distributed based on the extent of high-cost areas and the number of unserved locations in each state relative to the total number of unserved locations in the country.
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Our Door-to-Door sales teams received individualized training to increase their sales potential through AI generated insights on their performance.  Recognition: We continued our Changemaker program, recognizing the most outstanding builders of Gigabit America. Every quarter we award winners, one of whom becomes Changemaker of the Year.
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NTIA established initial requirements for this program in May 2022 and announced its state funding allocations in 2023. States are receiving required approvals of their Initials Proposals from NTIA on a rolling basis. As a result, the timing of each state’s location challenge process and grant program will vary. States will award funding they receive through competitive grant processes.
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We also launched a new program called Frontier Heroes that recognizes teammates who have performed courageous acts.  Community Engagement: Through our Broadband for Good program, our employees helped strengthen the communities we serve by donating fiber internet and critical resources to 50% more non-profits this year.
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In the IIJA, Congress also provides $14.2 billion for the ACP.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

61 edited+42 added−11 removed97 unchanged
Biggest changeInflationary pressures on costs and disruptions in our supply chain, may adversely impact our financial condition or results of operations, including our fiber expansion plans. During fiscal 2023, we continued to experience the impact of inflation, including upward pressure on the cost of materials, labor, fuel and electricity, and other items that are critical to our business.
Biggest changeDuring fiscal 2024, we continued to experience the impact of inflation, including upward pressure on the cost of materials, labor, fuel and electricity, and other items that are critical to our business. We continue to monitor these impacts closely. In addition, we are monitoring the potential imposition of trade tariffs which could adversely impact our business.
In some jurisdictions, regulation may restrict our ability to expand our service offerings. In some jurisdictions we may be required to undertake investments and/or other actions to ensure service quality, network reliability, or continued availability of service or face penalties and other obligations.
In some jurisdictions, regulation may restrict our ability to expand our service offerings and we may be required to undertake investments and/or other actions to ensure service quality, network reliability, or continued availability of service or face penalties and other obligations.
Our certificate of incorporation and our by-laws contain provisions that may make the acquisition of our Company more difficult without the approval of our Board, including, but not limited to, the following: action by stockholders may only be taken at an annual or special meeting duly called by or at the direction of our board of directors; and advance notice for all stockholder proposals is required.
Our certificate of incorporation and our by-laws contain provisions that may make the acquisition of our Company more difficult without the approval of our Board of Directors, including, but not limited to, the following: action by stockholders may only be taken at an annual or special meeting duly called by or at the direction of our Board of Directors; and advance notice for all stockholder proposals is required.
We are party to various legal proceedings, including, from time to time, individual actions, class and putative class actions, and governmental investigations, covering a wide range of matters and types of claims including, but not limited to, general contract disputes, billing disputes, rights of access, taxes and surcharges, consumer protection, advertising, sales and the provision of services, trademark and patent infringement, employment, regulatory, tort, claims of competitors and disputes with carriers.
We are party to various legal proceedings, including, from time to time, individual actions, class and putative class actions, and governmental investigations, covering a wide range of matters and types of claims including, but not limited to, general contract disputes, billing disputes, rights of access, taxes and surcharges, consumer protection and privacy, advertising, sales and the provision of services, trademark and patent infringement, employment, regulatory, tort, claims of competitors and disputes with carriers.
Any actual or perceived failure to comply with data privacy laws or regulations, or related contractual or other obligations, or any perceived privacy rights violation, could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for contract breaches, and other significant costs, penalties, and other liabilities, as well as harm to our reputation and market position.
Any actual or perceived failure to comply with data privacy laws or regulations, or related contractual or other obligations, or any perceived privacy rights violation, could lead to investigations, 18 claims, and proceedings by governmental entities and private parties, damages for contract breaches, and other significant costs, penalties, and other liabilities, as well as harm to our reputation and market position.
Any future contribution to our pension plan could be material and could have a material adverse effect on our liquidity by reducing cash flows. 14 Significant changes in discount rates, rates of return on pension assets, mortality tables and other factors could adversely affect our earnings and equity and increase our pension funding requirements.
Any future contribution to our pension plan could be material and could have a material adverse effect on our liquidity by reducing cash flows. Significant changes in discount rates, rates of return on pension assets, mortality tables and other factors could adversely affect our earnings and equity and increase our pension funding requirements.
In the event it were to become necessary to seek alternative suppliers and vendors, we may be unable to 18 obtain satisfactory replacement supplies, services, or utilities on economically-attractive terms, on a timely basis, or at all, which could increase costs or cause disruptions in our services.
In the event it were to become necessary to seek alternative suppliers and vendors, we may be unable to obtain satisfactory replacement supplies, services, or utilities on economically-attractive terms, on a timely basis, or at all, which could increase costs or cause disruptions in our services.
For 16 example, as service providers continue to invest in 5G and low earth orbit satellite networks and services, their 5G services could reduce demand for our network services. Such enhancements to competitors’ product offerings may influence our customers to consider other service providers, such as cable operators, CLECs, OTT or wireless providers.
For example, as service providers continue to invest in 5G and low earth orbit satellite networks and services, their 5G services could reduce demand for our network services. Such enhancements to competitors’ product offerings may influence our customers to consider other service providers, such as cable operators, CLECs, OTT or wireless providers.
Some of our competitors have materially larger scale than we do, and may, as a result, be better positioned than we are in such negotiations. As a result of these factors, the cost of content acquisition may continue to increase faster than corresponding revenues which could result in lower profitability.
Some of our competitors have materially larger scale than we do, and may, as a result, be better positioned 19 than we are in such negotiations. As a result of these factors, the cost of content acquisition may continue to increase faster than corresponding revenues which could result in lower profitability.
In addition, certain of our debt instruments contain covenants that restrict the ability of our subsidiaries to pay dividends to us. Delaware law and certain provisions in our certificate of incorporation may prevent efforts by our stockholders to change the direction or management of our Company.
In addition, certain of our debt instruments contain covenants that restrict the ability of our subsidiaries to pay dividends to us. 22 Delaware law and certain provisions in our certificate of incorporation may prevent efforts by our stockholders to change the direction or management of our Company.
Consequently, some of these competitors may be able to develop and expand their communications and network infrastructures more quickly, adapt more swiftly to new or emerging technologies and changes in customer preferences, including leading edge technologies such as artificial intelligence, machine learning and various types of data science, as well as take advantage of acquisition and other opportunities more readily and devote greater resources to the marketing and sale of their products and services than we will be able to.
Consequently, some of these competitors may be able to develop and expand their communications and network infrastructures more quickly, adapt more swiftly to new or emerging technologies and changes in customer preferences, including leading edge technologies such as artificial intelligence (“AI”), machine learning and various types of data science, as 16 well as take advantage of acquisition and other opportunities more readily and devote greater resources to the marketing and sale of their products and services than we will be able to.
Such volatility may affect our ability to access capital markets, which could lead to higher borrowing 13 costs or other unattractive financing terms or, in some cases, the inability to fund ongoing operations.
Such volatility may affect our ability to access capital markets, which could lead to higher borrowing costs or other unattractive financing terms or, in some cases, the inability to fund ongoing operations.
We must produce adequate revenues and operating cash flows that, when combined with cash on hand and borrowing under our revolving credit facility and other financings, will be sufficient to service our debt, fund our capital expenditures, taxes, pension and other employee benefit obligations and other operating expenses. We continue to experience revenue declines as compared to prior years.
We must produce adequate revenues and operating cash flows that, when combined with cash on hand and borrowing under our revolving credit facility and other financings, will be sufficient to service our debt, fund our capital expenditures, taxes, pension and other employee benefit obligations and other operating expenses. We may experience revenue declines as compared to prior years.
We cannot assure you that we will not experience significant shortages or delays in our supply chain relating to materials, labor, and other inputs necessary to our fiber expansion plans. Any such shortages or delays may adversely impact our ability to reach our fiber expansion targets on budget and on time.
We cannot assure you that we will not experience significant shortages or delays in our supply chain relating to materials, labor, trade tariffs and other inputs necessary to our fiber expansion plans. Any such shortages or delays may adversely impact our ability to reach our fiber expansion targets on budget and on time.
As of December 31, 2023, economic uncertainty, inflationary pressures, the ongoing war in Ukraine, the Israel-Hamas war, rising interest rates and the expectations around the terminal target rate of the Federal Reserve continue to produce volatility in the debt and equity markets.
As of December 31, 2024, economic uncertainty, inflationary pressures, the ongoing war in Ukraine, the Israel-Hamas war, rising interest rates and the expectations around the terminal target rate of the Federal Reserve continue to produce volatility in the debt and equity markets.
Cyberattacks against companies like ours have increased in frequency and potential harm over time, and the methods used to gain unauthorized access constantly evolve, making it increasingly difficult to anticipate, prevent, and/or detect incidents successfully in every instance.
Cyber-attacks against companies like ours have increased in frequency and potential harm over time, and the methods used to gain unauthorized access constantly evolve, making it increasingly difficult to anticipate, prevent, and/or detect incidents successfully in every instance.
We began receiving RDOF funding early in 2022. The RDOF program is less favorable to us than the CAF Phase II program was and resulted in a material reduction in our annual FCC funding, from approximately $313 million in annual support under CAF II in 2021 to approximately $37 million in annual support under RDOF beginning in early 2022.
The RDOF program is less favorable to us than the CAF Phase II program was and resulted in a material reduction in our annual FCC funding, from approximately $313 million in annual support under CAF II in 2021 to approximately $37 million in annual support under RDOF beginning in early 2022.
While we have developed systems and processes designed to protect the integrity, confidentiality and security of the confidential and personal information under our control, we cannot assure you that any security measures that we or our third-party service providers implement will be effective in preventing security incidents, disruptions, cyberattacks, or other similar events.
While we have developed systems and processes designed to protect the 17 integrity, confidentiality and security of the confidential and personal information under our control, we cannot assure you that any security measures that we or our third-party service providers implement will be effective in preventing security incidents, disruptions, cyber-attacks, or other similar events.
The National Telecommunications and Information Administration (NTIA) is administering the principal last mile infrastructure funding program in the amount of $42.5 billion, the Broadband Equity, Access & Deployment Program (BEAD), and will distribute funding through direct grants to states, who will then award the funds based on competitive grant programs.
The National Telecommunications and Information Administration (“NTIA”) is administering the principal last mile infrastructure funding program in the amount of $42.5 billion, the Broadband Equity, Access & Deployment Program (“BEAD”), and will distribute funding through direct grants to states, who will then award the funds based on competitive grant programs.
Risks Related to Regulation and Oversight Changes in federal or state regulations may reduce subsidy and other revenues we receive. A portion of Frontier’s total revenues ($75 million, or 1%, in 2023 and $54 million, or 1%, in 2022) are derived from federal and state subsidies for rural and high-cost support including RDOF.
Risks Related to Regulation and Oversight Changes in federal or state regulations may reduce subsidy and other revenues we receive. A portion of Frontier’s total revenues ($64 million, or 1%, in 2024 and $75 million, or 1%, in 2023) are derived from federal and state subsidies for rural and high-cost support including RDOF.
In addition, changes to the regulations that govern our business, including regulation of currently unregulated internet access services, may have an adverse effect on our business by reducing the allowable fees that we may charge, imposing additional compliance costs, reducing the amount of subsidies, or otherwise changing the nature of our operations and the competition in our industry.
In addition, changes to the regulations that govern our business, including more robust regulation of currently lightly regulated internet access services, may have an adverse effect on our business by reducing the allowable fees that we may charge, imposing additional compliance costs, reducing the amount of subsidies, or otherwise changing the nature of our operations and the competition in our industry.
Although the terms of the agreements currently governing our existing indebtedness restrict our restricted subsidiaries’ ability to incur additional indebtedness and liens, such restrictions are subject to several exceptions and qualifications, and the indebtedness and/or liens incurred in compliance with such restrictions may be substantial.
We may also be able to incur substantial additional indebtedness in the future. Although the terms of the agreements currently governing our existing indebtedness restrict our restricted subsidiaries’ ability to incur additional indebtedness and liens, such restrictions are subject to several exceptions and qualifications, and the indebtedness and/or liens incurred in compliance with such restrictions may be substantial.
Many factors, which may be outside our control, may cause the market price of our common stock to fluctuate significantly, including those described elsewhere in the “Risk Factors” section, as well as the following: variations in our operating and financial performance and prospects from period to period; our quarterly or annual earnings or those of other companies in our industry compared to market expectations; the public’s reaction to our press releases, other public announcements, and filings with the SEC; market overhang due to substantial holdings by former creditors that may wish to dispose of our common stock; coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; market and industry perception of our success, or lack thereof, in pursuing our fiber expansion strategy; strategic actions by us or our competitors, such as acquisitions or restructurings; changes in laws or regulations which adversely affect our industry or us; changes in accounting standards, policies, guidance, interpretations, or principles; changes in senior management or key personnel; issuances, exchanges, or sales, or expected issuances, exchanges, or sales of our capital stock; adverse resolution of new or pending litigation against us; and changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events. 20 These broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance.
Other factors include those described elsewhere in the “Risk Factors” section, as well as the following: variations in our operating and financial performance and prospects from period to period; our quarterly or annual earnings or those of other companies in our industry compared to market expectations; the public’s reaction to our press releases, other public announcements, and filings with the SEC; market overhang due to substantial holdings by former creditors that may wish to dispose of our common stock; coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; market and industry perception of our success, or lack thereof, in pursuing our fiber expansion strategy; strategic actions by us or our competitors, such as acquisitions or restructurings; changes in laws or regulations which adversely affect our industry or us; changes in accounting standards, policies, guidance, interpretations, or principles; changes in senior management or key personnel; issuances, exchanges, or sales, or expected issuances, exchanges, or sales of our capital stock; adverse resolution of new or pending litigation against us; and changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
We are subject to the oversight of certain federal and state regulatory agencies regarding commitments that were made by or imposed on the Company by the regulatory agencies in association with securing federal and state regulatory approval for the Restructuring.
We are subject to the oversight of certain federal and state regulatory agencies regarding commitments that were made by or imposed on the Company by the regulatory agencies in association with securing federal and state regulatory approval for the Restructuring and the ongoing operation of our business.
Under Internal Revenue Service (“IRS”) regulations, we are required to make minimum contributions to our pension plan annually, based upon, among other factors, the value of plan assets relative to the funding target. We made contributions of $134 million and $176 million to our pension plan in 2023 and 2022, respectively.
Under Internal Revenue Service (“IRS”) regulations, we are required to make minimum contributions to our pension plan annually, based upon, among other factors, the value of plan assets relative to the funding target. We made contributions of $133 15 million and $134 million to our pension plan in 2024 and 2023, respectively.
The potential significant negative consequences on our financial condition and results of operations that could result from our substantial debt include: limitations on our ability to obtain additional debt or equity financing on favorable terms or at all; instances in which we are unable to comply with the covenants contained in our indentures and credit agreements or to generate cash sufficient to make required debt payments, which circumstances have the potential of accelerating the maturity of some or all of our outstanding indebtedness; the allocation of a substantial portion of our cash flow from operations to service our debt, thus reducing the amount of our cash flows available for other purposes, including capital expenditures that would otherwise improve our competitive position, results of operations or stock price; requiring us to sell debt or equity securities or to sell some of our core assets, possibly on unfavorable terms, to meet payment obligations; compromising our flexibility to plan for, or react to, competitive challenges in our business and the telecommunications industries; increasing our vulnerability to general adverse economic and industry conditions, including increases in interest rates, particularly given a portion of our indebtedness bears interest at variable rates, as well as to catastrophic events; and the possibility of being put at a competitive disadvantage with competitors who, relative to their size, do not have as much debt as we do, and competitors who may be in a more favorable position to access additional capital resources.
The potential significant negative consequences on our financial condition and results of operations that could result from our substantial debt include: limitations on our ability to obtain additional debt or equity financing on favorable terms or at all; instances in which we are unable to comply with the covenants contained in our indentures and credit agreements or to generate cash sufficient to make required debt payments, which circumstances have the potential of accelerating the maturity of some or all of our outstanding indebtedness; the allocation of a substantial portion of our cash flow from operations to service our debt, thus reducing the amount of our cash flows available for other purposes, including capital expenditures that would otherwise improve our competitive position, results of operations or stock price; requiring us to sell debt or equity securities or to sell some of our core assets, possibly on unfavorable terms, to meet payment obligations; compromising our flexibility to plan for, or react to, competitive challenges in our business and the telecommunications industries; increasing our vulnerability to general adverse economic and industry conditions, including increases in interest rates, particularly given a portion of our indebtedness bears interest at variable rates, as well as to catastrophic events; and the possibility of being put at a competitive disadvantage with competitors who, relative to their size, do not have as much debt as we do, and competitors who may be in a more favorable position to access additional capital resources. 14 In addition, our First Lien Notes and Second Lien Notes, as well as a portion of our subsidiary indebtedness (other than a portion of the securitized Class A and Class B notes), are rated below “investment grade” by independent rating agencies.
In addition, we may be required to pay significant awards or enter into settlements with governmental or other entities which impose significant financial and business remediation measures. We rely on a limited number of key suppliers and vendors.
We may incur significant expenses in defending these lawsuits. In addition, we may be required to pay significant awards or enter into settlements with governmental or other entities which impose significant financial and business remediation measures. We rely on a limited number of key suppliers and vendors.
These rating agencies may lower our debt ratings further, if in the rating agencies’ judgment such an action is appropriate. A further lowering of a rating would likely increase our future borrowing costs and reduce our access to capital.
This has resulted in higher borrowing costs for us. These rating agencies may lower our debt ratings further, if in the rating agencies’ judgment such an action is appropriate. A further lowering of a rating would likely increase our future borrowing costs and reduce our access to capital.
Our required contributions for plan years 2023 and 2022, calculated as of January 1 of the relevant year, were approximately $126 million and $134 million, respectively.
Our required contributions for plan years 2024 and 2023, calculated as of January 1 of the relevant year, were approximately $130 million and $126 million, respectively.
The Company made several affirmative commitments to federal and certain state regulators to secure approval for the Restructuring, including specific investment, broadband service deployment, service quality improvements, reporting, and compliance commitments.
The Company has made several affirmative commitments to federal and certain state regulators to secure approval for the Restructuring, and the ongoing operation of our business, including specific investment, broadband service deployment, service quality improvements, reporting, and compliance commitments.
Regulators will monitor and may launch compliance inquiries or investigations and if the Company is found to have failed to comply with its obligations it could result in reputational harm, enforcement actions, litigation, penalties, fines, settlements and/or operational and financial conditions being placed on the Company, any of which could materially and adversely affect our business.
Regulators will monitor and may launch compliance inquiries or investigations and if the Company is found to have failed to comply with its obligations it could result in reputational harm, enforcement actions, litigation, penalties, fines, settlements and/or operational and financial conditions being placed on the Company, any of which could materially and adversely affect our business. 21 Issues related to the development and use of artificial intelligence could give rise to legal or regulatory actions, damage our reputation or otherwise materially harm our business.
General Risk Factors The ability to attract and retain key personnel is critical to the success of our business. Our success depends in part upon key personnel. Qualified individuals are in high demand, and we may incur significant costs to attract them.
General Risk Factors The ability to attract and retain key personnel is critical to the success of our business. Our success depends in part upon key personnel. Qualified individuals are in high demand, and we may incur significant costs to attract them, particularly in light of the uncertainty created by the pendency of the Merger, as described above.
The CAF II program and associated support ended as of December 31, 2021. We participated in the FCC’s RDOF Phase I auction and were awarded approximately $371 million over ten years to build gigabit-capable broadband over a fiber-to-the-premises network to approximately 127,000 locations in eight states (California, Connecticut, Florida, Illinois, New York, Pennsylvania, Texas, and West Virginia).
We participated in the FCC’s RDOF Phase I auction and were awarded approximately $371 million over ten years to build gigabit-capable broadband over a fiber-to-the-premises network to approximately 127,000 locations in eight states (California, Connecticut, Florida, Illinois, New York, Pennsylvania, Texas, and West Virginia). We began receiving RDOF funding early in 2022.
In addition, governmental initiatives to address climate change could, if adopted, restrict our operations, require us to make capital expenditures to comply 17 with these initiatives, and increase our costs, all of which could impact our ability to compete.
We may incur significant costs to prepare for, respond to, and mitigate the impact of climate change on our infrastructure and operations. In addition, governmental initiatives to address climate change could, if adopted, restrict our operations, require us to make capital expenditures to comply with these initiatives, and increase our costs, all of which could impact our ability to compete.
We continue to monitor these impacts closely. If our costs continue to rise, we may experience losses and diminished margins. While we may seek to recoup or offset increased costs in whole or in part through customer price increases or by implementing offsetting cost reductions, we may be unable to do so.
If our costs continue to rise, we may experience losses and diminished margins. While we may seek to recoup or offset increased costs in whole or in part through customer price increases or by implementing offsetting cost reductions, we may be unable to do so. Through December 31, 2024, we had not experienced any significant disruptions in our supply chain.
Our business and results of operations may be materially adversely impacted if we are not able to effectively compete. We cannot predict which of the many possible future technologies, products or services will be important to maintain our competitive position or what expenditures will be required to develop and provide these technologies, products, or services.
We cannot predict which of the many possible future technologies, products or services will be important to maintain our competitive position or what expenditures will be required to develop and provide these technologies, products, or services.
With this waiver, we are spreading the 2020 minimum required contribution over the five subsequent plan years, in addition to the minimum contributions owed for those plan years. We expect to make contributions to our pension plan in future years and the amount of required contributions for future years could be significant.
With this waiver, we are spreading the 2020 minimum required contribution over the five subsequent plan years, in addition to the minimum contributions owed for those plan years.
The communications industry is subject to significant changes in technology and replacing or upgrading our infrastructure to keep pace with such technological changes could result in significant capital expenditures.
We may be unable to meet the technological needs or expectations of our customers and may lose customers as a result. The communications industry is subject to significant changes in technology and replacing or upgrading our infrastructure to keep pace with such technological changes could result in significant capital expenditures.
New labor agreements or the renewal of existing agreements may impose significant additional costs on us, which could adversely affect our financial condition and results of operations in the future. Climate change and increasingly stringent environmental laws, rules and regulations, and customer expectations and other environmental liabilities, could adversely affect our business.
New labor agreements or the renewal of existing agreements may impose significant additional costs on us, which could adversely affect our financial condition and results of operations in the future.
If current and future programs and initiatives are unsuccessful, result in lower returns than we anticipate, or take longer than we anticipate, it could have a material adverse effect on our financial position and our results of operations.
If current and future programs and initiatives are unsuccessful, result in lower returns than we anticipate, or take longer than we anticipate, it could have a material adverse effect on our financial position and our results of operations. The communications industry is very competitive, and some of our competitors have superior resources which may place us at a disadvantage.
Tax legislation may adversely affect our business and financial condition. The determination of the benefit from (or provision for) income taxes requires complex estimations and significant judgments concerning the applicable tax laws.
For all these reasons, we cannot assure you that our use of AI will not harm our business, operations or reputation. Tax legislation may adversely affect our business and financial condition. The determination of the benefit from (or provision for) income taxes requires complex estimations and significant judgments concerning the applicable tax laws.
Volatility in our asset values, liability calculations, or returns may impact the costs of maintaining our pension plan and our future funding requirements.
We expect to make contributions to our pension plan in future years and the amount of required contributions for future years could be significant. Volatility in our asset values, liability calculations, or returns may impact the costs of maintaining our pension plan and our future funding requirements.
In addition, price volatility may be greater if the public float and trading volume of our common stock is low. As a result, you may suffer a loss on your investment. If there are substantial sales of shares of our common stock, the price of our common stock could decline.
These broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low. As a result, you may suffer a loss on your investment.
Security incidents result from the actions of a wide variety of actors with a wide range of motives and expertise, such as traditional hackers, personnel or the personnel of third parties, sophisticated nation-states and nation-state-supported actors.
Security incidents result from the actions of a wide variety of actors with a wide range of motives and expertise, such as traditional hackers, personnel or the personnel of third parties, sophisticated nation-states and nation-state-supported actors. On April 14, 2024, we detected that a third party had gained unauthorized access to portions of our information technology environment.
We are actively pursuing awards of these stimulus funds, however, we continue to evaluate our opportunities as the process is complex and any awards that we ultimately receive under the IIJA may require significant up-front capital expenditures or other costs.
We are actively pursuing awards of these stimulus funds, however, we continue to evaluate our opportunities as the process is complex and any awards that we ultimately receive under the IIJA may require significant up-front capital expenditures or other costs. 20 A portion of our total revenues are derived from switched access charges paid by other carriers for services we provide in originating intrastate and interstate long-distance traffic.
Our suppliers and vendors may also continue to experience increased costs for their materials, labor, and other significant items due to inflation, which they could seek to pass along to us and their other customers. In addition, due to changes in the communications industry, the suppliers of many of these products and services have been consolidating.
Our suppliers and vendors may also continue to experience increased costs for their materials, labor, and other significant items due to factors including new or increased regulation, inflation and trade tariffs, which they could seek to pass along to us and their other customers.
However, future reductions in our subsidy or switched access revenues may directly affect our profitability and cash flows as those regulatory revenues do not have an equal level of associated variable expenses. We are also required to contribute to the Universal Service Fund (“USF”) and the FCC allows us to recover these contributions through a USF surcharge on customers’ bills.
We cannot predict when or how these matters will be decided or the effect on our subsidy or switched access revenues. However, future reductions in our subsidy or switched access revenues may directly affect our profitability and cash flows as those regulatory revenues do not have an equal level of associated variable expenses.
For example, our competitors may seek to introduce networks in our primarily copper-based markets that are competitive with or superior to our copper-based networks. Several competitors were successful bidders in the RDOF auction in areas within Frontier’s service footprint and we expect these competitors will deploy expanded services in these areas that will compete with our services.
Several competitors were successful bidders in the RDOF auction and have or may be successful in securing funding through BEAD and other federal state grant programs in areas within Frontier’s service footprint and we expect these competitors will deploy expanded services in these areas that will compete with our services.
The term of our collective bargaining agreements is typically three years and at any point in time we generally have several agreements under negotiation and extension. Approximately 28% of our unionized employees are covered by collective bargaining agreements that are scheduled to expire in 2024. We cannot predict the outcome of negotiations of the collective bargaining agreements covering our employees.
Approximately 43% of our unionized employees are covered by collective bargaining agreements that are scheduled to expire in 2025. We cannot predict the outcome of negotiations of the collective bargaining agreements covering our employees.
These changes could be severe and could negatively impact our operations, including damaging our network infrastructure, which could result in increased costs and loss of revenue. We may incur significant costs to prepare for, respond to, and mitigate the impact of climate change on our infrastructure and operations.
For example, we provide service to customers and maintain equipment in areas impacted by the January 2025 wildfires in Southern California. These changes could be severe and could negatively impact our operations, including damaging our network infrastructure, which could result in increased costs and loss of revenue.
The following risk factors should be read in conjunction with the balance of this annual report, including the consolidated financial statements and related notes included in this report. Risks Related to Our Indebtedness We have a significant amount of indebtedness, and we may incur substantially more debt in the future. Such debt and debt service obligations may adversely affect us.
The following risk factors should be read in conjunction with the balance of this annual report, including the consolidated financial statements and related notes included in this report.
Additionally, the greater brand name recognition of some competitors may require 15 us to price our services at lower levels in order to retain or obtain customers. Finally, the cost advantages and greater financial resources of some of these competitors may give them the ability to reduce their prices for an extended period of time if they so choose.
Finally, the cost advantages and greater financial resources of some of these competitors may give them the ability to reduce their prices for an extended period of time if they so choose. Our business and results of operations may be materially adversely impacted if we are not able to effectively compete.
The communications industry is very competitive, and some of our competitors have superior resources which may place us at a disadvantage. We face competition in every aspect of our business. Through mergers and various service expansion strategies, service providers are striving to provide integrated solutions both within and across geographic markets.
We face competition in every aspect of our business. Through mergers and various service expansion strategies, service providers are striving to provide integrated solutions both within and across geographic markets. Our competitors include cable operators, wireless carriers, satellite providers, wireline carriers, fiber “overbuilders” and OTT video providers, many of which are subject to less regulation than we are.
We cannot predict whether new regulations, or the outcome of expected or pending challenges to federal, state or local regulations or actions will prove beneficial or detrimental to our competitive position. We are subject to the oversight of certain federal and state agencies that may investigate or pursue enforcement actions against us relating to consumer protection matters.
At this time, it is unknown how these regulations, regulatory oversight, or changes to these regulations will affect our operations or ability to compete in the future. We are subject to the oversight of certain federal and state agencies that may investigate or pursue enforcement actions against us relating to consumer protection matters.
Certain states also have their own open proceedings to address reform to originating intrastate access charges, other intercarrier compensation, and state universal service funds. We cannot predict when or how these matters will be decided or the effect on our subsidy or switched access revenues.
The rates we can charge for switched access are regulated by the FCC and state regulatory agencies and could be further reduced in the future. Certain states also have their own open proceedings to address reform to originating intrastate access charges, other intercarrier compensation, and state universal service funds.
There can be no assurance that the impact of such incidents would not be material to our results of operations, financial condition, or cash flows. We may be unable to meet the technological needs or expectations of our customers and may lose customers as a result.
There can be no assurance that the impact of such incidents would not be material to our results of operations, financial condition, or cash flows. Our business is sensitive to continued relationships with our wholesale customers. We have substantial business relationships with other communications carriers for which we provide service.
Upon emergence from bankruptcy, USF charges are recorded on a net basis, to Cost of Service expense. If we are unable to recover USF contributions, it could have a material adverse effect on our business or results of operations.
We are also required to contribute to the Universal Service Fund (“USF”) and the FCC allows us to recover these contributions through a USF surcharge on customers’ bills. If we are unable to recover USF contributions, it could have a material adverse effect on our business or results of operations.
If we fail to maintain our grow this business, our revenues and results of operations could be materially and adversely affected. A significant portion of our workforce is represented by labor unions. As of December 31, 2023, approximately 68% of our total employees were represented by unions and were subject to collective bargaining agreements.
A significant portion of our workforce is represented by labor unions. As of December 31, 2024, approximately 66% of our total employees were represented by unions and were subject to collective bargaining agreements. The term of our collective bargaining agreements is typically three years and at any point in time we generally have several agreements under negotiation and extension.
As of December 31, 2023, we had indebtedness of approximately $11 billion of which approximately $10 billion was secured. We may also be able to incur substantial additional indebtedness in the future.
Risks Related to Our Indebtedness We have a significant amount of indebtedness, and we may incur substantially more debt in the future. Such debt and debt service obligations may adversely affect us. As of December 31, 2024, we had indebtedness of approximately $11.6 billion of which approximately $11 billion was secured.
Our business is sensitive to continued relationships with our wholesale customers. We have substantial business relationships with other communications carriers for which we provide service. While we seek to maintain and grow our business with these customers, we face significant competition for this wholesale business.
While we seek to maintain and grow our business with these customers, we face significant competition for this wholesale business. In addition, many of our wholesale customers are migrating away from the time division multiplexing (TDM) service we have historically provided to IP based services.
Our competitors include cable operators, wireless carriers, satellite providers, wireline carriers, fiber “overbuilders” and OTT video providers, many of which are subject to less regulation than we are. These entities may provide services that are competitive with the services that we offer or intend to introduce.
These entities may provide services that are competitive with the services that we offer or intend to introduce. For example, our competitors may seek to introduce networks in our primarily copper-based markets that are competitive with or superior to our copper-based networks.
Removed
In addition, our First Lien Notes and Second Lien Notes, as well as a portion of our subsidiary indebtedness (other than a portion of the securitized Class A and Class B notes), are rated below “investment grade” by independent rating agencies. This has resulted in higher borrowing costs for us.
Added
Risks Related to the Proposed Merger with Verizon The Merger may not be completed on the terms or timeline currently contemplated or at all, which could adversely affect our stock price, business, financial condition and results of operations.
Removed
Through December 31, 2023, we had not experienced any significant disruptions in our supply chain; however, some of our business partners have been impacted by COVID-related workforce absences and other disruptions which have affected our service levels and distribution of work.
Added
On September 4, 2024, the Company entered into the Merger Agreement with Verizon, which provides that the consummation of the Merger is subject to certain conditions, including (i) the Company Stockholder Approval; (ii) the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR waiting period”); (iii) the receipt of certain required consents or approvals from the FCC and certain specified state public utility commissions and local franchise authorities; (iv) the absence of legal restraints prohibiting the Merger; and (v) other customary conditions specified in the Merger Agreement.
Removed
In connection with our emergence from bankruptcy, the Plan provided that holders of general unsecured claims, including, but not limited to, litigation claims against us and/or our subsidiaries, had their claims “ride through” the bankruptcy, meaning there was no bar to or discharge of these claims.
Added
The Company Stockholder Approval was obtained on November 13, 2024 and the applicable HSR waiting period expired on February 14, 2025.
Removed
In particular, litigation claims against us survived the bankruptcy and those claims may be pursued against us. To the extent such claims could have been asserted prior to bankruptcy or arose during the bankruptcy, such claims can be asserted now that we have emerged from bankruptcy.
Added
While it is currently anticipated that the Merger will be consummated by the first quarter of 2026, there can be no assurance that the foregoing conditions will be satisfied in a timely manner or at all, or that an effect, event, development, or change will not transpire that could delay or prevent these conditions from being satisfied.
Removed
In addition to potential liability for claims asserted against us, we have ongoing obligations to indemnify our former officers and directors and certain underwriters in connection with litigation as we did before the bankruptcy. Litigation is subject to uncertainty and the outcome of individual matters is not predictable. We may incur significant expenses in defending these lawsuits.
Added
If the Merger is not consummated for any reason, the trading price of our common stock may decline to the extent that the market price of the common stock reflects positive market assumptions that the Merger will be consummated, and the related benefits will be realized.
Removed
For example, supply chain and labor disruptions arising from the COVID-19 pandemic affected the ability of certain of our suppliers and vendors to provide products and services to us in a timely matter, or at all, if similar disruptions were to occur in the future, it could adversely impact our operations.
Added
We may also be subject to additional risks if the Merger is not completed, including:  the requirement in the Merger Agreement that, under certain circumstances, we pay Verizon a termination fee of $320 million in cash;  incurring substantial costs related to the Merger, such as financial advisory, legal, accounting, and other professional services fees that have already been incurred or will continue to be incurred until closing;  limitations on our ability to retain and hire key personnel;  the imposition of additional regulatory and operational requirements on our business;  reputational harm including relationships with investors, customers, and business partners due to the adverse perception of any failure to successfully complete the Merger; and  potential disruption to our business and distraction of our workforce and management team to pursue other opportunities that could be beneficial to us, in each case without realizing any of the benefits of having the Merger completed.
Removed
A portion of our total revenues are derived from switched access charges paid by other carriers for services we provide in originating intrastate and interstate long-distance traffic. The rates we can charge for switched access are regulated by the FCC and state regulatory agencies and could be further reduced in the future.
Added
The pendency of the Merger could negatively impact our business, financial conditions, and results of operations. The pendency of the Merger could adversely affect our business, financial condition and results of operations and may result in our inability to hire or the departure of key personnel.
Removed
At this time, it is unknown how these regulations, regulatory oversight, or changes to these regulations will affect our operations or ability to compete in the future. 19 FCC rulemakings and state regulatory proceedings, including those relating to Internet access offerings, could have a substantial adverse impact on our operations.
Added
In connection with the Merger, some of our customers and business partners may delay or defer decisions or may end their relationships with us, which could negatively affect our revenues, earnings and cash flows, regardless of whether the Merger is completed.
Removed
The FCC currently classifies fixed consumer broadband services as information services, subject to light-touch regulation. In October 2023 the FCC released a notice of proposed rulemaking seeking to reclassify certain broadband services as lightly regulated telecommunications services, imposing certain requirements on the reclassified internet services.
Added
Similarly, our current and prospective employees may experience uncertainty about their future roles with us following the Merger, which may materially adversely affect our ability to attract and retain key personnel during the pendency of the Merger.
Removed
Our Internet access offerings could become subject to additional laws and regulations as they are adopted or applied to the Internet.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition to critical risk management, we work to upgrade our existing technology systems, enhance our overall security posture and provide employee training around cyber risks, which are constantly evolving. Our processes also address cybersecurity risks associated with our use of third-party service providers and other external parties and circumstances.
Biggest changeIn addition to critical risk management, we conduct regular exercises and simulations to review and continuously improve our incident response protocols, we work to upgrade our existing technology systems to enhance our overall security posture and we provide ongoing employee training around cyber risks.
We describe whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, in our risk factor disclosures under the heading “ We rely on n etwork and information systems and other technology, and a disruption or failure of such networks, systems or technology as a result of cyber-attacks, malware, misappropriation of data or other malfeasance, as well as outages, accidental releases of information or similar events, may disrupt our business and materially impact our results of operations, financial condition and cash flows ” in Item 1A of this Annual Report on Form 10-K.
We describe whether and how risks from identified cybersecurity threats, including as a result of previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, in our risk factor disclosures under the heading “ We rely on n etwork and information systems and other technology, and a disruption or failure of such networks, systems or technology as a result of cyber-attacks, malware, misappropriation of data or other malfeasance, as well as outages, accidental releases of information or similar events, may disrupt our business and materially impact our results of operations, financial condition and cash flows ” in Item 1A of this Annual Report on Form 10-K.
While material risks are generally overseen by the full Board, the Audit Committee has a key role in cybersecurity risk monitoring and oversight as set forth in its charter. In establishing Audit Committee membership, the Nominating & Corporate Governance Committee identifies directors with relevant IT, network and cyber expertise to serve on the Committee.
While material risks are generally overseen by the full Board of Directors, the Audit Committee has a key role in cybersecurity risk monitoring and oversight as set forth in its charter. In establishing Audit Committee membership, the Nominating & Corporate Governance Committee identifies directors with relevant IT, network and cyber expertise to serve on the Committee.
Our CISO has over 20 years of experience in IT, cyber security and data privacy and data management and reports directly to the EVP, Chief Data and Information Officer (CDIO). Our CDIO has over 25 years of experience, having previously held senior leadership positions in technology, IT and operations at large public companies prior to joining Frontier.
Our CISO has over 20 years of experience in IT, cyber security and data privacy and data management and reports directly to the EVP, Chief Digital and Information Officer (CDIO). Our CDIO has over 25 years of experience, having previously held senior leadership positions in technology, IT and operations at large public companies prior to joining Frontier.
The members of these teams have extensive expertise in evaluating the potential impact and materiality of events in the context of Frontier’s business and financial position, reputational and industry risk, and legal and regulatory environment, and there are procedures in place to escalate material incidents for consideration by the Audit Committee.
The members of these teams have extensive expertise in evaluating the potential impact and materiality of events in the context of Frontier’s business and financial position, reputational and industry risk, and legal and regulatory environment, and there are procedures in place to escalate potentially material incidents for consideration by the Audit Committee.
As of the date of this report, we have not experienced any cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition.
As of the date of this report, we have not experienced any cybersecurity incidents that [we have determined] have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition.
The CDIO and CISO provide periodic reports to the Audit Committee on the Company’s data privacy and information and infrastructure security programs, including cybersecurity risks. In addition, senior management reports to the Board at least annually on cybersecurity risks. ‎ 22
The CDIO and CISO provide periodic reports to the Audit Committee on the Company’s data privacy and information and infrastructure 24 security programs, including cybersecurity risks. In addition, senior management reports to the Board of Directors at least annually on cybersecurity risks.
Our information technology, networks, and infrastructure may be subject to damage, disruptions, or shutdowns due to cyber-attacks, malware, employee or third-party error or malfeasance, power outages, communication or utility failures, systems failures, natural disasters or other catastrophic events.
Our information technology, networks, and infrastructure have been and may in the future be subject to damage, disruptions, or shutdowns due to cyber-attacks, malware, employee or third-party error or malfeasance, power outages, communication or utility failures, systems failures, natural disasters or other catastrophic events.
Added
For example, employees are required to complete cybersecurity training and receive ongoing education which includes simulated phishing attacks and communications for recognizing evolving threats. Our processes also address cybersecurity risks associated with our use of third-party service providers and other external parties and circumstances.
Added
For example, the Audit Committee was actively involved in the review, disclosure and mitigation of the reported April 2024 cyber-attack. See Item 1A “Risk Factors” for a further discussion of cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur gross investment in property, by category, as of December 31, 2023, was as follows: ($ in millions) Land $ 243 Buildings and leasehold improvements 1,221 General support 427 Central office/electronic circuit equipment 2,467 Poles 915 Cable, fiber, and wire 7,718 Conduit 1,416 Materials and supplies 594 Construction work in progress 1,323 Total $ 16,324 In connection with our ongoing operational and cost savings initiatives, we have undertaken a review of our real estate portfolio, including leased facilities, and are seeking to consolidate our footprint and reduce our property portfolio where economically and operationally beneficial.
Biggest changeOur gross investment in property, by category, as of December 31, 2024, was as follows: ($ in millions) Land $ 241 Buildings and leasehold improvements 1,250 General support 591 Central office/electronic circuit equipment 3,226 Poles 1,074 Cable, fiber, and wire 9,921 Conduit 1,429 Materials and supplies 431 Construction work in progress 1,155 Total $ 19,318 In connection with our ongoing operational and cost savings initiatives, we have undertaken a review of our real estate portfolio, including leased facilities, and are seeking to consolidate our footprint and reduce our property portfolio where economically and operationally beneficial.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeLegal Proceedings We are party to various legal proceedings (including individual, class and putative class actions as well as federal and state governmental investigations) arising in the normal course of our business covering a wide range of matters and types of claims including, but not limited to, general contracts, billing disputes, rights of access, taxes and surcharges, consumer protection, trademark, copyright and patent infringement, employment, regulatory, tort, claims of competitors and disputes with other carriers.
Biggest changeLegal Proceedings We are party to various legal proceedings (including individual, class and putative class actions as well as federal and state governmental investigations) arising in the normal course of our business covering a wide range of matters and types of claims including, but not limited to, general contracts, billing disputes, rights of access, taxes and surcharges, consumer protection and privacy, trademark, copyright and patent infringement, employment, regulatory, tort, claims of competitors and disputes with other carriers.
For more information regarding pending and threatened legal actions and proceedings see Note 21 - ‘‘Commitments, Contingencies, and Guarantees’’ to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
For more information regarding pending and threatened legal actions and proceedings see Note 20 - ‘‘Commitments, Contingencies, and Guarantees’’ to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeMine Safety Disclosures Not applicable. ‎ 23 Information About Our Executive Officers The table below presents the names, ages, and positions of our current executive officers as of February 23, 2024: Name Age Current Position and Officer Scott Beasley 43 Executive Vice President, Chief Financial Officer Veronica Bloodworth 53 Executive Vice President, Chief Network Officer Ettienne Brandt 47 Executive Vice President, Business Vishal Dixit 44 Executive Vice President, Strategy & Wholesale Alan Gardner 64 Executive Vice President, Chief People Officer John Harrobin 56 Executive Vice President, Consumer Nick Jeffery 56 President & Chief Executive Officer Erin Kurtz 45 Executive Vice President, Chief Communications Officer William McGloin 53 Chief Accounting Officer & Controller Charlon McIntosh 49 Executive Vice President, Chief Customer Operations Officer Mark D.
Biggest changeMine Safety Disclosures Not applicable. ‎ 25 Information About Our Executive Officers The table below presents the names, ages, and positions of our current executive officers as of February 20, 2025: Name Age Current Position and Officer Scott Beasley 44 Executive Vice President, Chief Financial Officer Veronica Bloodworth 54 Executive Vice President, Chief Network Officer Ettienne Brandt 48 Executive Vice President, Business Vishal Dixit 45 Executive Vice President, Strategy & Wholesale Alan Gardner 65 Executive Vice President, Chief People Officer John Harrobin 57 Executive Vice President, Consumer Nick Jeffery 57 President & Chief Executive Officer Erin Kurtz 46 Executive Vice President, Chief Communications Officer William McGloin 54 Chief Accounting Officer & Controller Charlon McIntosh 50 Executive Vice President, Chief Customer Operations Officer Mark D.
He began his career with Intel Corporation in New Zealand developing software switches, and holds an MBA from the London Business School, U.K., and a B.E. in Electrical and Electronics Engineering from the University of Auckland, New Zealand. ‎ 24 ALAN GARDNER joined Frontier in 2021 and is Executive Vice President and Chief People Officer.
He began his career with Intel Corporation in New Zealand developing software switches, and holds an MBA from the London Business School, U.K., and a B.E. in Electrical and Electronics Engineering from the University of Auckland, New Zealand. ‎ 26 ALAN GARDNER joined Frontier in 2021 and is Executive Vice President and Chief People Officer.
He earned a B.A. from Harvard College and a J.D. from Harvard Law School with Honors. 25 MELISSA PINT joined Frontier in 2021 and is Executive Vice President, Chief Digital Information Officer.
He earned a B.A. from Harvard College and a J.D. from Harvard Law School with Honors. 27 MELISSA PINT joined Frontier in 2021 and is Executive Vice President, Chief Digital Information Officer.
He also is a member of the board of directors of SubCom, LLC. ‎ 26 PART II
He also is a member of the board of directors of SubCom, LLC. ‎ 28 PART II
Nielsen 59 Executive Vice President, Chief Legal and Regulatory Officer Melissa Pint 49 Executive Vice President, Chief Digital Information Officer John Stratton 63 Executive Chairman There is no family relationship between the directors or executive officers.
Nielsen 60 Executive Vice President, Chief Legal and Regulatory Officer Melissa Pint 50 Executive Vice President, Chief Digital Information Officer John Stratton 64 Executive Chairman There is no family relationship between the directors or executive officers.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIndexed Monthly Stock Price Close Source: FactSet 27 INDEXED Base RETURN Date Year Ending Company / Index 5/21 12/23 Frontier Communications Parent, Inc. 100 94.03 S&P Midcap 400 Index 100 101.85 S&P 500 Telecom Services Index 100 72.81 The stock performance depicted in the graph above is not to be relied upon as indicative of future performance.
Biggest changeIndexed Monthly Stock Price Close Source: FactSet INDEXED Base RETURN Date Year Ending Company / Index 5/21 12/24 Frontier Communications Parent, Inc. 100 128.76 S&P Midcap 400 Index 100 114.28 S&P 500 Telecom Services Index 100 89.57 The stock performance depicted in the graph above is not to be relied upon as indicative of future performance.
Stock Performance Graph The following chart provides a comparison of the cumulative total return of our common stock to the S&P MidCap 400 Index and the S&P 500 Telecom Services Index for the period from May 4, 2021, the day our common stock was listed and began trading on the Nasdaq, through December 31, 2023.
Stock Performance Graph The following chart provides a comparison of the cumulative total return of our common stock to the S&P MidCap 400 Index and the S&P 500 Telecom Services Index for the period from May 4, 2021, the day our common stock was listed and began trading on the Nasdaq, through December 31, 2024.
Item 5. Market for Registrant's Common Equity; Related Stockholder Matters, and Issuer Purchases of Equity Securities Common Stock Information Our common stock is currently traded on the Nasdaq Global Select Market under the symbol “FYBR”. We paid no cash dividends to common shareholders in either of 2023 and 2022.
Item 5. Market for Registrant's Common Equity; Related Stockholder Matters, and Issuer Purchases of Equity Securities Common Stock Information Our common stock is currently traded on the Nasdaq Global Select Market under the symbol “FYBR”. We paid no cash dividends to common shareholders in either of 2024 and 2023.
As of February 21, 2024, the approximate number of security holders of record of our common stock was 330. We estimate the total number of stockholders to be higher as a number of our shares are held by brokers or dealers for their customers in street name.
As of February 3, 2025, the approximate number of security holders of record of our common stock was 408. We estimate the total number of stockholders to be higher as a number of our shares are held by brokers or dealers for their customers in street name.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(a) Results of Operations Customer Trends As of or for the year ended December 31, (Customer, Subscriber, and Employee Metrics in thousands) 2023 2022 % Change Broadband Customer Metrics (1) Fiber Broadband Consumer customers 1,878 1,575 19 % Business and wholesale customers 129 114 13 % Consumer net customer additions 303 239 27 % Consumer customer churn 1.32% 1.38% (4) % Consumer customer ARPU $ 63.39 $ 62.45 2 % Copper Broadband Consumer customers 822 1,043 (21) % Business and wholesale customers 114 136 (16) % Consumer net customer losses (221) (191) 16 % Consumer customer churn 1.90% 1.79% 6 % Consumer customer ARPU $ 52.43 $ 48.13 9 % Consumer Customer Metrics Customers 3,129 3,133 (0) % Net customer losses (4) (32) (88) % ARPC $ 82.53 $ 82.30 0 % Customer Churn 1.52% 1.54% (1) % Other Metrics Employees 13,297 14,708 (10) % (1) Historical amounts have been updated to include related metrics for our wholesale customers.
Biggest change(a) Results of Operations Customer Trends As of or for the year ended December 31, (Customer, Subscriber, and Employee Metrics in thousands) 2024 2023 % Change Broadband Customer Metrics Fiber Broadband Consumer customers 2,249 1,878 20 % Business and wholesale customers 143 129 11 % Consumer net customer additions 371 303 22 % Consumer customer churn 1.36% 1.32% 3 % Consumer customer ARPU $ 65.54 $ 63.39 3 % Copper Broadband Consumer customers 612 822 (26) % Business and wholesale customers 90 114 (21) % Consumer net customer losses (210) (221) (5) % Consumer customer churn 2.22% 1.90% 17 % Consumer customer ARPU $ 58.96 $ 52.43 12 % Consumer Customer Metrics Customers 3,193 3,129 2 % Net customer additions / (losses) 64 (4) (1,700) % ARPC $ 83.53 $ 82.53 1 % Customer Churn 1.65% 1.52% 8 % Other Metrics Employees 13,025 13,297 (2) % We provide service and product options in our consumer and business offerings in each of our markets. ‎ 31 Fiber Broadband Customers Our investment strategy is focused on expanding our fiber network.
The indentures governing our First Lien Notes and Second Lien Notes also include usual and customary negative covenants for debt securities of this type, including covenants limiting us and our restricted subsidiaries’ (other than certain covenants therein which are limited to subsidiary guarantors) ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of certain material subordinated indebtedness, in each case subject to customary exceptions for debt securities of this type.
First Lien Notes and Second Lien Notes The indentures governing our First Lien Notes and Second Lien Notes also include usual and customary negative covenants for debt securities of this type, including covenants limiting us and our restricted subsidiaries’ (other than certain covenants therein which are limited to subsidiary guarantors) ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of certain material subordinated indebtedness, in each case subject to customary exceptions for debt securities of this type.
The indentures governing the outstanding subsidiary debentures include covenants that limit such subsidiary’s ability to create liens and/or merge or consolidate with other companies. These covenants are subject to important exceptions and qualifications. The indenture governing Frontier Issuer’s Fiber Term Notes includes covenants and restrictions customary for transactions of this type.
The indentures governing the outstanding subsidiary debentures include covenants that limit such subsidiary’s ability to create liens and/or merge or consolidate with other companies. These covenants are subject to important exceptions and qualifications. Fiber Term Notes The indenture governing Frontier Issuer’s Fiber Term Notes includes covenants and restrictions customary for transactions of this type.
The expected long-term rate of return on plan assets is based on an asset allocation assumption of 35% in long-duration fixed income securities, and 65% in equity securities and other investments. We review our asset allocation at least annually and make changes when considered appropriate. Our asset return assumption is made at the beginning of our fiscal year.
The expected long-term rate of return on plan assets is based on an asset allocation assumption of 65% in long-duration fixed income securities, and 35% in equity securities and other investments. We review our asset allocation at least annually and make changes when considered appropriate. Our asset return assumption is made at the beginning of our fiscal year.
Complying with such laws, as well as other legislative and regulatory action related to privacy, could result in increased costs of compliance, claims against the Company or investigations related to compliance, and increased uncertainty in the use and availability of certain consumer data. Video Programming: Federal, state, and local governments extensively regulate the video services industry.
Complying with such laws, as well as other legislative and regulatory action related to privacy, could result in increased costs of compliance, claims 41 against the Company or investigations related to compliance, and increased uncertainty in the use and availability of certain consumer data. Video Programming: Federal, state, and local governments extensively regulate the video services industry.
The Fiber Term Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain stated debt service coverage ratios, the acceleration of the maturity of the Fiber Term Notes following the occurrence of an event of default and the failure to repay or refinance on the applicable anticipated repayment date.
The Fiber Term Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain stated debt service coverage ratios, the acceleration of the maturity of the Fiber Term Notes following the occurrence of an event of default and the failure to repay or refinance on the applicable Anticipated Repayment Date (“ARD”).
Our linear video services are subject to, among other things: subscriber privacy regulations; requirements that we carry a local broadcast station or obtain 39 consent to carry a local or distant broadcast station; rules for franchise renewals and transfers; the manner in which program packages are marketed to subscribers; and program access requirements.
Our linear video services are subject to, among other things: subscriber privacy regulations; requirements that we carry a local broadcast station or obtain consent to carry a local or distant broadcast station; rules for franchise renewals and transfers; the manner in which program packages are marketed to subscribers; and program access requirements.
The decrease in cost of service expense was driven by lower video content costs as a result of declines in video customers, non-renewal of certain content agreements, and decreased CPE costs. These decreases more than offset higher energy and benefits costs and outside service rate increases resulting from higher inflation.
The decrease in cost of service expense was driven by lower video content costs as a result of declines in video customers, non-renewal of certain content agreements, and decreased CPE costs. These decreases more than offset higher energy and outside service rate increases resulting from higher inflation.
Actual income taxes could vary from these estimates due to future changes in governing law or review by taxing authorities. 41 We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized.
Actual income taxes could vary from these estimates due to future changes in governing law or review by taxing authorities. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized.
Our estimates are based on assumptions and other considerations, including payment history, customer financial performance, carrier billing disputes and aging analysis. Our estimation process includes general and specific reserves and varies by customer category. In 2023 and 2022, we had no “critical estimates” related to bankruptcies of communications companies or any other significant customers.
Our estimates are based on assumptions and other considerations, including payment history, customer financial performance, carrier billing disputes and aging analysis. Our estimation process includes general and specific reserves and varies by customer category. In 2024 and 2023, we had no “critical estimates” related to bankruptcies of communications companies or any other significant customers.
As of December 31, 2023, and 2022, we utilized an estimation technique that is based upon a settlement model (Bond:Link) that permits us to closely match cash flows to the expected payments to participants. This rate can change from year-to-year based on market conditions that affect corporate bond yields.
As of December 31, 2024, and 2023, we utilized an estimation technique that is based upon a settlement model (Bond:Link) that permits us to closely match cash flows to the expected payments to participants. This rate can change from year-to-year based on market conditions that affect corporate bond yields.
We considered whether the carrying values of finite-lived intangible assets, and property plant and equipment may not be recoverable or whether the carrying value of certain finite-lived intangible assets were impaired, noting no impairment was present as of or for the year ended December 31, 2023.
We considered whether the carrying values of finite-lived intangible assets, and property plant and equipment may not be recoverable or whether the carrying value of certain finite-lived intangible assets were impaired, noting no impairment was present as of or for the year ended December 31, 2024.
Recent Accounting Pronouncements For additional information regarding FASB Accounting Standards Updates (‘‘ASU’’s) that have been issued but not yet adopted and that may impact the Company, refer to Note 2 – ‘‘Recent Accounting Pronouncements’’ to the audited consolidated financial statements in Part II, Item 8 of this annual Report on form 10-K .
Recent Accounting Pronouncements For additional information regarding FASB Accounting Standards Updates (‘‘ASU’’s) that have been issued but not yet adopted and that may impact the Company, refer to Note 3 – ‘‘Recent Accounting Pronouncements’’ to the audited consolidated financial statements in Part II, Item 8 of this annual Report on form 10-K . 43
See Note 7 of the Notes to Consolidated Financial Statements for additional information. 40 Asset Impairments We review long-lived assets to be held and used, including customer lists, finite-lived intangible assets, and long-lived assets to be disposed of for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
See Note 6 of the Notes to Consolidated Financial Statements for additional information. Asset Impairments We review long-lived assets to be held and used, including customer lists, finite-lived intangible assets, and long-lived assets to be disposed of for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
Future Commitments See “Regulatory Developments” immediately below for information regarding Frontier’s known and potential future commitments related to our participation in the FCC’s CAF Phase II program and RDOF Phase I auction.
Future Commitments See “Regulatory Developments” immediately below for information regarding Frontier’s known and potential future commitments related to our participation in the FCC’s CAF Phase II program, NTIA BEAD program, and RDOF Phase I auction.
This decline was driven by decreases in voice revenue predominantly in business, largely offset by increases in fiber broadband and network access services. The increase in fiber broadband was due to continued growth of our customer base, and a shift towards higher broadband speeds.
This increase was driven by increases in fiber broadband and network access services, partially offset by decreases in voice revenue predominantly in business. The increase in fiber broadband was due to continued growth of our customer base, and a shift towards higher broadband speeds.
The increase was driven by growth in the fiber broadband revenue, partly offset by declines in copper broadband revenue. Voice services We provide voice services consisting of traditional local and long-distance service and voice over Internet protocol (VoIP) service provided over our fiber and copper broadband products.
The increase was driven by growth in the fiber broadband and network access revenues, partly offset by declines in copper broadband revenue. Voice services We provide voice services consisting of traditional local and long-distance service and voice over Internet protocol (VoIP) service provided over our fiber and copper broadband products.
The revenue growth was the result of growth in fiber data and value added service revenues along with inflationary price increases, offset by declines in voice, video, and copper broadband. o We experienced a 21% improvement in consumer fiber broadband revenues for the year ended December 31, 2023, as compared to the year ended December 31, 2022. o This improvement is a result of higher consumer fiber broadband ARPU as well as increase net adds of consumer fiber broadband customers due to our expanded fiber footprint and continued focus on product positioning in both new and existing markets. We experienced a decline of approximately 12% in consumer copper broadband revenues for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
The revenue growth was the result of growth in fiber data and value added service revenues along with inflationary price increases, offset by declines in voice, video, and copper broadband. o We experienced a 23% improvement in consumer fiber broadband revenues for the year ended December 31, 2024, as compared to the year ended December 31, 2023. o This improvement is a result of higher consumer fiber broadband ARPU as well as increase net adds of consumer fiber broadband customers due to our expanded fiber footprint and continued focus on product positioning in both new and existing markets. We experienced a decline of approximately 13% in consumer copper broadband revenues for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
We utilize the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recorded for the tax effect of temporary differences between the financial statement basis and the tax basis of assets and liabilities using tax rates expected to be in effect when the temporary differences are expected to reverse.
Under the asset and liability method, deferred income taxes are recorded for the tax effect of temporary differences between the financial statement basis and the tax basis of assets and liabilities using tax rates expected to be in effect when the temporary differences are expected to reverse.
The latest study was completed in the fourth quarter of 2023 and did not result in any significant changes in remaining lives for any of our asset categories. A one-year decrease in the estimated useful lives of our property, plant, and equipment would result in an increase of approximately $128 million to depreciation expense.
The latest study was completed in the fourth quarter of 2024 and did not result in any significant changes in remaining lives for any of our asset categories. A one-year decrease in the estimated useful lives of our property, plant, and equipment would result in an increase of approximately $156 million to depreciation expense.
This section generally discusses the results of our operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This section generally discusses the results of our operations for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Our average monthly consumer copper broadband churn was 1.90% for the year ended December 31, 2023, compared to 1.79% in 2022. The increase in consumer copper broadband churn was driven by the impact of inflationary price increases and changes to our copper broadband go to market approach which impacted gross add volume.
Our average monthly consumer copper broadband churn was 2.22% for the year ended December 31, 2024, compared to 1.90% in 2023. The increase in consumer copper broadband churn was driven by the impact of inflationary price increases and changes to our copper broadband go to market approach which impacted gross add volume.
Such access charges and other third-party costs exclude depreciation and amortization, and employee related expenses. Cost of service decreased $44 million for the year ended December 31, 2023, as compared to the prior year.
Such access charges and other third-party costs exclude depreciation and amortization, and employee related expenses. Cost of service decreased $15 million for the year ended December 31, 2024, as compared to the prior year.
In the following table, we show the estimated sensitivity of our pension and other postretirement benefit plan liabilities to a 25 basis point change in the discount rate as of December 31, 2023: ($ in millions) Increase in Discount Rate of 25 bps Decrease in Discount Rate of 25 bps Pension plans Projected benefit obligation $ (48) $ 50 Other postretirement plans Accumulated postretirement benefit obligation $ (13) $ 13 In developing the expected long-term rate of return assumption, we considered published surveys of expected market returns, 10 and 20 year actual returns of various major indices, and our own historical 5-year, 10-year and 20-year investment returns.
In the following table, we show the estimated sensitivity of our pension and other postretirement benefit plan liabilities to a 25 basis point change in the discount rate as of December 31, 2024: ($ in millions) Increase in Discount Rate of 25 bps Decrease in Discount Rate of 25 bps Pension plans Projected benefit obligation $ (47) $ 49 Other postretirement plans Accumulated postretirement benefit obligation $ (11) $ 12 In developing the expected long-term rate of return assumption, we considered published surveys of expected market returns, 10 and 20 year actual returns of various major indices, and our own historical 5-year, 10-year and 20-year investment returns.
To the extent that Frontier is unable to meet the milestones or construct to all locations by the required deadlines, Frontier could be required to return a portion of funds previously received and may be subject to certain fines, requirements and obligations.
To the extent that Frontier is unable to fulfill the RDOF requirements, meet the milestones or construct to all locations by the required deadlines, funding to us could be discontinued and Frontier could be required to return a portion of funds previously received and may be subject to certain fines, requirements and obligations.
We have assessed our current and expected funding requirements and our current and expected sources of liquidity, and have determined, based on our forecasted financial results and financial condition as of December 31, 2023, that our operating cash flows and existing cash balances, will be adequate to finance our working capital requirements, fund capital expenditures, make required debt interest and principal payments, pay taxes and make other payments over the next twelve months.
We have assessed our current and expected funding requirements and our current and expected sources of liquidity, and have determined, based on our forecasted financial results and financial condition as of December 31, 2024, that our operating cash flows, existing cash balances and capacity under our DDTL and Revolving Credit Facilities, will be adequate to finance our working capital requirements, fund capital expenditures, make required debt interest and principal payments, pay taxes and make other payments over the next twelve months.
As our copper footprint transitions to fiber, we expect fewer copper sales opportunities, and will proactively migrate certain existing broadband customers from copper to fiber, both of which will reduce our copper net adds. Business and Wholesale For the year ended December 31, 2023, our business and wholesale revenues decreased 1%, as compared to the prior year.
As our copper footprint transitions to fiber, we expect fewer copper sales opportunities, and will proactively migrate certain existing broadband customers from copper to fiber, both of which will reduce our copper net adds. Business and Wholesale For the year ended December 31, 2024, our business and wholesale revenues increased 5%, as compared to the prior year.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses (“SG&A expenses”) include the salaries, wages and related benefits and costs of corporate and sales personnel, travel, insurance, non-network related rent, advertising, and other administrative expenses. SG&A expenses decreased by $99 million for the year ended December 31, 2023, as compared to the prior year.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses (“SG&A expenses”) include the salaries, wages and related benefits and costs of corporate and sales personnel, travel, insurance, non-network related rent, advertising, and other administrative expenses. SG&A expenses increased by $79 million for the year ended December 31, 2024, as compared to the prior year.
Total pension and OPEB service costs were as follows : For the year ended For the year ended December 31, December 31, ($ in millions) 2023 2022 Total pension/OPEB expenses $ 59 $ 82 Less: costs capitalized into capital expenditures (18) (21) Net pension/OPEB expense $ 41 $ 61 Depreciation and Amortization For the year ended December 31, 2023, the increased depreciation and amortization expense was driven by higher depreciation expense as a result of higher property, plant and equipment in service.
Total pension and OPEB service costs were as follows : For the year ended For the year ended December 31, December 31, ($ in millions) 2024 2023 Total pension/OPEB expenses $ 54 $ 59 Less: costs capitalized into capital expenditures (18) (18) Net pension/OPEB expense $ 36 $ 41 Depreciation and Amortization For the year ended December 31, 2024, the increased depreciation and amortization expense was driven by higher depreciation expense as a result of higher property, plant and equipment in service.
There are inherent uncertainties with respect to such estimates and assumptions; accordingly, it is possible that actual results could differ from those estimates and changes to estimates could occur in the near term. The estimates which require the most significant judgment are listed below. These critical accounting estimates have been reviewed with the Audit Committee of our Board of Directors.
There are inherent uncertainties with respect to such estimates and assumptions; accordingly, it is possible that actual results could differ from those estimates and changes to estimates could occur in the near term. These critical accounting estimates have been reviewed with the Audit Committee of our Board of Directors.
We continue to closely monitor and evaluate the impact these and other factors may have on our business, including demand for our products and services, our ability to execute on our strategic priorities and our financial condition and results of operations. ‎ 29 Financial Overview – Operating Income We reported operating income of $492 million and $592 million, for the years ended December 31, 2023 and 2022, respectively, a decrease of $100 million.
We continue to closely monitor and evaluate the impact these and other factors may have on our business, including demand for our products and services, our ability to execute on our strategic priorities and our financial condition and results of operations. ‎ 30 Financial Overview – Operating Income We reported operating income of $353 million and $492 million, for the years ended December 31, 2024 and 2023, respectively, a decrease of $139 million.
These improvements were driven by our increased focus on key customer touchpoints such as installation and first bill and reflect the end of certain promotion pricing periods as well as, retention activities associated with inflation-related pricing actions. o The average monthly consumer fiber broadband revenue per customer (“consumer ARPU”) increased $0.94, or 2%, to $63.39 in 2023, compared to $62.45 in 2022. o The increase in consumer ARPU for the year ended December 31, 2023 was due to higher intake pricing, customer shifts to higher broadband speeds, customers rolling off promotional pricing, and lower gift card redemptions, all partially offset by increased retention activity and autopay take rates.
These consistent results were driven by our continued focus on key customer touchpoints such as installation and first bill and reflect retention activities associated with inflation-related pricing actions and the end of certain promotion pricing periods. o The average monthly consumer fiber broadband revenue per customer (“consumer ARPU”) increased $2.15, or 3%, to $65.54 in 2024, compared to $63.39 in 2023. o The increase in consumer ARPU for the year ended December 31, 2024 was due to higher intake pricing, customer shifts to higher broadband speeds, customers rolling off promotional pricing, and lower gift card redemptions, all partially offset by increased retention activity and autopay take rates.
Operating income decreased primarily due to decreases in revenue from voice and video services and increases in depreciation and amortization expense. These factors were partially offset by an increase in data and internet services revenue, as well as decreases in selling, general and administrative expenses and other charges as compared to 2022.
Operating income decreased primarily due to decreases in revenue from voice and video services and increases in selling, general and administrative expenses, and in depreciation and amortization expense. These factors were partially offset by an increase in data and internet services revenue, as well as decreases in cost of service as compared to 2023.
Thereafter, the FCC has been reviewing carriers’ CAF II program completion data, and if the FCC determines that the Company did not satisfy certain applicable CAF Phase II requirements, Frontier could be required to return a portion of the funds previously received and may be subject to certain other fines, requirements, and obligations.
Thereafter, USAC and the FCC have been reviewing carriers’ CAF II program completion data, and should USAC or the FCC determine that the Company did not satisfy certain applicable CAF Phase II requirements, Frontier could be required to return a portion of the funds previously received and may be subject to certain other fines, requirements and obligations.
For a discussion of the year ended December 31, 2022, compared to the four months ended April 30, 2021, and the eight months ended December 31, 2021, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.
For a discussion of the year ended December 31, 2023, compared to the year ended December 31, 2022, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Analysis of Cash Flows As of December 31, 2023, we had unrestricted cash and cash equivalents aggregating $1,125 million. For the year ended December 31, 2023, we used cash flow from operations, cash on hand, and cash from borrowings principally to fund our cash investing and financing activities, which were primarily short-term investments and capital expenditures.
Analysis of Cash Flows As of December 31, 2024, we had unrestricted cash and cash equivalents aggregating $750 million. For the year ended December 31, 2024, we used cash flow from operations, cash on hand, and cash from borrowings principally to fund our cash investing and financing activities, which were primarily capital expenditures.
Copper Broadband Customers For the year ended December 31, 2023, we lost approximately 221,000 consumer copper broadband customers compared to a loss of approximately 191,000 in 2022. For the year ended December 31, 2023, we lost approximately 22,000 business and wholesale copper broadband customers compared to a loss of approximately 20,000 in 2022.
Copper Broadband Customers For the year ended December 31, 2024, we lost approximately 210,000 consumer copper broadband customers compared to a loss of approximately 221,000 in 2023. For the year ended December 31, 2024, we lost approximately 24,000 business and wholesale copper broadband customers compared to a loss of approximately 22,000 in 2023.
Debt Covenants and Borrowing Capacity Our Amended and Restated Credit Agreement includes usual and customary negative covenants for loan agreements of this type, including covenants limiting us and our restricted subsidiaries’ (other than certain covenants therein which are limited to subsidiary guarantors) ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of certain material subordinated indebtedness, in each case subject to customary exceptions for loan agreements of this type. 37 Our Amended and Restated Credit Agreement also contains a “financial covenant” which provides that our first lien leverage ratio shall not exceed as of the last day of each fiscal quarter 3.50:1.00, with step-downs to: (a) 3.25:1.00 in 2026; and (b) 3.00:1.00 in 2027 and continuing thereafter.
Debt Covenants and Borrowing Capacity Credit Agreement Our Amended and Restated Credit Agreement includes usual and customary negative covenants for loan agreements of this type, including covenants limiting us and our restricted subsidiaries’ (other than certain covenants therein which are limited to subsidiary guarantors) ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of certain material subordinated indebtedness, in each case subject to customary exceptions for loan agreements of this type. 39 Our Amended and Restated Credit Agreement also contains a “financial covenant” which provides that, commencing with the period ending June 30, 2024, our financial maintenance covenant leverage ratio shall not exceed as of the last day of each fiscal quarter 5.25:1.00, with a step-down to 4.75:1.00 commencing with the period ending March 31, 2027, and continuing thereafter.
We are utilizing a discount rate of 5.20% as of December 31, 2023, for our qualified pension plan, compared to rates of 5.50% and 2.90% in 2022 and 2021, respectively. The discount rate for postretirement plans as of December 31, 2023, was 5.20% compared to 5.50% in 2022 and 3.00% in 2021.
We are utilizing a discount rate of 5.60% as of December 31, 2024, for our qualified pension plan, compared to rates of 5.20% and 5.50% in 2023 and 2022, respectively. The discount rate for postretirement plans as of December 31, 2024, was 5.70% compared to 5.20% in 2023 and 5.50% in 2022.
Business Overview Frontier Communications Parent, Inc. is a leading communications and technology provider offering gigabit speeds to approximately 2.9 million broadband subscribers, with approximately 13,300 employees, operating in 25 states as of December 31, 2023. We are building critical infrastructure across the country with our fiber-optic network and cloud-based solutions, enabling secure high-speed connections.
Business Overview Frontier Communications Parent, Inc. is a leading communications and technology provider offering broadband services to approximately 3.1 million broadband customers, with approximately 13,000 employees, operating in 25 states as of December 31, 2024. We are building critical infrastructure across the country with our fiber-optic network and cloud-based solutions, enabling secure high-speed connections.
Customer preferences as well as our fiber investment initiatives resulted in an increase in the number of our consumer broadband customers and a migration of our customer base to fiber. We lost approximately 4,000 consumer customers for the year ended December 31, 2023, compared to a loss of approximately 32,000 consumer customers for the year ended December 31, 2022, driven by losses in copper broadband, voice and video customers, offset by growth in fiber broadband customers. For the year ended December 31, 2023, we experienced a net gain of consumer broadband customers of approximately 82,000 as compared to a net gain of approximately 48,000 for the year ended December 31, 2022. o The average monthly consumer revenue per customer (“consumer ARPC”) increased $0.23, or less than 1%, to $82.53 for the year ended December 31, 2023, compared to the prior year period.
Customer preferences as well as our fiber investment initiatives resulted in an increase in the number of our consumer broadband customers and a migration of our copper customers to fiber. We gained approximately 64,000 consumer customers for the year ended December 31, 2024, compared to a loss of approximately 4,000 consumer customers for the year ended December 31, 2023, driven by growth in fiber broadband customers and partially offset by losses in copper broadband, voice and video customers. For the year ended December 31, 2024, we experienced a net gain of consumer broadband customers of approximately 161,000 as compared to a net gain of approximately 82,000 for the year ended December 31, 2023. o The average monthly consumer revenue per customer (“consumer ARPC”) increased $1.00, or 1%, to $83.53 for the year ended December 31, 2024, compared to the prior year period.
It also includes enhanced features such as call waiting, caller identification, and voice messaging services. Voice services revenue declined $125 million, or 8%, to $1,373 million, for the year ended December 31, 2023, as compared to the prior year.
It also includes enhanced features such as call waiting, caller identification, and voice messaging services. Voice services revenue declined $142 million, or 10%, to $1,231 million, for the year ended December 31, 2024, as compared to the prior year.
We accomplished the following objectives in 2023: We passed 1.3 million new fiber locations. As of December 31, 2023, we had approximately 6.5 million total locations passed with fiber. We added 318,000 fiber broadband customer net additions, resulting in fiber broadband customer growth of 19% as compared to the prior year.
We accomplished the following objectives in 2024: We added approximately 1.3 million fiber passings. As of December 31, 2024, we had approximately 7.8 million total locations passed with fiber. We added 385,000 fiber broadband customer net additions, resulting in fiber broadband customer growth of 19% as compared to the prior year.
In addition to higher costs, the availability of building materials and other supply chain risks could negatively impact our ability to achieve the fiber build plans we are executing against. During 2023, markets remained volatile, and the economic outlook was uncertain.
In addition to higher costs, the availability of building materials and other supply chain risks could negatively impact our ability to achieve the fiber build plans we are executing against.
As of December 31, 2023, the unfunded benefit obligation for these plans recorded on our consolidated balance sheet was $735 million. During 2023, we contributed $176 million to these plans in cash and recorded $59 million of operating expense before capitalization, and $209 million of net non-operating income.
As of December 31, 2024, the unfunded benefit obligation for these plans recorded on our consolidated balance sheet was $630 million. During 2024, we contributed $171 million to these plans in cash and recorded $54 42 million of operating expense before capitalization, and $13 million of net non-operating income.
For 2024, we expect to assume a rate of return of 7.50%. Our pension plan assets are valued at fair value as of the measurement date . For additional information regarding our pension and other postretirement benefits (see Note 19 to the Notes to Consolidated Financial Statements). Income Taxes We file a consolidated federal income tax return.
Our pension plan assets are valued at fair value as of the measurement date . For additional information regarding our pension and other postretirement benefits (see Note 18 to the Notes to Consolidated Financial Statements). Income Taxes We file a consolidated federal income tax return. We utilize the asset and liability method of accounting for income taxes.
Video services revenue declined $90 million, or 17%, to $430 million, for the year ended December 31, 2023, as compared to the prior year. The decline was primarily driven by linear video customer losses, partially offset by price increases as compared to the prior year.
Video services revenue declined $86 million, or 20%, to $344 million, for the year ended December 31, 2024, as compared to the prior year. The decline was primarily driven by traditional video customer losses, partially offset by price increases as compared to the prior year.
As of December 31, 2023, we had a working capital surplus of $506 million compared to a $302 million surplus at December 31, 2022.
As of December 31, 2024 , we had a working capital deficit of $ 1,029 million compared to a $506 million surplus at December 31, 2023.
Consumer Customers We experienced a decrease in consumer customers of less than 1% as of December 31, 2023, as compared to December 31, 2022. Consumer customer losses were driven by reductions in our copper broadband and stand-alone voice customers, partially offset by net additions of fiber broadband customers.
Consumer Customers We experienced an increase in consumer customers of 2% as of December 31, 2024, as compared to December 31, 2023. Consumer customer gains were driven by net additions of fiber broadband customers, partially offset by reductions in our copper broadband and stand-alone voice customers.
We expect this trend to continue and accelerate due to strong fiber demand and the migration of customers from copper to fiber as we expand our fiber network. ‎ 32 The table below presents our revenue for our consumer and business and wholesale customers for the periods indicated: For the year ended For the year ended December 31, December 31, $ Increase % Increase ( $ in millions ) 2023 2022 (Decrease) (Decrease) Consumer $ 3,097 $ 3,116 $ (19) (1) % Business and wholesale 2,579 2,617 (38) (1) % Revenue from contracts with customers (1) 5,676 5,733 (57) (1) % Subsidy revenue 75 54 21 39 % Total revenue $ 5,751 $ 5,787 $ (36) (1) % (1) Includes $62 million and $63 million of lease revenue for the years ended December 31, 2023 and 2022, respectively.
We expect this trend to continue and accelerate due to strong fiber demand and the migration of customers from copper to fiber as we expand our fiber network. ‎ 33 The table below presents our revenue for our consumer and business and wholesale customers for the periods indicated: For the year ended For the year ended December 31, December 31, $ Increase % Increase ( $ in millions ) 2024 2023 (Decrease) (Decrease) Consumer $ 3,163 $ 3,097 $ 66 2 % Business and wholesale 2,710 2,579 131 5 % Revenue from contracts with customers (1) 5,873 5,676 197 3 % Subsidy revenue 64 75 (11) (15) % Total revenue $ 5,937 $ 5,751 $ 186 3 % (1) Includes $52 million and $62 million of lease revenue for the years ended December 31, 2024 and 2023, respectively.
($ in millions) Data and Internet services revenue, December 31, 2022 $ 3,390 Change in fiber broadband revenue 240 Change in copper broadband revenue (96) Data and Internet services revenue, December 31, 2023 $ 3,534 Data and internet services revenue increased $144 million, or 4%, to $3,534 million for the year ended December 31, 2023, as compared to the prior year.
($ in millions) Data and Internet services revenue, December 31, 2023 $ 3,534 Change in fiber broadband revenue 320 Change in copper broadband revenue (89) Change in other data and internet services 198 Data and Internet services revenue, December 31, 2024 $ 3,963 Data and internet services revenue increased $429 million, or 12%, to $3,963 million for the year ended December 31, 2024, as compared to the prior year.
Frontier was awarded approximately $371 million over ten years to build gigabit-capable broadband over a fiber-to-the-premises network to approximately 127,000 locations in eight states (California, Connecticut, Florida, Illinois, New York, Pennsylvania, Texas, and West Virginia).
On January 30, 2020, the FCC adopted an order establishing the RDOF competitive reverse auction to provide support to serve high-cost areas. Frontier was awarded approximately $371 million over ten years to build gigabit-capable broadband over a fiber-to-the-premises network to approximately 127,000 locations in eight states (California, Connecticut, Florida, Illinois, New York, Pennsylvania, Texas, and West Virginia).
Consumer For the year ended December 31, 2023, compared to the year ended December 31, 2022: Consumer revenues were down approximately 1% for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Consumer For the year ended December 31, 2024, compared to the year ended December 31, 2023: Consumer revenues increased approximately 2% for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
This decrease was primarily driven by a remeasurement gain for our pension benefit obligation of $202 million for the year ended December 31, 2023, compared to a remeasurement gain for our other postretirement benefit obligation of $248 million, and a remeasurement gain related to our pension plan of $218 million for the year ended December 31, 2022.
This decrease was primarily driven by a remeasurement loss to our pension plan of $45 million for the year ended December 31, 2024, compared to a remeasurement gain of $202 million for the year ended December 31, 2023, partially offset by a remeasurement gain to our postretirement benefit plan of $35 million, for the year ended December 31, 2024, compared to a remeasurement loss of $3 million, for the year ended December 31, 2023.
Going forward, we expect moderate movements in ARPC as our customer mix becomes more weighted towards broadband services. ‎ 31 Financial Results For the year ended For the year ended December 31, December 31, ( $ in millions ) 2023 2022 Data and Internet services $ 3,534 $ 3,390 Voice services 1,373 1,498 Video services 430 520 Other 339 325 Revenue from contracts with customers 5,676 5,733 Subsidy and other revenue 75 54 Revenue 5,751 5,787 Operating expenses: Cost of service 2,125 2,169 Selling, general and administrative expenses 1,646 1,745 Depreciation and amortization 1,415 1,182 Restructuring costs and other charges 73 99 Total operating expenses $ 5,259 $ 5,195 Operating income 492 592 Consumer 3,097 3,116 Business and wholesale 2,579 2,617 Revenue from contracts with customers $ 5,676 $ 5,733 Fiber revenue 2,997 2,769 Copper revenue 2,679 2,964 Revenue from contracts with customers $ 5,676 $ 5,733 REVENUE The table below presents our revenue by technology for the periods indicated: For the year ended For the year ended December 31, December 31, $ Increase % Increase ( $ in millions ) 2023 2022 (Decrease) (Decrease) Fiber $ 2,997 $ 2,769 $ 228 8 % Copper 2,679 2,964 (285) (10) % Revenue from contracts with customers (1) 5,676 5,733 (57) (1) % Subsidy revenue 75 54 21 39 % Total revenue $ 5,751 $ 5,787 $ (36) (1) % (1) Includes $62 million and $63 million of lease revenue for the years ended December 31, 2023 and 2022, respectively.
Going forward, we expect moderate movements in ARPC as our customer mix becomes more weighted towards broadband services. ‎ 32 Financial Results For the year ended For the year ended December 31, December 31, ( $ in millions ) 2024 2023 Data and Internet services $ 3,963 $ 3,534 Voice services 1,231 1,373 Video services 344 430 Other 335 339 Revenue from contracts with customers 5,873 5,676 Subsidy and other revenue 64 75 Revenue 5,937 5,751 Operating expenses: Cost of service 2,110 2,125 Selling, general and administrative expenses 1,725 1,646 Depreciation and amortization 1,625 1,415 Restructuring costs and other charges 124 73 Total operating expenses $ 5,584 $ 5,259 Operating income 353 492 Consumer 3,163 3,097 Business and wholesale 2,710 2,579 Revenue from contracts with customers $ 5,873 $ 5,676 Fiber revenue 3,402 2,997 Copper revenue 2,471 2,679 Revenue from contracts with customers $ 5,873 $ 5,676 REVENUE The table below presents our revenue by technology for the periods indicated: For the year ended For the year ended December 31, December 31, $ Increase % Increase ( $ in millions ) 2024 2023 (Decrease) (Decrease) Fiber $ 3,402 $ 2,997 $ 405 14 % Copper 2,471 2,679 (208) (8) % Revenue from contracts with customers (1) 5,873 5,676 197 3 % Subsidy revenue 64 75 (11) (15) % Total revenue $ 5,937 $ 5,751 $ 186 3 % (1) Includes $52 million and $62 million of lease revenue for the years ended December 31, 2024 and 2023, respectively.
Other customer services revenue increased $14 million, or 4%, to $339 million for the year ended December 31, 2023, as compared to the prior year period driven by increases in pole rentals, related application fees and equipment sales, partially offset by decreases in switched network access revenue.
Other customer revenue decreased $4 million, or 1%, to $335 million for the year ended December 31, 2024, as compared to the prior year period driven by decreases in rent, switched access and equipment sales, partially offset by higher other fees.
The table below presents our revenue by product and service type for the periods indicated : For the year ended For the year ended December 31, December 31, $ Increase % Increase ( $ in millions ) 2023 2022 (Decrease) (Decrease) Data and Internet services $ 3,534 $ 3,390 $ 144 4 % Voice services 1,373 1,498 (125) (8) % Video services 430 520 (90) (17) % Other 339 325 14 4 % Revenue from contracts with customers (1) 5,676 5,733 (57) (1) % Subsidy revenue 75 54 21 39 % Total revenue $ 5,751 $ 5,787 $ (36) (1) % (1) Includes $62 million and $63 million of lease revenue for the years ended December 31, 2023 and 2022, respectively. ‎ 33 We categorize our products, services, and other revenues into the following five categories: Data and Internet Services We provide data and Internet services to our consumer, business, and wholesale customers.
The table below presents our revenue by product and service type for the periods indicated : For the year ended For the year ended December 31, December 31, $ Increase % Increase ( $ in millions ) 2024 2023 (Decrease) (Decrease) Data and Internet services $ 3,963 $ 3,534 $ 429 12 % Voice services 1,231 1,373 (142) (10) % Video services 344 430 (86) (20) % Other 335 339 (4) (1) % Revenue from contracts with customers (1) 5,873 5,676 197 3 % Subsidy revenue 64 75 (11) (15) % Total revenue $ 5,937 $ 5,751 $ 186 3 % (1) Includes $52 million and $62 million of lease revenue for the years ended December 31, 2024 and 2023, respectively. ‎ 34 We categorize our products, services, and other revenues into the following five categories: Data and Internet Services We provide data and Internet services to our consumer, business, and wholesale customers.
($ in millions) Subsidy and other revenue, December 31, 2022 $ 54 Change in CAF II and other subsidies 5 Change in RDOF and other revenue 16 Subsidy and other revenue, December 31, 2023 $ 75 34 OPERATING EXPENSES The table below presents our operating expenses for the periods indicated: For the year ended For the year ended ($ in millions) December 31, December 31, Variance 2023 2022 % Operating expenses: Cost of Service $ 2,125 $ 2,169 (2) % Selling, general and administrative expenses 1,646 1,745 (6) % Depreciation and amortization 1,415 1,182 20 % Restructuring costs and other charges 73 99 (26) % Total operating expenses $ 5,259 $ 5,195 1 % Cost of Service Cost of service expenses include access charges and other third-party costs directly attributable to connecting customer locations to our network and video content costs.
Subsidy and other revenue Subsidy and other revenue decreased $11 million, or 15%, to $64 million for the year ended December 31, 2024, compared to the prior year, primarily due to decreases in federal and state subsidies. 35 OPERATING EXPENSES The table below presents our operating expenses for the periods indicated: For the year ended For the year ended ($ in millions) December 31, December 31, Variance 2024 2023 % Operating expenses: Cost of Service $ 2,110 $ 2,125 (1) % Selling, general and administrative expenses 1,725 1,646 5 % Depreciation and amortization 1,625 1,415 15 % Restructuring costs and other charges 124 73 70 % Total operating expenses $ 5,584 $ 5,259 6 % Cost of Service Cost of service expenses include access charges and other third-party costs directly attributable to connecting customer locations to our network and video content costs.
Our actual return on plan assets for the year ended December 31, 2023, was a gain of 15%, for the year ended December 31, 2022, was a loss of 20%, for the four months ended April 30, 2021, was a gain of 3%, and for the eight months ended December 31, 2021, was a gain of 6%.
Our actual return on plan assets for the year ended December 31, 2024, was a gain of 5%, for the year ended December 31, 2023, was a gain of 15% and for the year ended December 31, 2022, was a loss of 20%. For 2025, we expect to assume a rate of return of 6.65%.
The quarter ended December 31, 2023 represents the eighteenth consecutive quarter of positive fiber net adds. For the year ended December 31, 2023, we added approximately 303,000 consumer fiber broadband customers compared to approximately 239,000 in 2022 . Customers who migrated from our copper base constituted a minor portion of these consumer fiber broadband customer net additions in 2023.
Customers who migrated from our copper base constituted a minor portion of these consumer fiber broadband customer net additions in 2024. For the year ended December 31, 2024, we added approximately 14,000 business and wholesale fiber broadband customers compared to approximately 15,000 in 2023. Our focus on expanding and improving our fiber network has contributed to healthy customer retention.
Cash Flows provided from Financing Activities Cash flows provided from financing activities increased $918 million to $2,129 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Cash Flows used by Financing Activities Cash flows used by financing activities decreased $2,397 million to $268 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
The primary driver for the change in the working capital surplus at December 31, 2023 was due to an increase in cash and cash equivalents of $803 million and a decrease in accounts payable of $307 million; partially offset by a decrease in short-term investments of $675 million and an increase in vendor financing payables of $263 million, as compared to the year ended December 31, 2022.
The primary drivers for the change to the working capital deficit at December 31, 2024 were a decrease in short-term investments of $1,075 million, a decrease of $375 million in cash and cash equivalents, a decrease to vendor financing payables of $247 million and a decrease in accounts receivable of $67 million, partially offset by an increase of $82 million in other current liabilities as compared to the period ended December 31, 2023.
Interest expense For the year ended December 31, 2023, interest expense increased $161 million, as compared to 2022. The increase in interest expense was primarily driven by a higher debt balance, as well as higher interest rates.
Interest expense For the year ended December 31, 2024, interest expense increased $151 million, as compared to 2023. The increase in interest expense was primarily driven by a higher debt balance. Income tax expense (benefit) During the year ended December 31, 2024, we recorded an income tax benefit of $24 million on pre-tax loss of $346 million.
This decrease was primarily a result of lower compensation and benefit costs, and other fees, partially offset by increased commissions and an $11 million sales tax refund in 2022. Pension and Other post-employment benefits (“OPEB”) costs We allocate certain pension/OPEB expense to cost of service and SG&A expenses.
This increase was primarily a result of increases in marketing costs, third party commissions, property taxes, and a settled dispute with the Chief Executive Officer of Frontier’s predecessor company, partially offset by lower compensation and other fees. Pension and Other post-employment benefits (“OPEB”) costs We allocate certain pension/OPEB expense to cost of service and SG&A expenses.
Our primary sources of liquidity are cash flows from operations, cash on hand and borrowing capacity under our $900 million Revolving Facility (as reduced by $358 million of revolver Letters of Credit). In addition, potential future sources of capital may include debt and equity (or equity-linked) financing and the $500 million Variable Funding Notes facility.
Our primary sources of liquidity are cash flows from operations, cash on hand and borrowing capacity under our $1,500 million DDTL Facility and $925 million Revolving Facility (as reduced by $265 million of revolver Letters of Credit).
As of December 31, 2023, we had $263 million of vendor financing liabilities included in “Other current liabilities” on our consolidated balance sheets , of which $255 million is associated with capital expenditures.
We have negotiated payment terms with certain of our vendors, (referred to as vendor financing), which are excluded from capital expenditures and reported as financing activities. As of December 31, 2024 and December 31, 2023 we had $16 million and $263 million, respectively, of vendor financing liabilities included in “Other current liabilities” on our consolidated balance sheet.
In 2023, 2022 and 2021, our expected long-term rate of return on plan assets was 7.50%.
In 2023 and 2022, our expected long-term rate of return on plan assets was 7.50%. For the period January 1, 2024 – September 30, 2024, our expected long-term rate of return on plan assets was 7.50%. For the period October 1, 2024 to December 31, 2024, our expected long-term rate of return on plan assets was 6.65%.
The increase in financing activities was primarily driven by an increase in proceeds from long-term debt borrowings in the first three quarters of 2023 as compared to the prior year period. Capital Resources Our primary anticipated uses of liquidity are to fund the costs of operations, working capital and capital expenditures and to fund interest payments on our long-term debt.
Capital Resources Our primary anticipated uses of liquidity are to fund the costs of operations, working capital and capital expenditures and to fund interest payments on our long-term debt.
In August 2023, our limited-purpose, bankruptcy remote, subsidiary, Frontier Issuer LLC (“Frontier Issuer”), issued $1.6 billion aggregate principal amount of secured fiber network revenue term notes, less $58 million in original issue discounts, consisting of $1,120 million 6.60% Series 2023-1, Class A-2 term notes, $155 million 8.30% Series 2023-1, Class B term notes and $312 million 11.50% Series 2023-1, Class C term notes (collectively, the “Fiber Term Notes”), each with an anticipated repayment date (“ARD”), in July 2028, in an offering exempt from registration under the Securities Act.
Fiber Network Revenue Term Notes On July 1, 2024, Frontier Issuer LLC (“Frontier Issuer”), the Company’s limited-purpose, bankruptcy remote, subsidiary completed the issuance of $750 million aggregate principal amount of secured fiber network revenue term notes consisting of $530 million 6.19% Series 2024-1, Class A-2 term notes, $73 million 7.02% Series 2024-1, Class B term notes and $147 million 11.16% Series 2024-1, Class C term notes, each with an anticipated repayment term of seven years (collectively, the “Fiber Term Notes”).
For the year ended December 31, 2023, restructuring costs and other charges decreased $26 million, as compared to the year ended December 31, 2022, primarily due to the non-recurrence of a one-time lease impairment charge of $44 million in the prior year, and lower costs related to other restructuring activities, partially offset by higher severance and employee costs. ‎ 35 OTHER NON-OPERATING INCOME AND EXPENSE For the year ended For the year ended ( $ in millions ) December 31, December 31, % Increase 2023 2022 (Decrease) Investment and other income, net $ 278 $ 554 (50)% Pension settlement costs $ - $ (55) NM Interest expense $ (653) $ (492) 33% % Income tax expense $ 88 $ 158 (44)% NM - Not meaningful Investment and other income, net Investment and other income, net decreased by $276 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
For the year ended December 31, 2024, restructuring costs and other charges increased $51 million, as compared to the year ended December 31, 2023, primarily due to higher pension/OPEB special termination benefit enhancement costs related to a voluntary severance program, costs associated with the Verizon merger and other restructuring activities, slightly offset by lower severance and employee costs. ‎ 36 OTHER NON-OPERATING INCOME AND EXPENSE For the year ended For the year ended ( $ in millions ) December 31, December 31, % Increase 2024 2023 (Decrease) Investment and other income, net $ 105 $ 278 (62) % Interest expense $ (804) $ (653) 23 % Income tax expense (benefit) $ (24) $ 88 (127) % Investment and other income, net Investment and other income, net decreased by $173 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
The overall decrease in operating cash flows was primarily the result of changes in working capital. We paid less than $1 million in net cash taxes during the year ended December 31, 2023, and we paid $8 million in net cash taxes during the year ended December 31, 2022.
Cash Flows provided from Operating Activities Cash flows provided from operating activities increased $277 million to $1,621 million for the year ended December 31, 2024, as compared to 2023. The overall increase in operating cash flows was primarily the result of changes in working capital.
For a discussion of these and other accounting policies, see Note 1 of the Notes to Consolidated Financial Statements. Fresh Start Accounting We adopted fresh start accounting and reporting on the Effective Date, in accordance with FASB ASC 852.
For a discussion of these and other accounting policies, see Note 1 of the Notes to Consolidated Financial Statements. Allowance for Doubtful Accounts We maintain an allowance for doubtful accounts based on our estimate of our ability to collect accounts receivable.
For the year ended December 31, 2023, we added approximately 15,000 business and wholesale fiber broadband customers compared to approximately 13,000 in 2022. Our focus on expanding and improving our fiber network has contributed to healthy customer retention. Our average monthly consumer fiber broadband churn was 1.32% for the year ended December 31, 2023, compared to 1.38% in 2022.
Our average monthly consumer fiber broadband churn was 1.36% for the year ended December 31, 2024, compared to 1.32% in 2023.
Absent additional funding, at present pace, the ACP funds are projected by the FCC to exhaust in April of 2024. Privacy: Our businesses are subject to federal and state laws and regulations that impose various restrictions and obligations related to privacy and the handling of customers’ personal information.
Significant decreases in available funding, or the imposition of significant requirements on the receipt of such funding, could have a material adverse effect on our business and results of operations. Privacy: Our businesses are subject to federal and state laws and regulations that impose various restrictions and obligations related to privacy and the handling of customers’ personal information.
The Fiber Term Notes are secured by certain of Frontier’s fiber assets and associated customer contracts in the Dallas, Texas metropolitan area. Certain cash and other accounts for the benefit of the Trustee and noteholders are restricted.
The Fiber Term Notes have a weighted average yield of approximately 7.4%. The Fiber Term Notes are secured by certain of Frontier’s fiber assets and associated customer contracts in the North Texas Area, in addition to those in the Dallas Metropolitan Area contributed in the Series 2023-1 Notes offering.
We provide service and product options in our consumer and business offerings in each of our markets. ‎ 30 Fiber Broadband Customers Our investment strategy is focused on expanding our fiber network. In conjunction with this strategy, we are also working to improve our product positioning in both existing and new fiber markets.
In conjunction with this strategy, we are also working to improve our product positioning in both existing and new fiber markets. For the year ended December 31, 2024, we added approximately 371,000 consumer fiber broadband customers compared to approximately 303,000 in 202 3.
As of December 31, 2023, we were in compliance with all of the covenants under our existing indentures and the Amended and Restated Credit Agreement. Net Operating Losses In connection with our emergence from bankruptcy, we consummated a taxable disposition of substantially all of the assets and/or subsidiary stock of the Company.
As of December 31, 2024, we were in compliance with all of the covenants under our existing indentures and the Amended and Restated Credit Agreement. Warehouse Facilities The Warehouse Credit Agreement includes covenants and restrictions customary for transactions of this type.
Off-Balance Sheet Arrangements We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial statements. 38 Future Contractual Obligations and Commitments A summary of our future contractual obligations and commercial commitments as of December 31, 2023 is as follows: Payments due by period ($ in millions) Total 2024 2025 2026 2027 2028 Thereafter Long-term debt obligations, excluding interest $ 11,231 $ 15 $ 15 $ 15 $ 2,740 $ 3,636 $ 4,810 Interest on long-term debt 3,990 813 794 786 753 357 487 Lease obligations 478 75 69 64 54 45 171 Purchase obligations 332 204 125 2 1 - - Total $ 16,031 $ 1,107 $ 1,003 $ 867 $ 3,548 $ 4,038 $ 5,468 Our outstanding performance letters of credit increased from $174 million to $181 million during the year ended December 31, 2023.
Future Contractual Obligations and Commitments A summary of our future contractual obligations and commercial commitments as of December 31, 2024 is as follows: Payments due by period ($ in millions) Total 2025 2026 2027 2028 2029 Thereafter Long-term debt obligations, excluding interest $ 11,569 $ 10 $ 10 $ 1,360 $ 3,646 $ 1,810 $ 4,733 Interest on long-term debt 3,748 785 786 779 597 436 365 Lease obligations 554 95 89 80 71 51 168 Purchase obligations 116 95 16 5 - - - Total $ 15,987 $ 985 $ 901 $ 2,224 $ 4,314 $ 2,297 $ 5,266 Our outstanding performance letters of credit increased from $181 million to $185 million during the year ended December 31, 2024.
Cash Flows used by Investing Activities Cash flows used by investing activities were $2,556 million for the year ended December 31, 2023, compared to cash flows used by investing activities of $4,468 million in 2022.
We received $10 million in net cash taxes during the year ended December 31, 2024, and we paid less than $1 million in net cash taxes during the year ended December 31, 2023. 37 Cash Flows used by Investing Activities Cash flows used by investing activities were $1,681 million for the year ended December 31, 2024, compared to cash flows used by investing activities of $2,556 million in 2023, due to a decrease of $428 million in capital expenditures and an increase from the activity of purchases and sales of short-term investments as compared to the prior year period.
(b) Liquidity and Capital Resources As of December 31, 2023, we had liquidity of approximately $3,242 million, comprised of cash and cash equivalents of $1,125 million, $1,075 million of short-term investments (consisting of term deposits earning interest in excess of traditional bank deposit rates, and placed with banks with A-1/P-1 or equivalent credit quality), $500 million Variable Funding Notes capacity, subject to customary conditions to draw, and available capacity on our undrawn revolving credit facility of $542 million.
Our effective tax rate for the year ended December 31, 2024 was 7.0%. (b) Liquidity and Capital Resources As of December 31, 2024, we had liquidity of approximately $2,910 million, comprised of cash and cash equivalents of $750 million, the available capacity on our delayed draw term loan facility of $1,500 million and undrawn revolving credit facility of $660 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−1 removed4 unchanged
Biggest changeThe discount rate is based on the pattern of expected future benefit payments and the prevailing rates available on long-term, high quality corporate bonds with durations approximate to that of our benefit obligation. As of December 31, 2023, and 2022, the discount rate utilized in calculating our benefit plan obligation was 5.20% and 5.50%, respectively.
Biggest changeOur discount rate assumption for our pension benefit obligation is determined at least annually, or whenever required, with assistance from our actuaries. The discount rate is based on the pattern of expected future benefit payments and the prevailing rates available on long-term, high quality corporate bonds with durations approximate to that of our benefit obligation.
Our objectives in managing our interest rate risk are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, only our $1.4 billion term loan facility has a floating rate at December 31, 2023.
Our objectives in managing our interest rate risk are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, only our $1.0 billion term loan facility has a floating rate at December 31, 2024.
The discount rate assumption for our OPEB obligation is determined in a similar manner to the pension plan. As of December 31, 2023, and 2022, our discount rate utilized in calculating our benefit plan obligation was 5.20% and 5.50%, respectively.
As of December 31, 2024, and 2023, the discount rate utilized in calculating our benefit plan obligation was 5.60% and 5.20%, respectively. The discount rate assumption for our OPEB obligation is determined in a similar manner to the pension plan.
As of December 31, 2023, 87% of our total debt had fixed interest rates. We had no interest rate swap agreements in effect at December 31, 2023. We believe that our currently outstanding obligation exposure to interest rate changes is minimal.
As of December 31, 2024, 91% of our total debt had fixed interest rates. We had no interest rate swap agreements in effect at December 31, 2024. We believe that our currently outstanding obligation exposure to interest rate changes is minimal.
At December 31, 2023, the fair value of our debt was estimated to be approximately $10.7 billion, based on quoted market prices, our overall weighted average borrowing rate was 7.103% and our overall weighted average maturity was approximately 5.5 years, which decreased from approximately 6.6 years as of December 31, 2022.
At December 31, 2024, the fair value of our debt was estimated to be approximately $11.7 billion, based on quoted market prices, our overall weighted average borrowing rate was 6.996% and our overall weighted average maturity was approximately 4.5 years, which decreased from approximately 5.5 years as of December 31, 2023.
The value of our pension plan assets increased $235 million from $2,033 million at December 31, 2022 to $2,268 million at December 31, 2023. This increase was primarily a result of changes in the market value of investments of $305 million, net of plan expenses, and contributions of $134 million, offset by benefit payments of $204 million. ‎ 42
The value of our pension plan assets increased $60 million from $2,268 million at December 31, 2023 to $2,328 million at December 31, 2024. This increase was primarily a result of changes in the market value of investments of $114 million, net of plan expenses, and contributions of $133 million, offset by benefit payments of $187 million.
Commencing July 1, 2023, the annual impact of 100 basis points change in the SOFR would result in approximately $14 million of additional interest expense, provided that the SOFR rate exceeds the SOFR floor.
The annual impact of 100 basis points increase in the SOFR would result in approximately $10 million of additional interest expense, provided that the SOFR rate exceeds the SOFR floor.
Refer to Note 9 for discussion of the impact of the Chapter 11 Cases on our debt obligations. Equity Price Exposure Our exposure to market risks for changes in equity security prices as of December 31, 2023 is primarily limited to our pension plan assets. We have no other security investments of any significant amount.
Equity Price Exposure Our exposure to market risks for changes in equity security prices as of December 31, 2024 is primarily limited to our pension plan assets. We have no other security investments of any significant amount.
An adverse change in interest rates would increase the amount that we pay on our variable rate obligations and could result in fluctuations in the fair value of our fixed rate obligations. To date, interest income from cash invested in term deposits has offset the impact of higher interest expense from floating rate debt.
An adverse change in interest rates would increase the amount that we pay on our variable rate obligations and could result in fluctuations in the fair value of our fixed rate obligations. Based upon our overall interest rate exposure, a near-term change in interest rates would not materially affect our consolidated financial position, results of operations or cash flows.
Removed
Based upon our overall interest rate exposure, a near-term change in interest rates would not materially affect our consolidated financial position, results of operations or cash flows. Our discount rate assumption for our pension benefit obligation is determined at least annually, or whenever required, with assistance from our actuaries.
Added
As of December 31, 2024, and 2023, our discount rate utilized in calculating our benefit plan obligation was 5.70% and 5.20%, respectively.

Other FYBR 10-K year-over-year comparisons