S&P gives Frontier B-

S&P said it assigned a B- issuer rating to Frontier Communications Holdings LLC. The agency also gave Frontier Communications Corp., which recently emerged from Chapter 11, a B- rating. Frontier Communications Corp. will transfer its assets and debts to the new company.

Concurrently, S&P gave B+ issue-level and 1 recovery ratings to the company's secured first-lien debt. The 1 recovery rating indicates an expectation for very high (90%-100%; rounded estimate: 90%) recovery in default. The agency also assigned a CCC+ issue-level and 5 recovery ratings to the company's second-lien debt.

“Frontier faces sharp revenue and EBITDA declines over the next couple of years, and its prospects to reverse these trends depend on successful execution of its fiber network upgrade plan. Frontier faces intense competition for broadband service in its markets from incumbent cable operators, which, combined with fiber overbuilders, overlap with about 90% of the company's footprint,” the agency said in a press release.

S&P said it expects Frontier's adjusted debt to EBITDA will be in the mid-3x area this year, rising to the low-4x area in 2022 and remaining at this level for at least the next few years.

The outlook is stable, indicating that although secular industry declines should contribute to lower earnings over the next couple of years, adjusted leverage will be supportive of the rating, in the mid-3x to low-4x area over the next two years, the agency said.

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