UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to ___________

Commission file number 001-11001

FRONTIER COMMUNICATIONS PARENT, INC.

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (203) 614-5600

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes __ No _X_

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes __ No X

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X No __

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer x Accelerated Filer o Non-Accelerated Filer o

Smaller Reporting Company o Emerging Growth Company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes __ No X 

The aggregate market value of common stock held by non-affiliates of the registrant on June 30, 2022, based on the closing price per share on such date was $5.77 billion. The number of shares outstanding of the registrant's common stock as of February 21, 2023 was 245,040,000.

DOCUMENT INCORPORATED BY REFERENCE

Portions of the proxy statement for the Registrant’s 2023 Annual Meeting of Stockholders are incorporated by reference in Part III of this Annual Report on Form 10-K. 

TABLE OF CONTENTS

PART I

Unless the context indicates otherwise, the use of the terms the "Company,” “Frontier”, “we,” “us” or “our” shall refer to Frontier Communications Parent, Inc.

Overview

Frontier is a leading communications and technology provider offering gigabit speeds that empower and connect 2.8 million broadband subscribers in 25 states as of December 31, 2022. We are building critical infrastructure across the country with our fiber-optic network and cloud-based solutions, enabling secure high-speed connections. Rallied around our purpose of Building Gigabit America^TM, we are focused on supporting a digital society, closing the digital divide, and working toward a more sustainable environment.

Our investment strategy is underpinned by the rapid growth in demand for high-speed broadband, with data usage per household expected to grow significantly through higher, over-the-top video consumption, more connected devices per household, and increased demand for upstream data (e.g., videoconferencing and gaming). We believe that our ability to provide symmetrical high-speed connectivity through our fiber-optic technology provides competitive advantages, and that we are well positioned to meet this growing demand with faster upload and download speeds, and lower latency than our competition.

For the year ended December 31, 2022, approximately 48% of our total revenue was attributable to activities related to our fiber-optic products with 51% of revenue related to our copper products. We generated revenue of approximately $5.8 billion for the year ended December 31, 2022.

2022 was a pivotal year for Frontier. We continued Building Gigabit America at a record pace, with substantial progress in executing on our four key strategic priorities: build fiber, sell fiber, improve the customer experience, and simplify operations.

Key milestone accomplishments against these four levels of value creation in 2022 include:

Fiber Deployment: We exceeded our initial 2022 plan, building fiber to approximately 1.2 million locations. As of December 31, 2022, we had approximately 5.2 million total locations passed with fiber, surpassing the halfway mark to our goal of 10 million total locations. Our build plan is solidified by multi-year agreements with key labor and equipment partners. As our expansion grows over time, we expect our business mix will shift significantly, with a larger percentage of revenue coming from fiber.

The following table shows the number of consumer fiber passings as of December 31, 2022:

⁽¹⁾ Consumer and business locations with fewer than 5 units per location.

Fiber Penetration: We strive to deliver new best-in-market products to meet customer demands and increase penetration across our fiber footprint. We are targeting terminal penetration of 45% or higher in markets we have passed with fiber.

In 2022, we added a record 250,000 fiber broadband customer net additions, resulting in fiber broadband customer growth of 17% as compared to the fourth quarter of 2021. Fiber broadband customer net additions continued to outpace copper broadband customer net losses, resulting in 40,000 total broadband customer net additions in 2022.

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These record fiber broadband net additions resulted in rising fiber broadband customer penetration across our footprint.

oIn 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 43.2% at the end of 2022, up from 41.9% from the end of 2021.

oIn our Expansion Fiber footprint, our target penetration is 15% - 20% after 12 months, 25% - 30% penetration after 24 months, and a terminal penetration of at least 45%. We have met or exceeded our targets for fiber locations constructed in 2020 and 2021:

oFiber locations constructed in 2020 reached broadband penetration of 22% and 31% after 12 and 24 months, respectively.

oFiber locations constructed in 2021 reached broadband penetration of 18% after 12 months.

Expansion fiber penetration meeting or exceeding targets

Customer Experience: We are focused on delivering an exceptional experience for our customers. In 2022, significant progress included:

oFiber Net Promoter Score (NPS) increased 10 points, from +9 points at the end of 2021 to +19 points at the end of 2022.

oFiber broadband churn improved 7 basis points from 1.45% in 2021 to 1.38% in 2022.

oWe launched our reinvented brand in April 2022.

oWe introduced our new customer app in November 2022.

oWe launched our 2 Gbps (Gigabits per second) fiber product offering in February 2022, and our 5 Gbps fiber product offering in January 2023.

Operational Efficiency: Across the entire company, we have identified opportunities to simplify and digitize our operations. We achieved our annualized gross run rate cost savings target of approximately $250 million more than one year ahead of plan. As of December 31, 2022, we had realized $336 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 multiple dwelling units. We provide broadband, video, voice and other services and products to our consumer customers over both fiber and copper-based networks.

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Business

Our business customers include larger enterprise customers, small and medium businesses (“SMB”), and wholesale customers.

oLarger Enterprise: These customers consist of Fortune 1000, multi-location companies, large government entities, large educational institutions, and non-profits.

oSmall and Medium Business: These customers consist of single or multi-location companies and mid-sized government entities, educational institutions, and non-profits.

oWholesale: These customers are often referred to as carriers or service providers and include national operators, cellular companies, and local exchange companies. These companies need to access locations within Frontier’s footprint to offer local services, wireless carriers, and integrated carriers that offer a variety of services across all these categories. 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. These services are offered on either a standalone basis or in a bundled package, per individual customer needs. Services that we offer to our SMB and larger enterprise customers include broadband, ethernet, traditional circuit-based services, software defined wide area network (“SDWAN”), managed Wi-Fi and cloud IT solutions, voice, and Unified Communications as a Service (“UCaaS”), and Voice over Internet Protocol (“VoIP”). We also offer these customers advanced hardware and network solutions and services.

Data and Internet Services: We offer a comprehensive range of broadband and networking services. The principal consumer service we provide is broadband internet. Business services include a complete portfolio of ethernet services, dedicated Internet, SDWAN, managed Wi-Fi, time division multiplexing data transport services, and optical transport services. These services are all supported by 24/7 technical support and an advanced network operations center. We also offer wireless broadband services (through unlicensed Spectrum) in select markets utilizing networks that we own or operate.

Voice Services: We offer voice services, including data-based VoIP and UCaaS, long-distance and voice messaging services, to consumer and business customers in all our markets. 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 inter-exchange carriers. Our long-distance services are billed in advance for unlimited use service and billed in arrears for services on a per minute-of-use basis.

We also offer packages of communications services. These packages permit customers to bundle their products and services, including voice service, video and Internet services, and other product offerings.

Video Services: We provide video services under the Frontier TV brand in portions of California, Indiana, Texas, and Florida and under the Vantage brand in portions of Connecticut, North Carolina, South Carolina, Illinois, New York, and Ohio. We also offer satellite TV video service to our customers under various agency relationships with satellite 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. 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.

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.

Network Architecture and Technology

Our local exchange carrier networks consist of host central office and remote sites, primarily equipped with digital and Internet Protocol switches. The outside plant consists of transport and distribution delivery networks connecting our host central office with remote central offices, and ultimately, with our customers. We own fiber optic and copper cable, which have been deployed in our networks and are the primary transport technologies between our host and remote central offices, and interconnection points with other communication carriers.

We have expanded and enhanced our fiber-optic and copper transport systems to support increasing demand for high bandwidth transport services. Our core fiber network is currently capable of 10 Gpbs and requires limited capital investment to enable faster speeds. We routinely enhance our networks and upgrade with the Internet protocol transport and routing equipment, reconfigurable optical add/drop multiplexers transport systems, passive optical network, ultra-high speed digital subscriber line broadband equipment, and VoIP switches. These systems support advanced services such as ethernet, dedicated Internet, VoIP, and SDWAN.

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 on business premises. 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. Additionally, fixed wireless broadband (FWB) is part of our broadband strategy and is deployed for some business ethernet services. FWB is delivered by the use of an antenna at a Frontier base location and another antenna at the customer location.

Competition

Competition within the communications industry is intense. For the vast 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 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. Given our footprint, we believe we are well positioned to capitalize on attractive demographic trends.

However, 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, including Frontier. More market participants are now competing to meet the communications needs of the same customer base, thus increasing competitive pressures. We face competition from cable, wireless and wireline carriers, satellite, fiber “overbuilders” and Over-the-Top (“OTT”) companies. Many of these service providers 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. Many of our competitors are larger, have stronger brand recognition, have more service offerings, and have greater financial resources than we currently do. All of these factors create potential downward pressure on the demand for and pricing of our services. Competition includes the following:

-Cable Operators: In a majority of our markets, cable operators offer high speed Internet, video, and voice services, and compete with us aggressively for consumer and business customers on speed and price, primarily by marketing with significant promotional period pricing.

-Wireless Carriers: Wireless operators offer broadband, video and voice services and compete with us for consumer and business customers by offering increasingly larger data packages that utilize the latest 5G technology to mobile customers. As a result, the percentage of premises with landline telephone service has been declining, a trend we expect will continue.

-Online Video Providers: Many consumers are opting for OTT video services rather than traditional, multi-channel video. In response, we have made investments in our network to deliver OTT video content to consumers who might not opt for traditional video services. Additionally, we have developed partnerships with leading OTT providers to offer their services to our customers. The percentage of premises with a traditional, multi-channel video product has declined, a trend we expect will continue.

Competition for consumer customers is based on price, bandwidth, quality, and speed of service, including promotions as well as bundling of service offerings. Competition comes from other communications providers, cable operators, Competitive Local Exchange Companies (CLECs), and other enterprises. 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. Some consumer customers prefer the convenience and discounts available when voice, data, Internet and/or video services are bundled by a single provider.

Competition for business customers is also based on price, bandwidth, quality, and speed of service, including pricing and promotions and bundled offerings. Competition comes from other communications providers, cable operators, CLECs, and other enterprises. 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.

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. We are committed to growing our customer base through providing higher broadband speeds and capacities that we believe will enable us to reach new markets, target new customers, and grow our business while maximizing our full geographic footprint.

In addition to the focus on our broadband capabilities, we continue to evolve our other product offerings to meet the changing needs of the market, provide strong customer service and support, invest in our network to enable satisfactory capacity and capabilities, and package our offerings at attractive prices. We are continuing to execute on our initiatives to build out and invest in our fiber network, drive operational performance, increasingly win more customers in our footprint, deliver an exceptional customer journey, and simplify our operations.

Regulatory Environment

Some of our operations are subject to regulation by the FCC and various state regulatory agencies, often called public service or utility commissions. We expect federal and state lawmakers, the FCC, and the state regulatory agencies to continue to revise the statutes and regulations governing communications services.

Regulation of Our Business

We are subject to federal, state, and local regulation and we have various regulatory authorizations for our regulated service offerings. At the federal level, the FCC generally exercises jurisdiction over information services, interstate, or international telecommunications services and over facilities to the extent they are used to provide, originate, or terminate interstate or international services. State regulatory commissions generally exercise jurisdiction over intrastate telecommunications services and the facilities used to provide, originate, or terminate those services. Most of our local exchange companies operate as incumbent carriers in the states in which they operate and are certified in those states to provide local telecommunications services. Certain federal and state agencies, including attorneys general, monitor and exercise oversight related to consumer protection issues, including marketing, sales, provision of services, and service charges. In addition, local governments often regulate the public rights-of-way necessary to install and operate networks and may require service providers to locate and work around other utility facilities and obtain licenses or franchises to use public rights-of-way. Municipalities and other local government agencies also may regulate other limited aspects of our business, by requiring us to obtain licenses and construction permits and to abide by applicable regulations and requirements.

Some state regulatory agencies have substantial oversight over incumbent telephone companies, and their interconnection with competitive providers and provision of non-discriminatory network access to certain network elements to them. Under the Federal Telecommunications Act of 1996, state regulatory commissions have jurisdiction to set certain rates, arbitrate, and review interconnection disputes and agreements between incumbent telephone companies and CLECs, in accordance with rules set by the FCC. The FCC and some state regulatory commissions also impose fees on providers of telecommunications services to support the federal and state universal service programs. Many of the states in which we operate require prior approvals or notifications for certain acquisitions, transfers or encumbrances of assets, customers, or ownership of regulated entities. The FCC and certain states also require certain approvals or notifications to discontinue the use of certain telecommunications facilities and the provision of some services.

Additionally, in some states we are subject to operating restrictions and minimum service quality standards. 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. 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. Some of these plans have limited terms 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. 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.

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. 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 annually certify compliance with certain rules. Although most of these regulations are generally consistent with our business plans, they may restrict our flexibility in operating our business.

Some regulations are, or could in the future be, the subject of judicial proceedings, legislative hearings and administrative proposals or challenges that could change the manner in which the entire industry operates or the way we provide services. Neither the outcome of any of these developments, nor their potential impact on us, can be predicted at this time. Regulatory oversight and requirements can change rapidly in the communications industry, and such changes may have an adverse effect on us.

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 in 29 states, which provided $332 million in annual support and in return the Company committed to make broadband with at least 10 Mbps downstream/1 Mbps upstream speeds available to approximately 774,000 high-cost unserved or underserved locations within its footprint. This amount included approximately 41,000 locations and $19 million in annual support related to the four states of the Northwest Operations, which were disposed on May 1, 2020. The deployment deadline for the CAF phase II program was December 31, 2021, and funding ended on that date. The FCC is 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 requirements and obligations.

On January 30, 2020, the FCC adopted an order establishing the RDOF competitive reverse auction to provide support to serve high-cost areas. The FCC announced the results of its RDOF Phase I auction on December 7, 2020. 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). Frontier will be required to complete the buildout to the RDOF locations six years after funding starts, with interim target milestones over this period.

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.

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. 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. 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.

In March 2021, Congress passed the American Rescue Plan Act (“ARPA”) of 2021, 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. 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. 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. 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”). 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. Each state will receive a 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. NTIA established initial requirements for this program in May 2022 and is expected to announce the state grant allocations in 2023. States will award funding they receive through competitive grant processes. In the IIJA, Congress also provides $14.2 billion for the ACP. The IIJA includes certain changes for the ACP including, it reduces the maximum available subsidy per household from $50 to $30 (while keeping it at $75 on tribal lands), expands the eligibility pool for the subsidy, and requires that customers be able to apply the credit to any Internet service offering, among other things.

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 also directed the FCC to require broadband service providers to display labels containing certain information regarding their broadband internet access plans. The rules adopted by the FCC require covered broadband providers to display these labels at the point of sale. 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. For example, privacy-related legislation has been adopted in a number of states in which we operate. Certain state requirements give consumers increased rights including the right to know what personal information is being collected about them and obtain a copy of such information, opt-out of the sale of personal information or sharing of personal information for purposes of certain targeted advertising, and to request the correction or deletion of this information. Complying with such laws, as well as other legislative and regulatory action related to privacy, could result in increased costs of compliance, claims against broadband Internet access service providers and others, and increased uncertainty in the value and availability of data.

Video Programming

Federal, state, and local governments extensively regulate the video services industry. 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.

We provide video programming in some of our markets including California, Connecticut, Florida, Indiana, and Texas pursuant to franchises, permits and similar authorizations issued by state and local franchising authorities. Most franchises require payment of a franchise fee as a requirement to the granting of authority.

Many franchises establish facilities and service requirements, as well as specific customer service standards and monetary penalties for non-compliance. We believe that we are meeting all material standards and requirements. Franchises are generally granted for fixed terms and must be periodically renewed.

Environmental Regulation

The local exchange carrier subsidiaries we operate are subject to federal, state, and local laws, and regulations governing the use, storage, disposal of, and exposure to hazardous materials, the release of pollutants into the environment and the remediation of contamination. As an owner and former owner of property, we are subject to environmental laws that could impose liability for the entire cost of cleanup at contaminated sites, including sites formerly owned by us or our predecessors, regardless of fault or the lawfulness of the activity that resulted in contamination. 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.

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. Solely for convenience, we refer to trademarks, service marks and trade names in this report without the ™, ^SM and ^® symbols. Such references are not intended to indicate, in any way, that we will not assert, to the fullest extent permitted by law, our rights to our trademarks, service marks and trade names. 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 singular purpose, Building Gigabit America. As of December 31, 2022, we had approximately 14,700 employees.

Our Board of Directors and executive leadership team oversee the execution of our fiber-first strategy: build fiber, sell fiber, improve the customer experience, and streamline operations. Motivated by a belief that Frontier’s success depends on our employees’ success, we strive to provide the skills they need to thrive by creating an inclusive culture that rewards them with competitive compensation and benefits, makes safety paramount, and nurtures professional and personal development.

Talent Engagement and Development

We are transforming our company from the inside out, which means culture change is a top priority. To drive change, we are creating a culture that is grounded in transparent, two-way communication with actionable feedback.

In 2022, we took the following steps, among others, to continue to build our culture:

All-employee Surveys: To tap into employees’ ideas, we conducted two all-employee surveys (March and October) in 2022.

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. During these calls, we discuss new products and programs, recognize individuals who go above and beyond, and answer our employees’ questions live.

Digital Employee Experience: We launched The Gigaverse, a digital hub where employees can access news and resources. We also launched an internal social media companion to encourage collaboration across teams.

Frontline Training: We added new programs to further develop our customer-facing employees including training on our products, services and technology, and the most effective ways to engage new and existing customers.

Health and Safety

The health and safety of our employees is our top priority, and we are committed to providing a safe working environment. This starts at the top, with monthly executive reviews designed to monitor existing and emerging health and safety risks associated with our business and identify opportunities for training and other mitigation programs.

As a standard practice, we maintain environmental, health, and safety compliance programs, including ongoing safety training for our field technicians. In 2022, we added technical safety programs as we expanded our fiber build across the country.

Diversity, Equity, and Inclusion

We embrace diversity because we believe it makes us a stronger and more innovative company.

To evolve our culture, we weave DEI objectives throughout the talent life cycle:

Recruitment and Attraction: Recruit and attract a workforce that resembles our customers and the communities we serve.  

Hiring: Maintain a hiring process designed to be free from bias and discrimination to ensure equitable opportunity. 

Onboarding and Engagement: Cultivate an inclusive community that advances a high-performing work culture and enhances a sense of belonging.

Training and Development: Provide development opportunities that increase the intercultural competence of our community and enhance the retention of underrepresented employees. 

Performance Management and Succession Planning: Ensure equitable promotion and compensation practices in the talent acquisition process.

Our Workforce

Our employee base decreased by approximately 6% from approximately 15,600 employees as of December 31, 2021 to approximately 14,700 at December 31, 2022. During 2022, restructuring initiatives and organizational realignment resulted in the separation of approximately 850 employees. Approximately 69% 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 27% of our unionized employees are covered by collective agreements that are scheduled to expire in 2023. We consider our relations with our employees to be good.

In addition, our workforce is currently supplemented by approximately 380 contract workers, primarily supporting the technology and field operations groups. We are a federal contractor and follow the rules set forth by the Department of Labor, Office of Federal Contract Compliance Programs (OFCCP), including those applicable to recruiting, hiring and diversity.

Emergence from Chapter 11 Bankruptcy; Basis of Presentation

On April 14, 2020, Frontier Communications Corporation (“Old Frontier”) and certain of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code. On August 27, 2020, the Bankruptcy Court entered the Confirmation Order, which approved and confirmed the Plan of Reorganization (the “Plan”). On April 30, 2021, (the “Effective Date”), we emerged from Chapter 11 pursuant to a series of transactions under the Plan. On the Effective Date, among other things, all of the obligations under Old Frontier’s unsecured senior notes were cancelled, all of Old Frontier’s equity existing as of the Effective Date was cancelled, and we issued 244,401,000 shares of common stock that were transferred to holders of the allowed senior notes claims (as defined in the Plan.) Further, in connection with the satisfaction of the conditions to effectiveness as set forth in the Confirmation Order and in the Plan, Frontier Communications Holdings, LLC completed a series of transactions whereby it assumed all of the outstanding indebtedness of Old Frontier and issued new first lien notes (the “Restructuring”).

We adopted fresh start accounting upon the effective date, which resulted in a new basis of accounting, and we became a new entity for financial reporting purposes. As a result of the application of fresh start accounting and the effects of the implementation of the Plan, the consolidated financial statements after the Effective Date are not comparable with the consolidated financial statements on or before that date. Refer to Note 4 – “Fresh Start Accounting” to the audited consolidated financial statements, in Part II, Item 8 of this Annual Report on Form 10-K, for additional information related to fresh start accounting.

In this report, references to “Successor” relate to our financial position and results of operations after the Effective Date and references to “Predecessor” refer to the financial position and results of operations of Old Frontier and its subsidiaries on or before the Effective Date.

Available Information

We make available, free of charge on our website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as practicable after we electronically file these documents with, or furnish them to, the SEC. These documents may be accessed through our website at www.frontier.com under “Investor Relations.” The information posted or linked on our website is not part of, or incorporated by reference into, this report. We also make our Annual Report available in printed form upon request at no charge.

We make available on our website, as noted above, or in printed form upon request, free of charge, our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Specific Code of Business Conduct and Ethics Provisions for Certain Officers, and the charters for the Audit, Compensation and Human Capital, and Nominating and Corporate Governance Committees of the Board of Directors. Stockholders may request printed copies of these materials by writing to: 401 Merritt 7, Norwalk, Connecticut 06851 Attention: Corporate Secretary.

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Forward-Looking Statements

This Annual Report on Form 10-K contains "forward-looking statements," related to future events. 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 and other matters. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and performance and contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “may,” “will,” “would,” or “target.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. We do not intend, nor do we undertake any duty, to update any forward-looking statements , except as required by law.

A 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 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 and potential disruptions in our supply chain resulting from the global microchip shortage, the COVID-19 pandemic, or otherwise, 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;

competition from cable, wireless and wireline carriers, satellite, fiber “overbuilders” and over the top companies, 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;

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 likelihood that our historical financial information may no longer be indicative of our future performance;

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, including the COVID-19 pandemic, natural disasters, economic or political instability, terrorist attacks and wars, or other adverse widespread developments;

potential adverse impacts of climate change and increasingly stringent environmental laws, rules and regulations, and customer expectations;

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.

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. 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.

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ITEM 1A. Risk Factors

Before you make an investment decision with respect to any of our securities, you should carefully consider all the information we have included in this Annual Report on Form 10-K and our subsequent filings with the SEC. In particular, you should carefully consider the risk factors described below and the risks and uncertainties related to “Forward-Looking Statements,” any of which could materially adversely affect our business, operating results, financial condition, and the actual outcome of matters as to which forward-looking statements are made in this annual report. The risks and uncertainties described below are not the only ones facing Frontier.

Additional risks and uncertainties that are not presently known to us or that we currently deem immaterial or that are not specific to us, may also adversely affect our business and operations. 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.

As of December 31, 2022, we had indebtedness of approximately $9 billion of which approximately $8 billion was secured. 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. Also, these restrictions do not prevent us or our restricted subsidiaries from incurring obligations that do not constitute indebtedness. In addition, to the extent other new debt is added to our subsidiaries’ current debt levels, the substantial leverage risks described below would increase.

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 and 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.

In addition, our First Lien Notes and Second Lien Notes, as well as our subsidiary indebtedness, are rated below “investment grade” by independent rating agencies. 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 negotiations with vendors, customers and business partners could also be negatively impacted if they deem us a credit risk as a result of our credit rating.

Economic uncertainty and volatility in the U.S. and global financial markets could limit our ability to access capital or increase the cost of capital needed to fund business operations, including our fiber expansion plans.

As of December 31, 2022, economic uncertainty, inflationary pressures, the ongoing COVID-19 pandemic in the U.S. and globally, the ongoing war in Ukraine, 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. 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. Adverse changes or continued volatility in the financial markets could render us either unable to access additional financing or able to access these markets only at higher costs and with restrictive financial or other conditions, which could severely affect our business operations and hinder our fiber expansion plans.

The agreements governing our current indebtedness contain various covenants that impose restrictions on us and certain of our subsidiaries that may reduce our operating and financial flexibility and we may not be able to satisfy our obligations under these or other, future debt arrangements.

The agreements governing our existing indebtedness contain covenants that, among other things, limit our ability and the ability of certain of our subsidiaries to:

incur additional debt and issue preferred stock;

incur or create liens;

redeem and/or prepay certain debt;

pay dividends on our stock or repurchase stock;

make certain investments;

engage in specified sales of assets;

enter into transactions with affiliates; and

engage in consolidation, mergers, and acquisitions.

In addition, our credit facilities require us to comply with specified financial ratios, including a maximum first lien coverage ratio. Any future indebtedness may also require us to comply with similar or other covenants.

These restrictions on our ability to operate our business could seriously harm our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions, and other corporate opportunities. Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants. Failure to comply with any of the covenants in our financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity for the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing. This could have serious consequences to our financial condition and results of operations.

Frontier is primarily a holding company and, as a result, we rely on the receipt of funds from our subsidiaries in order to meet our cash needs and service our indebtedness, including the notes.

Frontier is primarily a holding company, and its principal assets consist of the shares of capital stock or other equity instruments of its subsidiaries. As a holding company, we depend on distributions, transfers, and other intracompany payments from our subsidiaries to fund our obligations. The operating results of our subsidiaries at any given time may not be sufficient to make distributions, transfers, or other payments to us in order to allow us to make payments on our indebtedness. In addition, the payment of these distributions, transfers, and other payments, as well as other transfers of assets, between our subsidiaries and from our subsidiaries to us may be subject to legal, regulatory, or contractual restrictions. Some state regulators have imposed, and others may consider imposing on regulated companies, including us, cash management practices that could limit the ability of such regulated companies to transfer cash between subsidiaries or to the parent company. While none of the existing state regulations materially affect our cash management, any changes to the existing regulations or imposition of new regulations or restrictions may materially adversely affect our ability to transfer cash within our consolidated companies.

We expect to make contributions to our pension plan in future years, the amount of which will be impacted by volatility in asset values related to Frontier’s pension plan and changes in pension plan assumptions.

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 $176 million and $42 million to our pension plan in 2022 and 2021, respectively. Our required contributions for plan years 2022 and 2021, calculated as of January 1 of the relevant year, were approximately $134 million and $172 million, respectively. In 2021, we received an IRS waiver of the minimum funding standard under Section 412(c) of the Internal Revenue Code, and Section 302(c) of the Employee Retirement Income Security Act of 1974 for the plan year 2020 minimum required distribution. 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. Further, we have adopted certain provisions of the American Rescue Plan Act, or ARPA, effective for 2019 and 2020, which decreased the minimum required contributions for those 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. Volatility in our asset values, liability calculations, or returns may impact the costs of maintaining our pension plan and our future 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.

Pension costs and obligations are determined using actual results as well as actuarial valuations that involve several assumptions. The most critical assumptions are the discount rate, the long-term expected return on assets and mortality tables. Other assumptions include salary increases, lump sum payments, and retirement age. Some of these assumptions, such as the discount rate and return on pension assets, are reflective of economic conditions and impacted by factors such as inflationary pressures that are largely out of our control. Changes in the pension assumptions could have a material impact on pension costs and obligations, and could in turn have a material adverse effect on our earnings, equity, and funding requirements.

Risks Related to Our Business

If our fiber expansion plan or other initiatives to increase our revenues, customer trends, profitability and cash flows are unsuccessful, our financial position and results of operations will be negatively and adversely impacted.

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 have undertaken, and expect to continue to undertake, programs and initiatives with the objective of improving revenues, customer trends, profitability, and cash flows by enhancing our operations and customer service and support processes. In particular, under our fiber expansion plan we intend to grow our fiber network and optimize our existing copper network at attractive internal rates of return (IRRs) in order to increase our revenues and customer trends, and in turn increase our profitability and cash flows. We have historically experienced significant challenges in achieving such improvements. In addition, these programs and initiatives require significant investment and other resources and may divert attention from ongoing operations and other strategic initiatives.

There can be no assurance that our current and future initiatives and programs will be successful, or that the actual returns from these programs and initiatives will not be lower than anticipated or take longer to realize than we anticipate. For example, we may not reach our targets to expand and penetrate our existing fiber network on the timelines we anticipate, or at all. 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.

Inflationary pressures on costs and disruptions in our supply chain, resulting from the COVID-19 pandemic, the global microchip shortage, or otherwise, may adversely impact our financial condition or results of operations, including our fiber expansion plans.

During fiscal 2022, we began 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. 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, 2022, 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. In particular, network electronics that require microchip processors have experienced supply chain constraints due to the global microchip shortage. 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.

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. Our competitors include cable companies, wireless and wireline carriers, satellite, fiber “overbuilders” and OTT companies, 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. 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. We also believe that wireless, cable, and other providers have increased their penetration of various services in our markets. We expect that competition will remain robust. Our revenue and cash flow will be adversely impacted if we cannot reverse our customer losses or continue to provide high-quality services.

Some of our competitors have market presence, engineering, technical, marketing, and financial capabilities which are substantially greater than ours. In addition, some of these competitors have less debt and are able to raise capital at a lower cost than we are 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, 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. Additionally, the greater brand name recognition of some competitors may require 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. 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. Our ability to compete successfully will depend on the effectiveness of capital expenditure investments in infrastructure, products and services, our marketing efforts, our ability to deliver high quality customer service, our ability to anticipate and respond to various competitive factors affecting the industry, including a changing regulatory environment that may affect our business and that of our competitors differently, new services that may be introduced, changes in consumer preferences, or habits, demographic trends, economic conditions and pricing strategies by competitors. Increasing competition may reduce our revenues and increase our marketing and other costs as well as require us to increase our capital expenditures and thereby decrease our cash flows.

We rely on network 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.

Our information technology, networks, and infrastructure may be subject to damage, disruptions, or shutdowns due to cyber-attacks, malware, including ransomware or other information security breaches, employee or third-party error or malfeasance, power outages, communication or utility failures, systems failures, natural disasters, or other catastrophic events.

Further, our network and information systems are subject to various risks related to third parties and other parties we may not fully control. We use encryption and authentication technology licensed from third parties to provide secure transmission of confidential information, including our business data and customer information. Similarly, we rely on employees in our network operations centers, data centers and call centers to follow our procedures when handling sensitive information. Use of third-party technologies could also expose us to supply chain cybersecurity risks. While we select our employees and third-party business partners carefully, we do not control their actions, which could expose us to cyber-security and other risks. In addition, our customers using our network to access the Internet may become victim to malicious and abusive Internet activities, such as unsolicited mass advertising (or spam), peer-to-peer file sharing, distribution of viruses, worms and other destructive or disruptive software; these activities could adversely affect our network, result in excessive call volume at our call centers and damage our or our customers’ equipment and data.

While we maintain security measures, disaster recovery plans and business continuity plans for our business and work to upgrade our existing technology systems and provide employee training around the cyber risks we face, these risks are constantly evolving and are challenging to mitigate. Like many companies, we are the subject of increasingly frequent cyber-attacks. Any unauthorized access, computer viruses, ransomware attacks, accidental or intentional release of confidential information or other disruptions could result in misappropriation of our or our customers’ sensitive information; financial loss; reputational harm; increased costs, such as those relating to remediation or future protection; customer dissatisfaction, which could lead to a decline in customers and revenue; changes to insurance premiums or coverage; government investigations and legal claims or proceedings, fines and other liabilities. 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.

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. If we do not replace or upgrade technology and equipment and manage broadband speeds and capacity as necessary, we may be unable to compete effectively because we will not be able to meet the needs or expectations of our customers.

In addition, enhancements to competitors’ product offerings may influence our customers to consider other service providers, such as cable operators, CLECs, OTT or wireless providers. We may be unable to attract new or retain existing customers from cable companies due to their deployment of enhanced broadband and VoIP technology. In addition, new capacity services for broadband technologies may permit our competitors to offer broadband data services to our customers throughout most or all of our service areas. Any resulting inability to attract new or retain existing customers could adversely impact our business and results of operations in a material manner.

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. 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, 2022, approximately 69% 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. Approximately 27% of our unionized employees are covered by collective bargaining agreements that are scheduled to expire in 2023. In addition, approximately 11% of the unionized workforce are covered by collective bargaining agreements that are on extensions from the dates on which they originally expired in 2021 or 2022.

We cannot predict the outcome of negotiations of the collective bargaining agreements covering our employees. If we are unable to reach new agreements or renew existing agreements, employees subject to collective bargaining agreements may engage in strikes, work slowdowns or other labor actions, which could materially disrupt our ability to provide services. 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, could adversely affect our business.

There is a heightened public focus on climate change, sustainability, and environmental issues and customer, regulatory and shareholder expectations are evolving rapidly, with a focus on companies’ climate change readiness, response, and mitigation strategies. This has led to increased government regulation and caused certain of our partners and vendors to incorporate environmental standards into our business with them. We expect that the trend of increasing environmental awareness will continue, which will result in higher costs of operations. We are committed to incorporating environmentally sustainable practices into our business, including those focused on reducing our carbon footprint and emissions, managing energy use and efficiency, and enhancing our use of renewable energy and device recycling, which may result in increases in our costs of operations relative to our competitors.

The potential impact of climate change on our operations and our customers remains uncertain. The primary risk that climate change poses to our business is the potential for increases in severe weather in the areas in which we operate. Increasing frequency and intensity of rainfall and severe storms, flooding, wildfires, mudslides, sustained high wind events and freezing conditions, including related power outages, could impair our ability to build and maintain our network and lead to disruptions in our services, workforce, and supply chain. These changes could be severe and could negatively impact our 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. Our inability to timely respond to the risks posed by climate change and the costs of compliance with climate change laws and regulations could have a material adverse impact on us.

In addition, the local exchange carrier subsidiaries we operate are subject to federal, state, and local laws and regulations governing the use, storage, disposal of, and exposure to hazardous materials, the release of pollutants into the environment and the remediation of contamination. As an owner and former owner of property, we are subject to environmental laws that could impose liability for the entire cost of cleanup at contaminated sites, including sites formerly owned by us or our predecessors, regardless of fault or the lawfulness of the activity that resulted in contamination.

Negotiations with the providers of content for our video systems may not be successful, potentially resulting in our inability to carry certain programming channels on our video systems, which could result in the loss of subscribers. Alternatively, because of the bargaining power of some content providers, we may be forced to pay an increasing amount for some content, resulting in higher expenses and lower profitability.

We continue to execute on our video strategy of achieving savings by renegotiating contracts to lower content costs or dropping channels entirely. The content owners of the programming that we carry on our multichannel video systems are the exclusive provider of the channels they offer. If we are unable to reach a mutually-agreed contract with a content owner, including pricing and carriage provisions, our existing agreements to carry this content may not be renewed, resulting in the blackout of these channels. The loss of content could result in loss of customers who place a high value on the particular content that is lost. In addition, many content providers own multiple channels. As a result, we typically have to negotiate the pricing for multiple channels rather than one and carry and pay for content that customers do not value, in order to have access to other content that customers do value. 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.

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We are subject to a significant amount of litigation, which could require us to pay significant damages or settlements.

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.

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. 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. 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. 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 depend on a limited number of suppliers and vendors for equipment and services relating to our network infrastructure, including network elements such as digital and Internet protocol switching and routing equipment, optical and copper transmission equipment, broadband connectivity equipment, various forms of customer premise equipment, optical fiber, wireless equipment, as well as the software that is used throughout our network to manage traffic, network elements, and other functions critical to our operations. If any of our major suppliers were to experience disruption, supply-chain interruptions, financial difficulties, or other unforeseen problems delivering, maintaining, or servicing these network components on a timely basis, our operations could suffer significantly. 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. 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. 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.

Risks Related to Regulation and Oversight

Changes in federal or state regulations may reduce the switched access charge and subsidy revenues we receive.

A portion of Frontier’s total revenues ($54 million, or 1%, in 2022 and $333 million, or 5%, in 2021) are derived from federal and state subsidies for rural and high-cost support including CAF II and RDOF and also including Federal High Cost support and various state subsidies. 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 began receiving RDOF funding early in 2022.

The RDOF program is less favorable to us than the CAF Phase II program was and results 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. This has resulted in a material reduction in our revenue and operating income and could have a material adverse effect on our business, financial condition, and results of operations. In addition, the FCC is reviewing CAF II carriers’ completion data and if the FCC determines that we did not satisfy our CAF II requirements we could be required to return a portion of the funds received and may be subject to certain other requirements and obligations.

In November 2021, Congress passed the IIJA which provides $65 billion to fund broadband connectivity programs, including broadband deployment to unserved and underserved locations. 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 NTIA has not yet determined each states’ funding allocation, which is dependent on the completion of the FCC’s Broadband Data Collection mapping initiative. We are closely tracking implementation of the BEAD program and anticipate a significant amount of funding will be available for awards in our footprint. 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.

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.

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. 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. This surcharge accounted for $83 million of revenue in the four months ended April 30, 2021. 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.

While we are implementing a number of operational initiatives in order to realize certain cost savings, our ability to achieve such cost savings on a timely basis, or at all, is subject to various risks and assumptions by our management, which may or may not be realized. Even if we do realize some or all of such cost savings, they may be insufficient to offset any reductions in subsidies we receive, or our inability to recover USF contributions.

Frontier and our industry are expected to remain highly regulated, and we could incur substantial compliance costs that could constrain our ability to compete in our target markets.

As an incumbent local exchange carrier, some of the services we offer are subject to significant regulation from federal, state, and local authorities. This regulation could impact our ability to change our rates, especially on our basic voice services and our access rates and could impose substantial compliance costs on us. 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 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. 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.

FCC rulemakings and state regulatory proceedings, including those relating to Internet access offerings, could have a substantial adverse impact on our operations.

Our Internet access offerings could become subject to additional laws and regulations as they are adopted or applied to the Internet. As the significance of the Internet expands, federal, state, and local governments may pass laws and adopt rules and regulations, including those directed at privacy, service quality or service rates, or apply existing laws and regulations to the Internet (including Internet access services), and related matters are under consideration in both federal and state legislative and regulatory bodies. 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.

Certain federal and state agencies, including state attorneys general, monitor and exercise oversight related to consumer protection matters, including those affecting the communications industry. Such agencies have in the past, and may in the future, choose to launch an inquiry or investigation of our business practices in response to customer complaints or other publicized customer service issues or disruptions, including regarding the failure to meet technological needs or expectations of our customers or related to public safety services. Such inquiries or investigations could result in reputational harm, enforcement actions, litigation, fines, settlements, and/or operational and financial conditions being placed on the Company, any of which could materially and adversely affect our business.

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.

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. 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.

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. If in the future any element of tax legislation changes the tax code for income taxes, it could affect our income tax position and we may need to adjust the benefit from (or provision for) income taxes accordingly.

Risks Related to Our Common Stock

The price of our common stock may be volatile or may decline, which could result in substantial losses for purchasers of our common stock.

Volatility in the market price of our common stock may prevent you from being able to sell your shares at or above the price you paid for them. 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.

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.

If there are substantial sales of shares of our common stock, the price of our common stock could decline.

The market price of the shares of our common stock could decline as a result of the sale of a substantial number of our shares of common stock in the public market, by us or significant stockholders, or the perception in the market that such sales could occur.

We do not intend to pay dividends on our common stock for the foreseeable future.

We currently have no intention to pay dividends on our common stock at any time in the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions, and other factors that our board of directors may deem relevant. 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.

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.

These and other provisions in our certificate of incorporation, bylaws and Delaware law could make it more difficult for stockholders or potential acquirers to initiate actions that are opposed by our board of directors, including actions to delay or impede a merger, tender offer or proxy contest involving our Company. The existence of these provisions could negatively affect the price of our common stock and limit opportunities for you to realize value in a corporate transaction.

If securities or industry analysts do not publish or cease publishing research or reports, or publish unfavorable research or reports, about us, our business, or our industry, or if they adversely change their recommendations regarding our stock, our stock price and trading volume could decline.

The trading market for our common stock is influenced by the research and reports that industry or securities analysts may publish about us, our business, our industry, or our competitors. If we do not maintain adequate research coverage or if any of the analysts who may cover us downgrade our stock, publish inaccurate or unfavorable research about our business or provide relatively more favorable recommendations about our competitors, our stock price could decline. If any analyst who may cover us were to cease coverage of our Company or fail to regularly publish reports about us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

General Risk Factors

The ability to attract and retain key personnel is critical to the success of our business and may be affected by our emergence from bankruptcy.

Our success depends in part upon key personnel. Qualified individuals are in high demand, and we may incur significant costs to attract them. The loss of key employees or unexpected changes in the composition of our senior management team could materially and adversely affect our ability to execute our strategy and implement operational initiatives which could have a material and adverse effect on our financial condition, liquidity, and results of operations. We cannot guarantee that our key personnel will not leave or compete with us. If executives, managers, or other key personnel resign, retire, or are terminated, or their service is otherwise interrupted, we may not be able to replace them in a timely manner. The loss, incapacity, or unavailability for any reason of key members of our management team could have a material adverse impact on our business.

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Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our owned property consists primarily of land and buildings, office and warehouse facilities, central office equipment, software, outside communications plant, and related equipment. Outside communications plant includes aerial and underground cable, conduit, poles, and wires. Central office equipment includes digital switches and peripheral equipment. In addition, we lease certain property, including primarily office facilities. All of our property is considered to be in good working condition and suitable for its intended purpose.

Our gross investment in property, by category, as of December 31, 2022, was as follows:

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

For more information regarding pending and threatened legal actions and proceedings see Note 22 - ‘‘Commitments, Contingencies, and Guarantees’’ to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

In 2014, Citynet, a competitive local exchange carrier doing business in West Virginia, filed a qui tam action in federal court in the District Court for the Southern District of West Virginia against Frontier West Virginia, Inc. and others on behalf of the U.S. Government concerning billing practices relating to a government grant. The complaint became public in 2016 after the U.S. Government declined to participate in the case and instead allowed Citynet to pursue the claims on behalf of the U.S. On December 6, 2022, the parties reached a settlement in principle. The parties are in the process of attempting to finalize all the terms of an agreement. We have accrued an amount for potential penalties that we deem to be probable and reasonably estimable, but we do not expect that any potential penalties, if ultimately incurred, will be material.

In addition, we are party to various other 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. Such matters are subject to uncertainty and the outcome of individual matters is not predictable. However, we believe that the ultimate resolution of these matters, after considering insurance coverage or other indemnities to which we are entitled, will not have a material adverse effect on our financial position, results of operations, or cash flows.

Item 4. Mine Safety Disclosures

Not applicable.

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Information About Our Executive Officers

The table below presents the names, ages, and positions of our current executive officers as of February 24, 2023:

There is no family relationship between the directors or executive officers. The term of office of each of the foregoing officers of Frontier is annual and will continue until a successor (if any) has been elected and qualified.

SCOTT BEASLEY joined Frontier in 2021 and is Executive Vice President and Chief Financial Officer. Prior to joining Frontier, he was Chief Financial Officer of Arcosa, Inc., a North American provider of infrastructure products and solutions, and helped lead its successful public spinoff in 2018. Under his financial leadership, Arcosa debuted on public equity and debt markets, developed a new shareholder base, implemented a disciplined capital allocation program, and published its inaugural ESG Sustainability Report. Arcosa executed 13 acquisitions in a 3-year period to reposition its portfolio around growth-oriented infrastructure products. From 2017 until Arcosa’s spin-off, Mr. Beasley was Group Chief Financial Officer of Trinity Industries, having served as Trinity’s Vice President of Corporate Strategic Planning since 2014. Prior to joining Trinity, Mr. Beasley was an Associate Partner at McKinsey & Company, where he led operational and organizational transformations across asset-intensive industries and started his career as an Operations Manager at McMaster Carr Supply Company. Mr. Beasley received an AB in Economics from Duke University and an MBA in Finance and Accounting from Northwestern University’s Kellogg School of Management.

VERONICA BLOODWORTH joined Frontier in 2021 as Executive Vice President and Chief Network Officer. Prior to joining Frontier, she was Senior Vice President of Construction and Engineering for AT&T, where she led the planning, design, construction and capital maintenance of the wireline and wireless network infrastructure across a national footprint. Previously as Senior Vice President, Corporate Strategy, AT&T Services, Ms. Bloodworth led the Velocity IP program, which laid the groundwork to transform the Company to an all IP/Wireless/Cloud business. Her 23-year career at AT&T included numerous leadership and management positions in Network and Finance, including various roles in Operations, Finance and Business Development within Cingular Wireless and BellSouth Mobility. She began her career at MCI. She is a Certified Public Accountant and has a bachelor’s degree from the University of Alabama and an MBA from Georgia State University.

ETTIENNE BRANDT joined Frontier in 2022 as Executive Vice President, Business. Mr. Brandt has over 20 years of experience in the telecommunications industry across cable, fiber, and wireless providers. He served as Managing Director, Commercial for the Consumer Division of BT Group plc., a British multi-national telecommunications company, as a key member of the leadership team responsible for returning the BT brand to growth. Previously, he served in a variety of roles at EE Ltd, a British national mobile operator and internet service provider, prior to its acquisition by BT, including leading the Enterprise P&L as Marketing and Commercial Director. He began his telecommunications career at NTL Incorporated (now Virgin Media), the largest UK cable provider, and also worked in South Africa and the USA. Mr. Brandt holds a Bachelor of Commerce from Stellenbosch University and is a member of the Chartered Institute of Management Accountants.

VISHAL DIXIT jointed Frontier in 2022 as Executive Vice President, Strategy & Wholesale. Mr. Dixit has over 20 years of experience leading strategy and commercial execution in international telecommunications and technology. He oversees all aspects of corporate strategy, M&A, and the operation of our wholesale business. Most recently, he was a member of Vodafone UK’s executive committee where he developed the company’s successful challenger growth strategy, transformed its wholesale business, and created industry-leading fiber partnerships. Prior to this, as a management consultant at McKinsey & Company, Mr. Dixit served global companies in technology and telecommunications. 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.

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ALAN GARDNER joined Frontier in 2021 and is Executive Vice President and Chief People Officer. Prior to joining Frontier, he was Senior Vice President, Human Resources of Verizon Communications, leading HR centers of all-encompassing expertise for employees around the globe. Prior to this, he was Senior Vice President, Human Resources, of Verizon Wireless, the $87 billion US-based joint venture between Verizon Communications and Vodafone. He held other executive roles of increasing responsibility within Verizon. Previously, Mr. Gardner was Director of Compensation and served in other roles at GTE Corporation. He began his career at American Express, UCCEL Corporation, and General Dynamics. He received a BS in computer science from the University of North Texas, a management certificate from the Management Institute for Engineers, Computer Professionals and Scientists at the University of Texas at Austin, and an MBA from the Cox School of Business at Southern Methodist University.

JOHN HARROBIN joined Frontier in 2021 and is Executive Vice President, Consumer. Prior to joining Frontier, he was Chief Marketing Officer at Audible, where he led the growth turnaround, brand repositioning, and content marketing capabilities of this multi-billion-dollar global content technology and entertainment subsidiary of Amazon. Under his leadership, Audible’s customer base doubled within 33 months as he expanded new, emerging channels, including mobile, social, and SEO. He began his marketing career in 1997 as a Senior Product Manager at Verizon Wireless. During his 18-year tenure at the company, he served in progressively senior roles, ultimately becoming Chief Marketing Officer. As leader of national marketing for Verizon Wireless, Mr. Harrobin led the launch of new products and businesses focused on mobile advertising, mobile content, and large-scale content rights and sponsorship negotiations with all major broadcast and cable networks, music labels, celebrity talent, and sport leagues including the NHL and NFL. Mr. Harrobin sits on the Executive Board of Villanova University’s Center for Marketing & Customer Insights. He has been recognized as an Outstanding Mentor by Advertising Women of New York, a top LGBT+ Global Ally by InVolve, and a top CMO by Forbes. He holds a BS from Villanova University and an MBA from Northwestern University’s Kellogg School of Management.

NICK JEFFERY joined Frontier in 2021 and is President and Chief Executive Officer. Mr. Jeffery has nearly 30 years of expertise and leadership in the telecommunications industry. Most recently, he was a member of the Vodafone Group Executive Board, a world-leading wireless and wireline operator and, as CEO, led the turn-around of Vodafone UK, the company’s home market. Mr. Jeffery founded and grew Vodafone’s Internet of Things business to become a world leader. Mr. Jeffery was additionally a Trustee of The Vodafone Foundation. Prior to joining Vodafone, Mr. Jeffery also spent more than a decade at Cable & Wireless, one of the world’s largest wireline companies, where he was CEO from 2012-2013. He was Head of Worldwide Sales and European EVP at Ciena Inc. from 2002 until 2004. In 2020 Mr. Jeffery was named CEO of the Year at the Mobile Industry Awards and in 2019. Mr. Jeffery is a graduate of the University of Warwick, U.K. with a B.S. in Economics, and a graduate of both INSEAD-Europe and Wharton U.S. Management Development programs.

ERIN KURTZ joined Frontier in 2021 and is Executive Vice President and Chief Communications Officer. Ms. Kurtz is a strategic communications leader with two decades of experience across a wide range of industries, including media, technology, logistics, and financial services. Most recently, she was Senior Vice President of XPO Logistics, where she set the global communications agenda for one of the fastest growing companies in the Fortune 500. In this role, she built and led an integrated communications strategy across public relations, reputation management, digital and social media, employee communications, brand marketing and government affairs. Prior to joining XPO in 2016, Ms. Kurtz co-founded Hunt & Gather, a high-touch marketing and communications agency, and held senior communications roles at Joele Frank, AOL, and Thomson Reuters. She started her career in Washington, DC at the American Hospital Association. Ms. Kurtz graduated from Syracuse University with a B.S. in Communications and Political Science.

WILLIAM MCGLOIN was appointed Chief Accounting Officer and Controller in June 2022. Mr. McGloin has served at Frontier for over eight years, most recently as Frontier’s Vice President, Controller, since 2018 and as Vice President, Assistant Controller since 2014. Prior to joining Frontier, he spent 17 years at KPMG’s audit practice where he completed a three-year rotation in the Department of Professional Practice (DPP) in the National Office. While at DPP, his principal responsibilities included researching technical accounting and SEC reporting inquiries received from engagement teams throughout the globe as well as developing firm auditing and accounting guidance and publications. While at KPMG’s audit practice he provided financial statement and internal control audits to both Fortune 500 SEC registrants and other large SEC clients with a concentration in the consumer products, manufacturing, software, retail, chemical and telecommunications industries. Mr. McGloin graduated from Florida Atlantic University with a B.A. in Accounting and is also a Certified Public Accountant.

CHARLON MCINTOSH joined Frontier in 2021 and is Executive Vice President and Chief Customer Operations Officer. Prior to joining Frontier, she was Humana’s Senior Vice President of Group Military Specialty Service and Business Operations, responsible for all customer support and operations for the Employer Group, Military and Specialty lines of business. She was also Head of the Customer Experience, developing and enabling Humana’s customer strategy. Ms. McIntosh held numerous leadership positions in customer operations and strategy during a nearly 20-year career with Humana, Charter Communications and Time Warner Cable. She began her career at Comcast. She earned an MBA from New York University and graduated with high honors from the University of California, Berkeley. She is a graduate of the NAMIC Executive Leadership Development Program and is a Women in Cable Television Betsy Magness Leadership Institute Fellow.

MARK D. NIELSEN has been with Frontier since 2014 and is Executive Vice President, Chief Legal and Regulatory Officer. Prior to joining Frontier, he was Associate General Counsel and Chief Compliance Officer for Praxair Inc. and Vice President and Assistant General Counsel of Raytheon Company. Before that, Mr. Nielsen served as Chief Legal Counsel, and then Chief of Staff, to Massachusetts Governor Mitt Romney from 2004 to 2007. Mr. Nielsen is a member of the Adjunct Faculty at Columbia Law School. He earned a B.A. from Harvard College and a J.D. from Harvard Law School with Honors.

MELISSA PINT joined Frontier in 2021 and is Executive Vice President, Chief Digital Information Officer. Prior to joining Frontier, she was Senior Vice President and Head of Technology at JCPenney, implementing a digital optimization strategy and customer-focused solutions for JCP.com, the JCP mobile app, all store and supply chain systems, business intelligence, analytics, marketing, and back-end merchandising. Ms. Pint has held leadership positions in technology, IT, and operations over a 25-year career with JCPenney, Target, and Cargill. She earned an MBA from the University of Minnesota and her undergraduate degree from the University of St. Thomas in Minnesota.

JOHN STRATTON was selected to serve as Executive Chairman in April 2021 after serving as a Board Observer since May 2020. He retired from Verizon Communications at the end of 2018, capping a 25-year career. In his most recent role, as Executive Vice President and President of Global Operations, he had full P&L responsibility for all of Verizon’s established businesses, employing 140,000 employees globally, generating more than $120 billion in annual revenue, and serving more than 120 million customers worldwide. In this role, he also led Verizon’s corporate marketing group and its consumer and business product management organizations. Prior to taking responsibility for all of Verizon’s network businesses, Mr. Stratton led several different divisions as Chief Operating Officer of Verizon Wireless, then as President of its global Enterprise Solutions group, and as head of all the company’s wireline divisions. He served as Verizon’s Chief Marketing Officer, and in 2009 was named as the No. 2 global “power player” by Ad Age magazine. Mr. Stratton is a member of the board of directors of Abbott Laboratories, a global healthcare leader, and of General Dynamics, a global aerospace and defense company. He also is a member of the board of directors of SubCom, LLC.

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PART II

Item 5. Market for Registrant's Common Equity; Related Stockholder Matters, and Issuer Purchases of Equity Securities

Common Stock Information

Our common stock has been traded on the Nasdaq Global Select Market under the symbol “FYBR” since May 4, 2021. On the Effective Date (i) shares of Old Frontier’s issued and outstanding common stock immediately prior to the Effective Date were canceled, and (ii) reorganized Frontier, in reliance on the exemption from registration under the Securities Act provided by Section 1145 of the Bankruptcy Code, issued approximately 244,401,000 shares of common stock to holders of certain senior notes claims under the Plan. We paid no cash dividends to common shareholders in either of 2022 and 2021.

As of February 21, 2023, the approximate number of security holders of record of our common stock was 298. 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.

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, 2022. The graph assumes $100 was invested at the open of market on May 4, 2021 in our common stock. Such returns are based on historical results and are not intended to suggest future performance. The S&P MidCap 400 Index and the S&P 500 Telecom Services Index assume reinvestment of any dividends.

Indexed Monthly Stock Price Close

Source: FactSet

The stock performance depicted in the graph above is not to be relied upon as indicative of future performance. The stock performance graph shall not be deemed to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended or the Exchange Act, except to the extent that we specifically incorporate the same by reference, nor shall it be deemed to be ‘‘soliciting material’’ or to be ‘‘filed’’ with the SEC or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act.

Item 6. Removed and Reserved

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Introduction

The following discussion should be read in conjunction with the audited consolidated financial statements and the related notes in Part II, Item 8, of this Annual Report on Form 10-K. In addition to historical information, the following discussion also contains forward-looking statements that include risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under the heading ‘‘Risk Factors’’ in Part I, Item 1A of this Annual Report on Form 10-K. This section generally discusses the results of our operations for the year ended December 31, 2022 compared to the four months ended April 30, 2021 and the eight months ended December 31, 2021. For a discussion of the four months ended April 30, 2021 and the eight months ended December 31, 2021 compared to the year ended December 31, 2020, 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, 2021. References herein to “we” or “our” include references to our Predecessor, our Successor, or to our Predecessor and Successor on a combined basis, as the context may require.

Business Overview

Frontier is a leading communications and technology provider offering gigabit speeds that empower and connect 2.8 million consumers and business customers in 25 states as of December 31, 2022. We are building critical infrastructure across the country with our fiber-optic network and cloud-based solutions, enabling secure high-speed connections. Rallied around our purpose of Building Gigabit America^TM, we are focused on supporting a digital society, closing the digital divide, and working toward a more sustainable environment.

In 2020, we began the expansion and transformation of our fiber network in order to meet the rapidly increasing demand for data from both our consumer and business customers. We believe that a fiber network has competitive advantages to be able to meet this growing demand, including faster download speeds, faster upload speeds, and lower latency levels than alternative broadband services.

In August 2021, we announced our plan to accelerate our fiber build to reach 10 million total fiber passings. We are prioritizing our activities to locations which we believe will provide the highest investment returns. 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. Our fiber build plans include significant expenditures which could be adversely impacted by supply chain delays, inflation, and other risks. 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.

Our strategy focuses on four levers of value creation: fiber deployment, fiber broadband penetration, operational efficiency, and improving the customer experience. We accomplished the following objectives in 2022:

-We exceeded our initial 2022 plan, building fiber to approximately 1.2 million locations. As of December 31, 2022, we had approximately 5.2 million total locations passed with fiber, surpassing the halfway mark to our goal of 10 million total locations with fiber. Our build plan prioritizes locations which will provide the highest investment returns and are geographically clustered to accelerate the pace of the build and remains on track and on budget, solidified by multi-year agreements with key labor and equipment partners. As our expansion grows over time, we expect our business mix will shift significantly, with a larger percentage of revenue coming from fiber.

-In 2022, we added a record 250,000 fiber broadband customer net additions, resulting in fiber broadband customer growth of 17% against the fourth quarter of 2021. Fiber broadband customer net additions continued to outpace copper broadband customer net losses, resulting in 40,000 total broadband customer net additions.

-Across the entire company, we have identified opportunities to simplify and digitize our operations. We achieved our annualized gross run rate cost savings target of approximately $250 million more than one year ahead of plan. As of December 31, 2022, we realized $336 million of gross annualized cost savings.

-We made significant strides to improve our customer experience, including an increase of 10 points in NPS from 2021. We reinvented our brand and announced the launch of our MyFrontier customer app. Our consumer fiber churn improved 7 basis points from 1.45% in 2021 to 1.38% in 2022.

During 2022, markets remained volatile, and the economic outlook was uncertain. We continue to closely monitor market factors including potential disruptions in our supply chain, tightening labor markets, actual or perceived inflation, increased fuel and electricity costs, and the cost of borrowing. We continuously 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.

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Financial Overview

We reported operating income of $592 million for the year ended December 31, 2022, $762 million for the eight months ended December 31, 2021, and $351 million for the four months ended April 30, 2021. While the basis of accounting for the Predecessor and Successor are different as a result of applying fresh start accounting, for purposes of discussing our year-over-year operating performance that follows we have presented combined Non-GAAP operating income for the year ended December 31, 2021 which will be compared to operating income for the year ended December 31, 2022. The more significant impacts of fresh start accounting that affect comparability are included in the variance analysis that follows.

We reported operating income of $592 million and Non-GAAP operating income of $1,113 million, for the year ended December 31, 2022 and 2021, respectively, a decrease of $521 million. After adjusting for the impact of fresh start accounting, our Non-GAAP operating income would have decreased by $501 million, as compared to 2021. The decrease in our operating results was primarily due to decreased subsidy, voice, and video revenue, offset by decreases in cost of services.

Presentation of Results of Operations

The sections below include tables that present customer counts, average monthly consumer revenue per customer (“ARPC”), average monthly revenue per unit (“ARPU”), and consumer customer churn. We define churn as the number of consumer customer deactivations during the month divided by the number of consumer customers at the beginning of the month and utilize the average of each monthly churn in the period. Management believes that consumer customer counts and average monthly revenue per customer are important factors in evaluating our consumer customer trends. Among the key services we provide to consumer customers are voice service, data service and video service. We continue to explore the potential to provide additional services to our customer base, with the objective of meeting our customers’ communications needs.

(a) Results of Operations

Customer Trends

⁽¹⁾ Amounts presented exclude related metrics for our wholesale customers.

⁽²⁾ Amounts represent activity related to both the Predecessor and Successor company on a combined basis.

We provide service and product options in our consumer and business offerings in each of our markets.

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Customers

During the year ended December 31, 2022, we experienced a reduction in customers of approximately 1% compared to the year ended December 31, 2021.

The average monthly consumer revenue per customer (“ARPC”) decreased 3%, to $82.30 for the year ended December 31, 2022, compared to 2021.

The decrease for the year ended December 31, 2022, was primarily a result of decreased video services and consumer voice services, slightly offset by increased fiber data. The moderate decline in ARPC is expected to continue as our customer mix becomes more weighted towards broadband service. We have de-emphasized the sale of low margin video products, which have been a material part of the overall ARPC. In our expansion markets, our target penetration is 15% and 20% within 12 months and 25% - 30% within 24 months.

Fiber Broadband Customers

Our investment strategy is focused on expanding and improving our fiber network. In conjunction with this strategy, we are also working to improve our product positioning in both existing and new fiber markets.

Although still in the early stages of this fiber investment strategy, results are promising as the quarter ended December 31, 2022 represents the fourteenth consecutive quarter of positive fiber net adds. For the year ended December 31, 2022, we added approximately 239,000 consumer fiber broadband customers compared to approximately 98,000 in 2021. Customers who migrated from our copper base constituted a minor portion of these consumer fiber broadband customer net additions in 2022.

For the year ended December 31, 2022, we added approximately 11,000 business fiber broadband customers compared to approximately 1,000 in 2021.

Our focus on expanding and improving our fiber network has contributed to improved customer retention. Our average monthly consumer fiber broadband churn was 1.38% for the year ended December 31, 2022, compared to 1.45% in 2021. The improvements in customer churn were also impacted by our increased focus on key customer touchpoints such as installation, first bill, end of promotion periods, and improved retention activities associated with inflation-related pricing actions, partially offset by increases in involuntary related churn.

The average monthly consumer fiber broadband revenue per customer (“ARPU”) increased $0.11 to $62.45 in 2022, compared to 2021. The increase in ARPU for 2022 was due to customer shift toward higher broadband speeds, customers rolling off promotional pricing, and upgrade activity, offset by auto pay discounts, gift card issuance and retention activity. During 2022, we had a greater degree of gift card issuances than we did in 2021. Gift cards are recognized when redeemed by the customer. Gift cards had a negative impact to consumer fiber broadband ARPU of $1.56 in 2022, as compared to $0.19 in 2021.

Copper Broadband Customers

For the year ended December 31, 2022, we lost 191,000 consumer copper broadband customers compared to a loss of 115,000 in 2021.

For the year ended December 31, 2022, we lost 19,000 business copper broadband customers compared to a loss of 19,000 in 2021.

Our average monthly consumer copper broadband churn was 1.79% for the year ended December 31, 2022, compared to 1.72% in 2021. The increase in consumer copper broadband churn was driven by the impact of copper to fiber migration activities in newly built fiber areas, the rationalization of our copper acquisition strategy, and adverse weather.

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Financial Results

REVENUE

The table below presents our revenue by technology for the periods indicated:

⁽¹⁾Includes $63 million of lease revenue for both years ended December 31, 2022 and 2021.

⁽²⁾Includes USF fees that, in conjunction with the application of fresh start accounting, are now recorded net.

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Our revenue streams are primarily a result of recurring data, voice, and video services delivered over either our copper or fiber network. Revenues are considered copper or fiber based on the “last-mile” technology used to connect the customer location. With our investment strategy to expand and improve our fiber network and the corresponding fiber focus of our sales and marketing efforts, we are experiencing growth in fiber broadband revenue and a decline in copper revenue. 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.

The table below presents our revenue for our consumer and business and wholesale customers for the periods indicated:

⁽¹⁾Includes $63 million of lease revenue for both years ended December 31, 2022 and 2021, respectively.

We conduct business with a range of consumer, business, and wholesale customers, and we generate both recurring and non-recurring revenues. Recurring revenues are primarily billed at fixed recurring rates, with some services billed based on usage. Revenue recognition is not dependent upon significant judgments by management, with the exception of a determination of the provision for expected credit losses.

Consumer

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. Customer preferences as well as our fiber investment initiatives are resulting in an increase in the number of our consumer broadband customers and a migration of our customer base to fiber.

Our consumer customer losses were 68% lower compared to the prior year. We lost approximately 32,000 and 99,000 consumer customers, primarily driven by voice and video customers, for the years ended December 31, 2022 and 2021, respectively. Driving the 2022 loss was approximately 80,000 in losses for voice only or video only customer combined, offset by gains in broadband customers.

In 2022, we experienced a net gain of consumer broadband customers of approximately 48,000 as compared to a net loss of approximately 17,000 for the year ended December 31, 2021.

We experienced 4% decline in consumer revenues, as compared to 2021. This decline was driven by a 3% decrease in ARPC and a 1% decline in the number of customers as compared to 2021, predominantly as a result of decreases in voice, video, and copper broadband, offset by increases in fiber broadband. Our fiber initiative will result in our revenue mix continuing to move to fiber broadband.

We experienced 13% improvement in consumer fiber broadband revenues as compared to 2021. This improvement is a result of our fiber initiative which resulted in net adds of 239,000 customers during the twelve-month period, and our continued focus on product positioning in both new and existing markets which resulted in an ARPU improvement of $0.11 for the year ended December 31, 2022 compared to 2021. The increase in ARPU for 2022 was due to customer shift toward higher broadband speeds, customers rolling off promotional pricing, and upgrade activity, offset by auto pay discounts, gift card issuance and retention activity.

We experienced approximately 4% decline in consumer copper broadband revenues for the year ended December 31, 2022. As our copper footprint is transitioned to fiber, we expect fewer copper sales opportunities, and will proactively migrate existing broadband customers from copper to fiber, both of which will reduce our copper net adds.

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