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Dynamic quotes 
OFFON

FRONTIER COMMUNICATIONS PARENT, INC.

(FYBR)
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FRONTIER COMMUNICATIONS PARENT, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

11/03/2021 | 03:07pm EST

Description of our Business


Frontier Communications offers a variety of services to residential and business
customers over its fiber-optic and copper networks in 25 states, including
high-speed Internet, video, advanced voice, and Frontier Secure® digital
protection solutions. Frontier Business™ offers communications solutions to
small, medium, and enterprise businesses.

Overview


On April 30, 2021, we emerged from bankruptcy with a restructured balance sheet,
a new management team, and a new purpose to Build Gigabit America by upgrading
our copper network to fiber to meet the rapidly increasing demand for data from
both our consumer and business customers. We believe that fiber-optic service
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.

On August 5, 2021, we announced our plan to accelerate our fiber build to reach
4 million fiber passings by December 31, 2021, and 10 million total fiber
passings by December 31, 2025. We are prioritizing these build outs to target
projects which we estimate 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 strategy focuses on four levers of value creation: fiber deployment, fiber broadband penetration, operational efficiency, and improving the customer experience.


?We built fiber to approximately 185,000 locations during the third quarter of
2021, resulting in 3.8 million total locations passed with fiber as of September
30, 2021. Our build plan remains on track and we have solidified our fiber build
supply chain with multi-year agreements with key labor and equipment partners.

?We had a record quarter of 29,000 fiber broadband customer net additions.

?We realized approximately $45 million of gross annualized cost savings and remain on track to deliver $250 million of gross annual cost savings by 2023

?We made significant strides in order to improve our customer experience, through partnerships with Red Ventures for digital customer acquisition and recently announced that we're teaming up with eero, an Amazon company, to offer the eero Pro 6 to new fiber-optic customers, delivering a fast, reliable whole-home Wi-Fi experience.


On October 13, 2021, our consolidated subsidiary Frontier Communications
Holdings, LLC ("FCH LLC" or the "Issuer"), issued $1.0 billion aggregate
principal amount of 6.0% second lien secured notes due 2030 in an offering
pursuant to exemptions from the registration requirements of the Securities Act
of 1933 (the "Securities Act"). The Company intends to use the net proceeds of
this offering to fund capital investments and operating costs arising from the
Company's fiber build and expansion of its fiber customer base, and for general
corporate purposes. Giving effect to this offering, our liquidity as of
September 30, 2021 would have been $2.7 billion.

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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

Presentation of Results of Operations


The sections below include tables that present customer counts, average monthly
consumer revenue per customer (ARPC) 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.

The following section should be read in conjunction with the unaudited interim
consolidated financial statements and related notes appearing elsewhere in this
Quarterly Report on Form 10-Q and Item 7. "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included in our Annual Report
on Form 10-K for the year ended December 31, 2020. The following charts present
key customer metrics, disaggregation of revenue, and the results of operations
of the consolidated company including the Northwest Operations (Northwest Ops)
through the date of sale. The results of operations for the Northwest Operations
are shown separate from the total for our operations located in the remaining 25
states (Remaining Properties).


?

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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

(a)Results of Operations


Unless otherwise indicated, the discussion of the customer metrics and
components of operating income for the table that follows relates only to the
Non-GAAP combined financial results for the three and nine months ended
September 30, 2021 as compared to the financial results excluding the impact of
the Northwest operations for the nine months ended September 30, 2020.

Customer counts, ARPC, and Consumer Customer Churn


                                         As of or for the three months 

ended September 30,

   (Customer, Subscriber, and
   Employee Metrics in thousands)            2021(2)               2020 (3)        % Change

   Customers (4)
   Consumer                                          3,173              3,306          (4) %
   Business (1)                                        304                332          (8) %
   Total                                             3,477              3,638          (4) %

Consumer Customer Metrics (4)

   Net customer additions (losses)                     (23)               (36)        (36) %
   ARPC                               $              83.77      $       86.75          (3) %
   Customer Churn                                     1.64%              1.81%         (9) %

Broadband Customer Metrics (1)

   (4)
   Fiber Broadband
   Consumer customers                                1,292              1,229           5  %
   Business customers                                   95                 94           1  %
   Consumer net customer additions                      29                  6         383  %
   Consumer customer churn                            1.56%              1.80%        (13) %
   Consumer customer ARPU               $            63.35      $       57.58          10  %
   Copper Broadband
   Consumer customers                                1,264              1,381          (8) %
   Business customers                                  138                157         (12) %
   Consumer net customer additions                     (33)               (20)         65  %
   Consumer customer churn                            1.89%              2.11%        (10) %
   Consumer customer ARPU               $            45.44      $       42.16           8  %

   Other Metrics
   Employees                                        15,803             16,302          (3) %


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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

                                             For the nine months ended

September 30,

    (Customer, Subscriber, and
    Employee Metrics in thousands)          2021(2)             2020 (3)         % Change

    Consumer Customer Metrics (4)
    Net customer additions (losses)                 (92)              
(107)        (14) %
    ARPC                               $          85.49      $        87.50          (2) %
    Customer Churn                                 1.54%               1.76%        (13) %
    Broadband Customer Metrics (1)
    (4)
    Fiber Broadband
    Consumer net customer additions                  54                  24         125  %
    Consumer customer churn                        1.50%               1.75%        (14) %
    Consumer customer ARPU               $        62.38$       57.14           9  %

Copper Broadband

    Consumer net customer additions                 (85)                (61)         39  %
    Consumer customer churn                        1.73%               2.17%        (20) %
    Consumer customer ARPU               $        44.47$       41.74           7  %

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

    Amounts represent activity related to both the Predecessor and Successor company on a
(2) combined basis.
(3) Amounts have been adjusted to exclude the impact of our Northwest Operations.
(4) Due to changes in methodology during the second quarter of 2021, historical periods

have been updated to reflect the comparable amounts.

Fiber Customers


The Company has initiated an investment strategy focused on expanding and
improving its fiber network. In conjunction with this strategy, the Company is
also working to improve its product positioning in both existing and new fiber
markets.

Although still in the initial stages of this fiber investment strategy, results
are promising as the quarter ended September 30, 2021 represents the ninth
consecutive quarter of positive net adds. Further, this strategy is accelerating
our fiber growth as the quarterly positive net adds are improving both year over
year and sequentially.

For the three and nine months ended September 30, 2021, Frontier added 29,000
and 54,000 consumer fiber broadband customers compared to 6,000 and 24,000 for
the three and nine months ended September 30, 2020. The positive growth in the
quarter ended September 30, 2021 represents the ninth consecutive quarter of
positive net adds.

Our focus on expanding and improving our state-of-the-art fiber network is
resulting in improved customer retention. Our average monthly consumer fiber
broadband churn was 1.56% and 1.50% for the three and nine months ended
September 30, 2021 compared to 1.80% and 1.75% for three and nine months ended
September 30, 2020. The improvements in customer churn were also aided by
increased focus on customer retention at key customer touchpoints such as
installation, first bill and end of promotion periods.

In addition to our sequential improvement in net add, we continue to see
improvements in the average monthly consumer fiber broadband revenue per
customer which increased $5.77 or 10% to $63.35 and increased $5.24 or 9% to
$62.38 for the three and nine months ended September 30, 2021 compared to the
prior year period, respectively. These increases are due to increased data
equipment revenue and shifting mix towards higher speeds.

                                       56

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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

Copper Customers


For the three and nine months ended September 30, 2021, Frontier lost 33,000 and
85,000 of our consumer copper broadband customers compared to 20,000 and 61,000
for the three and nine months ended September 30, 2020. Our fiber investment
strategy has impacted these results as new fiber markets will not only cease
selling the copper broadband product, but we will focus on converting existing
copper broadband customers to a fiber product.

For the three and nine months ended September 30, 2021, Frontier lost 4,000 and
14,000 of our business copper broadband customers compared to 7,000 and 20,000
for the three and nine months ended September 30, 2020.

Our average monthly consumer customer churn was 1.64% and 1.54% for the three
and nine months ended September 30, 2021 compared to 1.81% and 1.76% for three
and nine months ended September 30, 2020. The reductions in customer churn were
primarily driven by customer retention initiatives and also reflect the impact
of COVID-19.

Consumer and Business Customers

During the three and nine months ended September 30, 2021 we experienced a reduction in total customers of approximately 1% and 5%, respectively.


The average monthly consumer revenue per customer (consumer ARPC) decreased
$2.98 to $83.77 and decreased $2.01 to $85.49 for the three and nine months
ended September 30, 2021 compared to the prior year periods, respectively. After
adjusting for the fresh start impact of approximately $1.81 and $1.23 for the
three and nine month periods, respectively, consumer ARPC decreased by $1.17 and
$0.78, respectively.

The decrease for the three and nine months ended September 30, 2021 was
primarily a result of decreased video services along with decreased consumer
voice services, slightly offset by increased fiber data and data equipment
revenues. This ARPC trend is expected to continue as our customer mix becomes
more predominantly broadband. We have de-emphasized the sale of low margin video
products which have been a material part of the overall ARPC.

Financial Results


We reported operating income of $284 million and $270 million for the three
months ended September 30, 2021 and 2020, respectively. Fresh start accounting
decreased operating income by $23 million for the third quarter of 2021. After
adjusting for the impact of fresh start accounting, our operating income for the
three months ended September 30, 2021 would have increased by $37 million. The
improvement in our operating results was primarily due to a reduction in
depreciation and amortization expense as a result of the lower asset bases
established upon our implementation of fresh start accounting and lower video
content costs as compared to the corresponding period in 2020.

We reported operating income of $490 million and $351 million for the five
months ended September 30, 2021 and the four months ended April 30, 2021,
respectively. 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 to date operating performance that follows we have presented
combined Non-GAAP operating income for the nine months ended September 30, 2021
which will be compared to operating income for the nine months ended September
30, 2020 for the Remaining Properties. The more significant impacts of fresh
start accounting that affect comparability are included in the variance analysis
that follows.

We reported Non-GAAP operating income of $841 million and operating income of
$682 million for the nine months ended September 30, 2021 and 2020,
respectively, an increase of $159 million. Fresh start accounting decreased
operating income by $38 million for the first three quarters of 2021. After
adjusting for the impact of fresh start accounting, our non-GAAP operating
income would have increased by $197 million. The improvement in our operating
results was primarily due to reductions in depreciation and amortization
expense, loss on disposal, and

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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

decreased video content costs primarily related to the declines in video customers due to the Company de-emphasizing our less profitable video offerings.

                                       58

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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

                           Successor                                 Predecessor

                         For the three              For the three months

ended September 30, 2020

                          months ended           Consolidated            Northwest           Remaining
  ($ in millions)      September 30, 2021          Frontier               Ops (1)           Properties

  Data and Internet
  services             $              834     $               838      $              -   $          838
  Voice services                      411                     500                     -              500
  Video services                      149                     186                     -              186
  Other                                99                     103                     -              103
  Revenue from
  contracts
  with customers                    1,493                   1,627                     -            1,627
  Subsidy and other
  revenue                              83                      99                     -               99
  Revenue                           1,576                   1,726                     -            1,726

  Operating
  expenses (2):
  Network access
  expenses                            177                     226                     -              226
  Network related
  expenses                            413                     431                     -              431
  Selling, general
  and
  administrative
  expenses                            421                     404                     -              404
  Depreciation and
  amortization                        273                     392                     -              392
  Restructuring
  costs and
  other charges                         8                       3                     -                3
  Total operating
  expenses             $            1,292     $             1,456      $              -   $        1,456

  Operating income                    284                     270                     -              270

  Consumer (3)                        800                     865                     -              865
  Business and
  wholesale (3)                       693                     762                     -              762
  Revenue from
  contracts
  with customers                    1,493                   1,627                     -            1,627
  Subsidy and other
  revenue                              83                      99                     -               99
  Total revenue        $            1,576     $             1,726      $              -   $        1,726

(1)Amounts represent the financial results of the Northwest Operations for the three months ended September 30, 2020.

(2)Operating expenses for the Northwest Operations do not include allocated expenses which are included in operating expenses for our Remaining Properties.

(3)Due to changes in methodology during the second quarter of 2021, historical periods have been updated to reflect the comparable amounts.

                                       59

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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

                                                                 Non-GAAP
                      Successor           Predecessor            Combined                          Predecessor

                     For the five         For the four         For the nine        For the nine months ended September 30, 2020
                     months ended         months ended         months ended          Consolidated       Northwest     Remaining
  ($ in
  millions)       September 30, 2021     April 30, 2021     September 30, 2021         Frontier          Ops (1)     Properties

  Data and
  Internet
  services         $           1,390     $        1,125      $           2,515     $          2,644    $      102$    2,542
  Voice services                 694                647                  1,341                1,595            57         1,538
  Video services                 254                223                    477                  608            13           595
  Other                          161                125                    286                  328            12           316
  Revenue from
  contracts
  with customers               2,499              2,120                  4,619                5,175           184         4,991
  Subsidy and
  other revenue                  138                111                    249                  285             8           277
  Revenue                      2,637              2,231                  4,868                5,460           192         5,268

  Operating
  expenses (2):
  Network access
  expenses                       304                264                    568                  767            14           753
  Network
  related
  expenses                       682                566                  1,248                1,305            26         1,279
  Selling,
  general and
  administrative
  expenses                       690                537                  1,227                1,255            26         1,229
  Depreciation
  and
  amortization                   452                506                    958                1,204              -        1,204
  Loss on
  disposal of
  Northwest
  Operations                        -                  -                      -                 160              -          160
  Restructuring
  costs
  and other
  charges                         19                  7                     26                   87              -           87
  Total
  operating
  expenses         $           2,147     $        1,880      $           4,027     $          4,778    $       66$    4,712

  Operating
  income                         490                351                    841                  682           126           556

  Consumer (3)                 1,343              1,133                  2,476                2,746           102         2,644
  Business and
  wholesale (3)                1,156                987                  2,143                2,429            82         2,347
  Revenue from
  contracts
  with customers               2,499              2,120                  4,619                5,175           184         4,991
  Subsidy and
  other
  revenue                        138                111                    249                  285             8           277
  Total revenue    $           2,637     $        2,231      $           4,868     $          5,460    $      192$    5,268

(1)Amounts represent the financial results of the Northwest Operations for the nine months ended September 30, 2020.

(2)Operating expenses for the Northwest Operations do not include allocated expenses which are included in operating expenses for our Remaining Properties.

(3)Due to changes in methodology during the second quarter of 2021, historical periods have been updated to reflect the comparable amounts.

                                       60

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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

                                    REVENUE

Revenue for our consumer and business and wholesale customers was as follows:

                               Successor             Predecessor

                             For the three          For the three
                              months ended           months ended         $ Increase      % Increase
  ($ in millions)          September 30, 2021     September 30, 2020      (Decrease)      (Decrease)

  Consumer (2)             $              800    $               865    $         (65)          (8) %
  Business and wholesale
  (2)                                     693                    762              (69)          (9) %
  Revenue from contracts
  with customers (1)                    1,493                  1,627             (134)          (8) %
  Subsidy and other
  revenue                                  83                     99              (16)         (16) %
  Total revenue            $            1,576    $             1,726    $        (150)          (9) %

                                Non-GAAP
                                Combined             Predecessor

                              For the nine           For the nine
                              months ended           months ended         $ Increase      % Increase
  ($ in millions)          September 30, 2021     September 30, 2020      (Decrease)      (Decrease)

  Consumer (2)             $            2,476    $             2,644    $        (168)          (6) %
  Business and wholesale
  (2)                                   2,143                  2,347             (204)          (9) %
  Revenue from contracts
  with customers (1)                    4,619                  4,991             (372)          (7) %
  Subsidy and other
  revenue                                 249                    277              (28)         (10) %
  Total revenue            $            4,868    $             5,268    $        (400)          (8) %


(1)Lease revenue for the successor company for the three and nine months ended
September 30, 2021 was $16 million and $47 million, respectively. Lease revenue
for the predecessor company for the three and nine months ended September 30,
2020 was $16 million and $50 million, respectively.

(2)Due to changes in methodology during the third quarter of 2021, historical periods have been updated to reflect the comparable amounts.


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, offset by net additions of fiber broadband
customers. Customer preferences as well as our fiber investment initiative is
resulting in a migration of the customer base to fiber.

For the three and nine months ended September 30, 2021, Frontier lost 23,000 and
92,000 of our consumer customers compared to 36,000 and 107,000 for the three
and nine months ended September 30, 2020. This includes net losses of our
consumer broadband customers of approximately 4,000 and 14,000 during those same
periods. These improvements are a direct result of our fiber initiatives.

For the three and nine months ended September 30, 2021, we experienced 8% and 6%
declines in consumer revenues, respectively. These declines were driven by a 4%
decrease in the number of customers and a 3% and 2% decrease in ARPC,
respectively. This decline was driven predominantly by decreases in voice, video
and copper

                                       61
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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

broadband, offset by increases in fiber broadband. The Company's fiber initiative will result in our revenue mix continuing to move to fiber broadband.


For the three and nine months ended September 30, 2021, we experienced 15% and
13% improvements in consumer fiber broadband revenues. These improvements are a
result of our fiber initiative which resulted in net adds of 29,000 and 54,000
customers, and our continued focus on product positioning in both new and
existing markets which resulted in ARPU improvements of $5.77 and $5.24 for the
three and nine months ended September 30, 2021 respectively.

For both the three and nine months ended September 30, 2021, we experienced
approximately 1% declines in consumer copper broadband revenues, respectively.
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.

Business


For the three and nine months ended September 30, 2021, we experienced a 9%
decline in our business and wholesale revenues, in both periods. Of these
declines, wholesale revenues decreased by 16% and 12%, driven by lower rates for
our network access services charged to our wholesale customers for the three and
nine months ended September 30, 2021, respectively. Our small and medium
business and larger enterprise (SME) revenues decreased 2% and 5% primarily as a
result of a decline in small business customers for the three and nine months
ended September 30, 2021, respectively.

                                       62

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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

Revenue by product and service type was as follows:

                                Successor             Predecessor

                              For the three          For the three
                               months ended           months ended         $ Increase      % Increase
  ($ in millions)           September 30, 2021     September 30, 2020      (Decrease)      (Decrease)

  Data and Internet
  services                  $              834      $             838     $         (4)          (0) %
  Voice services                           411                    500              (89)         (18) %
  Video services                           149                    186              (37)         (20) %
  Other                                     99                    103               (4)          (4) %
  Revenue from contracts
  with customers (1)                     1,493                  1,627             (134)          (8) %
  Subsidy and other
  revenue                                   83                     99              (16)         (16) %
  Total revenue             $            1,576      $           1,726     $       (150)          (9) %

                                 Non-GAAP
                                 Combined             Predecessor

                               For the nine           For the nine
                               months ended           months ended         $ Increase      % Increase
  ($ in millions)           September 30, 2021     September 30, 2020      (Decrease)      (Decrease)

  Data and Internet
  services                  $            2,515      $           2,542     $        (27)          (1) %
  Voice services                         1,341                  1,538             (197)         (13) %
  Video services                           477                    595             (118)         (20) %
  Other                                    286                    316              (30)          (9) %
  Revenue from contracts
  with customers (1)                     4,619                  4,991             (372)          (7) %
  Subsidy and other
  revenue                                  249                    277              (28)         (10) %
  Total revenue             $            4,868      $           5,268     $       (400)          (8) %


(1)Lease revenue for the successor company for the three and nine months ended
September 30, 2021 was $16 million and $47 million, respectively. Lease revenue
for the predecessor company for the three and nine months ended September 30,
2020 was $16 million and $50 million, respectively.

We categorize our products, services, and other revenues into the following five categories:


Data and Internet Services

We provide data and internet services to our consumer, business and wholesale
customers. Data and internet services consist of fiber broadband services,
copper broadband services and network access revenues (data transmission
services and dedicated high-capacity circuits including data services to
wireless providers commonly called wireless backhaul). Network access services,
which constitute approximately one third of this revenue category, are provided
primarily to our business and wholesale customers while fiber and copper
broadband, which constitute approximately two thirds of the revenue category,
are provided to all customers.

Our fiber expansion initiative is expected to positively impact data and
internet services. This network expansion will provide faster, symmetrical
broadband speeds and provide customer and revenue growth opportunities for fiber
broadband and certain network access products like ethernet. This initiative
will also create an opportunity for us to migrate copper broadband and certain
other network access products to fiber broadband and ethernet.

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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

  ($ in millions)                   For the three months ended     For the nine months ended

  Data and internet services
  revenue, September 30, 2020        $                     838     $                   2,542

  Change in fiber broadband
  revenue                                                   34                            86
  Change in copper broadband
  revenue                                                   (7)                          (22)
  Change in network access revenue                         (26)                          (85)
  Impact of fresh start accounting                          (2)                           (4)
  Change in other data and
  internet services                                         (3)                           (2)

  Data and internet services
  revenue, September 30, 2021        $                     834     $                   2,515


Upon emergence from bankruptcy, the accumulated balances in deferred
installation fee revenue were eliminated as part of fresh start accounting,
which has resulted in a decline in revenue recognition. After adjusting for this
fresh start accounting impact, data and internet services revenue decreased $2
million and $23 million for the three and nine months ended September 30, 2021,
respectively.

The revenue declines were primarily driven by Frontier's network access revenue
and were offset by 6% and 5% improvement in our broadband revenue for the three
and nine months ended September 30, 2021, respectively, as compared to the
corresponding periods in 2020. The increases in broadband revenue were driven by
growth in fiber, offset somewhat by continued declines in copper. The Network
access revenues declines were the result of an ongoing migration of our carrier
customers from legacy technology circuits to lower priced ethernet circuits.

The period over period decrease in data and internet services revenue continued
to improve for the three months ended September 30, 2021, as compared to the
first six months of 2021, as a result of the Company's initiatives.

Voice Services


The Company provides voice services consisting of traditional local and
long-distance service and voice over internet protocol (VoIP) service provided
over our fiber and copper broadband products. It also includes enhanced features
such as call waiting, caller identification and voice messaging services.

  ($ in millions)                    For the three months ended       For 

the nine months ended

  Voice services revenue, September
  30, 2020                            $                     500       $                   1,538

  Change in local and long-distance
  service revenue                                           (27)                           (105)
  Impact of fresh start accounting                          (50)                            (78)
  Change in other voice services
  revenue                                                   (12)                            (14)

  Voice services revenue, September
  30, 2021                            $                     411       $                   1,341


Upon implementation of fresh start accounting policies, Frontier is recording
both revenue and expense related to Universal Service Fund (USF) surcharges on a
net basis, as opposed to recording each on a gross basis prior to emergence.
After adjusting for the impact of these revenues, voice services revenue
declined $39 million and $119 million for the three and nine months ended
September 30, 2021, respectively. These declines were primarily due to net
losses in business and consumer customers in addition to fewer customers
bundling voice services with broadband.

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                                  (Unaudited)

Video Services


Video services include revenues generated from traditional television (TV)
services provided directly to consumer customers as well as satellite TV
services provide through Dish. We are partnering with over-the-top (OTT) video
providers and expect this to grow as OTT options are offered with our broadband
products. Video services also includes pay per view revenues, video on demand,
equipment rentals, and video advertising. The Company has made the strategic
decision to limit sales of new traditional TV services, focusing on our
broadband products and OTT video options.

  ($ in millions)                   For the three months ended     For the nine months ended

  Video services revenue,
  September 30, 2020                 $                     186      $                    595

  Change in video services revenue                         (30)                         (106)
  Impact of fresh start accounting                          (7)                          (12)

  Video services revenue,
  September 30, 2021                 $                     149      $                    477


Under our fresh start accounting policies, Frontier is recording both revenue
and expense related to certain surcharges and taxes on a net basis, as opposed
to recording each on a gross basis prior to emergence. After adjusting for the
impact of these revenues, video services revenue declined $30 million and $106
million for the three and nine months ended September 30, 2021, respectively.
These declines were primarily driven by linear video customer losses, partially
offset by price increases.

Other

Other customer revenue includes directory listing services, switched access
revenue and sales of voice and data equipment (CPE) to our business customers.
Switched access revenue includes revenue derived from allowing other carriers to
use our network to originate and/or terminate their local and long-distance
voice traffic. These services are primarily billed on a minutes-of-use basis
applying tariffed rates filed with the FCC or state agencies.

  ($ in millions)                   For the three months ended    For the nine months ended

  Other customer revenue,
  September 30, 2020                 $                     103      $                   316

  Change in other customer revenue                         (11)                         (38)
  Impact of fresh start accounting                           7                            8

  Other customer revenue,
  September 30, 2021                 $                      99      $                   286


Under our fresh start accounting policies, Frontier has classified the provision
for bad debt as expense, rather than a reduction of revenue as it was recorded
prior to emergence, resulting in increases to other customer revenues of $16
million and $23 million for the three and nine months ended September 30, 2021,
respectively. Additionally, the accumulated balances in deferred installation
fee revenue were eliminated as part of fresh start accounting, which has
resulted in a $9 million and $15 million decline in revenue recognized for the
three and nine months ended September 30, 2021, respectively, as compared to the
prior year period. After adjusting for the impacts of these policy changes,
Other customer revenue declined $11 million and $38 million for the three and
nine months ended September 30, 2021, respectively. These decreases were
primarily driven by reductions in late payment fees, early termination fees and
reconnect fees.

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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

Subsidy and other revenue

Subsidy and other revenue decreased $16 million and $28 million for the three and nine months ended September 30, 2021.


  ($ in millions)                   For the three months ended    For the nine months ended

  Subsidy and other revenue,
  September 30, 2020                 $                      99      $                   277

  Change in transition service
  revenue                                                  (15)                         (25)
  Change in CAF II and other
  subsidies                                                 (3)                          (5)
  Impact of fresh start accounting                           2                            2

  Subsidy and other revenue,
  September 30, 2021                 $                      83      $                   249


The transition services agreement related to the disposal of our Northwest
Operations and has been discontinued. Upon implementation of new fresh start
accounting policies, certain governmental grants that were historically
presented on a net basis as part of capital expenditures, are presented on a
gross basis and included in subsidy, resulting in increases to Subsidy and other
revenue of $2 million for the three and nine months ended September 30, 2021.

                               OPERATING EXPENSES

                          For the three months ended                     For the nine months ended
                                 September 30,                                 September 30,
  ($ in millions)            2021             2020                          2021            2020
                                                           Variance       Non-GAAP                       Variance
                           Successor       Predecessor        %          
Combined       Predecessor        %

  Operating expenses:
  Network access
  expenses              $          177    $        226       (22) %    $         568    $        753       (25) %
  Network related
  expenses                         413             431        (4) %            1,248           1,279        (2) %
  Selling, general and
  administrative
  expenses                         421             404         4  %            1,227           1,229          - %
  Depreciation and
  amortization                     273             392       (30) %              958           1,204       (20) %
  Loss on Disposal of
  Northwest
  Operations                          -               -         - %                 -            160      (100) %
  Restructuring costs
  and
  other charges                      8               3       167  %               26              87       (70) %
  Total operating
  expenses              $        1,292$      1,456       (11) %    $       4,027$      4,712       (15) %


Network access expenses

Network access expenses include access charges and other third-party costs directly attributable to connecting customer locations to our network, video content costs and certain promotional costs. Such access charges and other third-party costs exclude network related expenses, depreciation and amortization, and employee related expenses.


For the three and nine months ended September 30, 2021, the decrease in network
access expense was driven by lower video content costs as a result of declines
in video customers, non-renewal of certain content agreements and decreased CPE
costs.

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                                  (Unaudited)

Network related expenses


Network related expenses include expenses associated with the delivery of
services to customers and the operation and maintenance of our network, such as
facility rent, utilities, maintenance and other costs, as well as salaries,
wages and related benefits associated with personnel who are responsible for the
delivery of services, and the operation and maintenance of our network.

Under our fresh start accounting policies we account for USF fees and certain
other surcharges and taxes on a net basis instead of on a gross basis in both
revenue and expense. Network related expense was $45 million and $76 million
lower for the three and nine months ended September 30, 2021, respectively as
compared to prior year period. Adjusting for this change in accounting policy,
network related expense increased $27 million and $45 million for the three and
nine months ended September 30, 2021, respectively. This increase was driven by
increased compensation and benefits costs for Frontier employees and increased
utilities costs.

Selling, general, and administrative expenses

Selling, general and administrative expenses (SG&A expenses) include the salaries, wages and related benefits and the related costs of corporate and sales personnel, travel, insurance, non-network related rent, advertising, and other administrative expenses.


As a result of the fresh start accounting policy change to classify the
provision for bad debt as an expense rather than a reduction to revenue, SG&A
expenses were $16 million and $23 million higher for the three and nine months
ended September 30, 2021, respectively. Additionally, we have expensed $14
million and $24 million, of certain administrative items that were previously
capitalized by the predecessor for the three and nine months ended September 30,
2021, respectively. Also, as a result of the fresh start accounting policy
change to account for USF fees and certain other surcharges and taxes on a net
basis instead of on a gross basis in both revenue and expense, SG&A Expenses
decreased by $12 million and $17 million for the three and nine months ended
September 30, 2021, respectively. After adjusting for these fresh start impacts
changes, SG&A expense declined $1 million and $28 million for the three and nine
month periods ended September 30, 2021, respectively. This decrease was a result
of, reduced property taxes and lower headcount, partially offset by higher
professional services and recruiting fees.

Depreciation and amortization


As a result of fresh start accounting, both Frontier's fixed assets and
intangible assets were adjusted to fair value as of the Effective Date. These
changes, which decreased the carrying value of its fixed assets and increased
the carrying value of its intangible assets. For the three and nine months ended
September 30, 2021, the decreased depreciation and amortization expense was
driven by lower depreciation expense as a result of reduced fixed asset bases
following the fresh start adjustment noted above. For the nine months ended
September 30, 2021, the reduction in depreciation expense was combined with
lower amortization expense compared to the prior year, primarily due to the
accelerated method of amortizing customer list intangibles during 2020.

Loss on disposal of Northwest Operations

During the nine months ended September 30, 2020, Frontier recorded a loss on disposal of $160 million associated with the sale of the Northwest Operations.

Restructuring costs and other charges


Restructuring costs and other charges consist of consulting and advisory fees
related to our balance sheet restructuring prior to filing our Chapter 11 Cases
and subsequent to the Emergence Date, workforce reductions, transformation
initiatives, other restructuring expenses.

For the three months ended September 30, 2021, restructuring costs and other charges increased slightly due to increased severance and employees costs resulting from workforce reductions.

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                                  (Unaudited)

For the nine months ended September 30, 2021, restructuring costs and other
charges decreased due to a reduction in our consulting and advisory fees related
to our balance sheet restructuring when comparing those that were incurred prior
to filing our Chapter 11 Cases and those that were incurred subsequent to the
Emergence Date.

Pension and Other Postretirement Employee Benefit (OPEB) costs


Frontier allocates certain pension/OPEB expense to network related expenses and
SG&A expenses. Total Non-GAAP combined pension and OPEB service costs for the
three and nine months ended September 30, 2021 as compared to the three and nine
months ended September 30, 2020 were as follows:

                       For the three months ended                     For the nine months ended
                              September 30,                                 September 30,
  ($ in millions)         2021             2020                          2021            2020
                                                        Variance       Non-GAAP                       Variance
                        Successor       Predecessor        %           Combined       Predecessor        %

  Net Pension/OPEB
  Costs:
  Pension/OPEB
  service costs       $          24     $        29       (17) %     $         79     $        88       (10) %
  Less: Costs
  capitalized into
  capital
  expenditures                   (6)             (5)       20  %              (17)            (18)       (6) %
  Net Pension/OPEB
  Costs               $          18     $        24       (25) %     $         62     $        70       (11) %


                     OTHER NON-OPERATING INCOME AND EXPENSE

The following table represents our Non-GAAP combined financial results for the
three and nine months ended September 30, 2021 as compared to the financial
results of our consolidated operations (including the Northwest Operations) for
the three and nine months ended September 30, 2020.

                                                        For the five     For the four
                        For the three months ended      months ended     months ended       For the nine months ended
                              September 30,            September 30,      April 30,               September 30,
  ($ in millions)          2021            2020             2021             2021             2021             2020
                                                                                            Non-GAAP
                        Successor       Predecessor      Successor       Predecessor        Combined        Predecessor

  Non-operating
  income (expense):
  Investment and
  other
  income (loss), net   $        (37)$        (14)$        (39)   $           1    $          (38)   $        (29)
  Pension settlement
  costs                $           -   $           -    $           -   $            -   $             -   $       (159)
  Reorganization
  items, net           $           -   $       (131)    $           -   $       4,171$        4,171$       (273)
  Interest expense     $        (90)$       (121)$       (152)$        (118)   $         (270)   $       (664)
  Income tax benefit
  (expense)            $         31    $        (11)    $         74    $        (136)   $          (62)   $        (91)
  Net income (loss)    $        126    $         15     $        225$       4,541$        4,766$       (352)


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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

Investment and other income (loss), net


Investment and other loss, net increased by $23 million and $9 million for the
three and nine months ended September 30, 2021, respectively, driven by higher
net non-operating pension and OPEB expense as compared to the prior year. This
decrease was driven by reduced pension expense as a result of the elimination of
actuarial losses that were amortized from accumulated other comprehensive income
(loss) prior to emergence, offset by increased OPEB expense including
remeasurement charges of $13 million recognized in May 2021 and $54 million
recognized in August 2021.

Pension settlement


During the nine months ended September 30, 2020, lump sum pension settlement
payments to terminated or retired individuals amounted to $464 million, which
exceeded the settlement threshold of $211 million, and as a result, Frontier
recognized non-cash settlement charges totaling $159 million for the nine months
ended September 30, 2020.

Reorganization items, net

The Company has incurred costs associated with the reorganization, primarily the
write-off of certain debt issuance costs and net discounts, financing costs, and
legal and professional fees and fresh start accounting adjustments. These
include expenses incurred subsequent to the Petition Date. During the nine
months ended September 30, 2021, Frontier recognized $4,171 million in
reorganization items associated with the restructuring of our balance sheet
primarily due to the $11 billion gain associated with the cancellation of debt,
offset by other adjustments related to emergence and fresh start accounting.

During the three and nine months ended September 30, 2020, Frontier incurred
$131 million and $273 million in reorganization costs, respectively, associated
with the restructuring of our balance sheet.

Interest expense


For the three and nine months ended September 30, 2021 interest expense
decreased $31 million and $394 million, respectively, as compared to the same
periods in 2020. The decline in interest expense was primarily driven by reduced
interest rates resulting from the refinancing of our secure debt, the unrecorded
interest related to our unsecured notes prior to emergence from bankruptcy, and
the overall reduction in our principal debt balance. The weighted average
interest rate as of September 30, 2021 and 2020 was 5.658% and 8.668%,
respectively.

Income tax expense (benefit)


During the four months ended April 30, 2021, the Predecessor recorded an income
tax benefit of $136 million on pre-tax income of $4,405 million. The driver for
the benefit was the tax effect of fresh start accounting adjustments. During the
five months ended September 30, 2021, the successor recorded income tax expense
of $74 million on pre-tax income of $299 million. Our effective tax rates for
the four months ended April 30, 2021 and the five months ended September 30,
2021 were (3.1%) and 24.7%, respectively.


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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

(b) Liquidity and Capital Resources


Frontier emerged from the Chapter 11 Cases on the effective date with a new
capital structure consisting of significantly lower levels of long-term debt as
compared to the Company's historical debt levels. The reorganization resulted in
the elimination of approximately $11 billion of our long-term debt and a
corresponding decrease in the capital needed for debt service requirements.
Following emergence, we expect that our principal uses of cash and capital
resources will be to fund the cost of operations, working capital, and capital
expenditures and to fund interest payments on our long-term debt.

Analysis of Cash Flows


As of September 30, 2021, we had unrestricted cash and cash equivalents
aggregating $1,211 million. For the nine months ended September 30, 2021, we
used cash flow from operations, cash on hand, and cash from prior year
borrowings principally to fund payments related to our emergence from Chapter 11
bankruptcy and our cash investing and financing activities, which were primarily
capital expenditures.

On October 13, 2021, our consolidated subsidiary Frontier Communications
Holdings, LLC, issued $1.0 billion aggregate principal amount of 6.0% second
lien secured notes due 2030 in an offering pursuant to exemptions from the
registration requirements of the Securities Act. The Company intends to use the
net proceeds of this offering to fund capital investments and operating costs
arising from the Company's fiber build and expansion of its fiber customer base,
and for general corporate purposes. Giving effect to this offering, our
liquidity as of September 30, 2021, would have been $2.7 billion.

As of September 30, 2021, we had a working capital surplus of $307 million
compared to a $4,486 million deficit at December 31, 2020. The primary driver
for the change in the working capital deficit at September 30, 2021 was
classification of our long-term debt as current as a result of the Chapter 11
Cases.

                                     Non-GAAP
                                     Combined            Predecessor

                                   For the nine         For the nine
                                   months ended         months ended
 ($ in millions)                September 30, 2021   September 30, 2020

 Cash provided by (used for):
 Operating activities           $              329    $           1,492
 Investing activities           $           (1,135)   $             315
 Financing activities           $              180    $            (791)

                      Cash Flows from Operating Activities

Non-GAAP combined cash flows used by operating activities decreased $1,163
million to $329 million for the nine months ended September 30, 2021 as compared
to the nine months ended September 30, 2020. The overall decrease in operating
cash flows was primarily the result of payments of excess cash to unsecured
senior noteholders and payments of prepetition accounts payable following our
emergence from bankruptcy totaling $1,169 million.

We paid $36 million in net cash taxes during the nine months ended September 30,
2021 and $6 million in net cash taxes during the nine months ended September 30,
2020.

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                                  (Unaudited)

                      Cash Flows from Investing Activities

Non-GAAP combined cash flows used in investing activities were $(1,135) million
for the nine months ended September 30, 2021, compared to cash flows provided by
investing activities of $315 million for the corresponding period in 2020.

Capital Expenditures


For the nine months ended September 30, 2021 and 2020, our Non-GAAP combined
capital expenditures were $1,146 million and $825 million, respectively. Capital
expenditures related to CAF Phase II are included in our reported amounts for
capital expenditures. The driver for the increase in capital expenditure was
increased spending for fiber upgrades to our existing copper network, a trend
that we expect to continue as we execute our strategy of investing in our fiber
network.

In the second quarter of 2020, we received $1,131 million in proceeds from the sale of our Northwest Operations.

                      Cash Flows from Financing Activities

Cash flows provided by financing activities increased $971 million to $180
million for the nine months ended September 30, 2021 as compared to 2020. The
increase is primarily the result of receiving $225 million in proceeds from the
exit term loan facility in 2021, offset by full repayment of the revolver in
September 30, 2020 of $749 million.

Capital Resources


The Restructuring resulted in a new capital structure with significantly lower
levels of long-term debt. Upon emergence, our consolidated long-term debt
decreased from approximately $16,769 million to $6,738 million. During the nine
months ended September 30, 2021, we paid $205 million of cash interest.

In connection with the Restructuring, we paid $1,313 million to Old Frontier's
unsecured senior note holders, $62 million related to prepetition accounts
payable and contract cure payments and $22 million for professional fees and
other bankruptcy related costs.

We expect that our primary anticipated uses of liquidity will be to fund the
costs of operations, working capital and capital expenditures and to fund
interest payments on our long-term debt. Our primary sources of liquidity are
cash flows from operations, cash on hand and borrowing capacity under our $625
million Revolving Facility (as reduced by $90 million of Letters of Credit.)

Our Credit Facilities, including our $1,468 million Term Loan Facility and $625
million Revolving Facility, and the indentures governing our outstanding secured
First Lien Notes and Second Lien Notes are described in detail in Note 11 to the
financial statements contained in Part I of this report.

We have assessed our current and expected funding requirements and our current
and expected sources of liquidity, and have determined, based on our forecasted
financial results and financial condition as of September 30, 2021, that our
operating cash flows and existing cash balances, will be adequate to finance our
working capital requirements, fund capital expenditures, make required debt
interest and principal payments, pay taxes and make other payments. A number of
factors, including but not limited to, losses of customers, pricing pressure
from increased competition, lower subsidy and switched access revenues, and the
impact of economic conditions may negatively affect our cash generated from
operations.


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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

Net Operating Losses


In connection with the Company's emergence from bankruptcy, the Company
consummated a taxable disposition of substantially all of the assets and/or
subsidiary stock of the Company. Certain of the NOLs were utilized in offsetting
gains from the disposition, certain of the NOLS were extinguished as part of
attribute reduction and certain subsidiary NOLS were carried over. Under Section
338(h)(10) of the Code, Predecessor and Successor made elections to step-up tax
basis of certain subsidiary assets. Such Section 338(h)(10) elections will
generate depreciation and amortization expense going forward, which may result
in net operating losses on a go forward basis. Such net operating losses would
be carried forward indefinitely but would be subject to an 80% limitation on
U.S. taxable income.

Off-Balance Sheet Arrangements
We do not maintain any off-balance sheet arrangements, transactions, obligations
or other relationships with unconsolidated entities that would be expected to
have a material current or future effect upon our financial statements.

Contractual Obligations


Other than as disclosed elsewhere in this report with respect to the filing of
the Chapter 11 Cases, the acceleration of substantially all of our debt, and the
application of fresh start accounting, there have been no material changes
outside the ordinary course of business to the information provided with respect
to our contractual obligations, including indebtedness and purchase and lease
obligations, as disclosed in our Annual Report on Form 10-K for the year ended
December 31, 2020.

Future Commitments

In April 2015, the FCC released its right of first refusal offer of support to
price cap carriers under the CAF Phase II program, which is intended to provide
long-term support for broadband in high cost unserved or underserved areas.
Frontier accepted the FCC's CAF Phase II offer in 25 states, which provides $313
million in annual support through 2021, to make available 10 Mbps downstream/1
Mbps upstream broadband service to households across some of the 25 states where
we operate.

To the extent we do not enable the required number of households with 10 Mbps
downstream/1 Mbps upstream broadband service by the end of the CAF Phase II
deployment deadline of December 31, 2021 or we are unable to satisfy other FCC
CAF Phase II requirements, Frontier would be required to return a portion of the
funds previously received and may be subject to certain other requirements and
obligations.

Critical Accounting Policies and Estimates


The preparation of our financial statements requires management to make
estimates and assumptions. There are inherent uncertainties with respect to such
estimates and assumptions; accordingly, it is possible that actual results could
differ from those estimates and changes to estimates could occur in the near
term. These critical accounting estimates have been reviewed with the Audit
Committee of our Board of Directors.

Except for the application of fresh start accounting, there have been no
material changes to our critical accounting policies and estimates from the
information provided in Item 7. "Management Discussion and Analysis of Financial
Condition and Results of Operations" included in our Annual Report on Form 10-K
for the year ended December 31, 2020.

See Note 1 of the notes to the financial statements for updated accounting policies related to the application of fresh start accounting.

Recent Accounting Pronouncements

See Note 2 of the Notes to Consolidated Financial Statements included in Part I of this report for additional information related to recent accounting literature.

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                   PART I. FINANCIAL INFORMATION (Continued)

             FRONTIER COMMUNICATIONS PARENT, INC. AND SUBSIDIARIES

                                  (Unaudited)

Regulatory Developments


In 2015, Frontier accepted the FCC's CAF Phase II offer in 29 states, which
provides $332 million in annual support and in return the Company is committed
to make broadband available to approximately 774,000 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 CAF Phase II program is intended to provide
long-term support for carriers for establishing and providing broadband service
with at least 10 Mbps downstream/1 Mbps upstream speeds in high-cost unserved or
underserved areas. The CAF II funding runs through and the Company must complete
the CAF II deployment by December 31, 2021. Thereafter, the FCC will review
carriers' CAF II program completion data and if the FCC determines that the
Company did not satisfy applicable FCC 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 Rural Digital
Opportunity Fund (RDOF), a competitive reverse auction to provide support to
serve high cost areas. The FCC held the RDOF Phase I auction from October 29,
2020 through November 25, 2020, and announced the results 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 submitted its Long
Form application to the FCC on January 29, 2021 and, assuming the long-form
application is granted by the FCC, anticipates that it will begin receiving
funding on January 1, 2022, in which case, Frontier will be required to complete
the buildout to the RDOF locations by December 31, 2027, with interim target
milestones over this period.

After the FCC completes its current requirement to update its broadband maps
with more granular broadband availability information, the FCC plans to hold a
second auction for any remaining locations with the remaining funding, expected
to be up to approximately $11.2 billion.

Privacy-related legislation has been considered in a number of states.
Legislative and regulatory action 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. On June 28, 2018,
the state of California enacted comprehensive privacy legislation that,
effective as of January 1, 2020, gives California consumers the right to know
what personal information is being collected about them, and whether and to whom
it is sold or disclosed, and to access and request deletion of this information.
Subject to certain exceptions, it also gives consumers the right to opt-out of
the sale of personal information. The law applies the same rules to all
companies that collect consumer information. It is unclear the degree to which
federal legislative or regulatory action may impact privacy issues.

On October 1, 2019, the D.C. Circuit Court largely upheld the FCC decision in
its 2018 Restoring Internet Freedom Order to reclassify broadband as an
"information service." However, the Court invalidated the FCC's preemption of a
state's ability to pass their own network neutrality rules, and California's
network neutrality provisions have gone into effect. It is unclear whether
pending or future appeals or regulatory challenges will have any impact on
federal or state net neutrality provisions.

On March 13, 2020, in response to the COVID-19 pandemic, over 550 providers of
critical communications services, including Frontier, took the FCC's Keep
Americans Connected pledge pursuant to which providers agreed (i) not to
terminate service to any consumer or small business customers because of their
inability to pay their bills due to the disruptions caused by the coronavirus
pandemic; (ii) to waive any late fees that any consumer or small business
customers incur because of their economic circumstances related to the
coronavirus pandemic; and (iii) to open its Wi-Fi hotspots to any American who
needs them. The Keep Americans Connected Pledge expired on June 30, 2020;
however, state and federal governments continue to ask companies to aid in
pandemic response. Some of the states we operate in have issued executive orders
prohibiting the disconnection of services for customers for the length of the
state of emergency and/or otherwise restrict the assessment of late fees during
the pandemic. While certain customers have taken advantage of COVID-19 related
relief programs, as of September 30, 2021, very few

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                   PART I. FINANCIAL INFORMATION (Continued)

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                                  (Unaudited)

had past due balances beyond the point of normal disconnection. Given the
unprecedented and evolving nature of the pandemic and the evolving response of
multiple levels of government, the impact of potential changes on the Company
are not fully known at this time.

The Federal government has undertaken a number of measures to address the
ongoing impacts of the COVID-19 pandemic and to facilitate enhanced access to
high speed broadband. As part of the Consolidated Appropriations Act of 2021
passed in December 2020, Congress provided $3.2 billion in funding to help
support access to broadband services. In furtherance of this objective, the
Federal Communications Commission 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 is currently participating
in the program. In March 2021, Congress also passed the American Rescue Plan Act
("ARPA") of 2021 which created a new $10 billionCoronavirus Capital Projects
Fund that will be 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. Additionally, the President
has proposed, and Congress continues to consider, $100 billion in additional
funding for broadband infrastructure and adoption programs. Frontier cannot say
at this time whether the federal government, states, and localities will use
these funds in ways that may benefit Frontier or create additional competition
in any of our markets. The ARPA also included $7.2 billion in funding for
schools and libraries (the Emergency Connectivity Fund) that will provide
support for connectivity that enables remote learning. The FCC has established
rules prioritizing funding for on-campus services and devices, and Frontier does
not know the impact this program may have, if any, at this point in time.

© Edgar Online, source Glimpses

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