Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  OTC Bulletin Board - Other OTC  >  Frontier Communications Corporation    FTRCQ

FRONTIER COMMUNICATIONS CORPORATION

(FTRCQ)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsOther languagesPress ReleasesOfficial PublicationsSector news

FRONTIER COMMUNICATIONS : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

11/04/2020 | 04:47pm EST

Overview


Frontier Communications Corporation (Frontier or the Company) is a provider of
communications services in the United States, with approximately 3.6 million
customers, 3.1 million broadband subscribers and 16,300 employees, operating in
25 states as of September 30, 2020. We offer a broad portfolio of communications
services for consumer and commercial customers. These services which include
data and internet services, video services, voice services, access services, and
advanced hardware and network solutions, are offered on either a standalone
basis or in a bundled package, depending on each customer's needs.

On April 14, 2020 (the Petition Date), Frontier and its subsidiaries
(collectively, the Company Parties or the Debtors and, as they may be
reorganized pursuant to the Plan, the Reorganized Company Parties or the
Reorganized Debtors) commenced cases under chapter 11 (the Chapter 11 Cases) of
title 11 of the United States Code (the Bankruptcy Code) in the U.S. Bankruptcy
Court for the Southern District of New York (the Bankruptcy Court). On May 15,
2020, the Company Parties filed a proposed Joint Plan of Reorganization and
related Disclosure Statement, the adequacy of which was approved by the
Bankruptcy Court. On August 21, 2020, the Company Parties filed the Fifth
Amended Joint Plan of Reorganization of Frontier Communications Corporation and
Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (the Plan)
with the Bankruptcy Court, which approved the Plan on August 27, 2020.

During the Chapter 11 Cases, Frontier is allowed to reorganize its finances
while the business operations continue. The Company Parties continue to operate
their businesses and manage their properties as "debtors-in-possession" under
the jurisdiction of the Bankruptcy Court and in accordance with the applicable
provisions of the Bankruptcy Code and orders of the Bankruptcy Court. To ensure
the Company Parties' ability to continue operating in the ordinary course of
business and minimize the effect of the Restructuring on the Company Parties'
customers and employees, the Company Parties filed certain motions and
applications intended to limit the disruption of the bankruptcy proceedings on
its operations (the First Day Motions), including authority to pay employee
wages and benefits, and pay vendors and suppliers for goods and services
provided both before and after the filing date. For further developments on this
topic, see "(b) Liquidity and Capital Resources-Chapter 11 Cases and Other
Related Matters."

On May 1, 2020, Frontier completed the sale of its Northwest Operations for
gross proceeds of $1,352 million, subject to certain closing adjustments. Net of
funding certain pension and other retiree medical liabilities, funding certain
escrows and other closing adjustments, we received $1,131 million in proceeds.
Revenues for the Northwest Operations represented approximately 7% of
consolidated revenue for the year ended December 31, 2019.

On October 8, 2020, the Company issued $1,150 million aggregate principal amount
of 5.875% First Lien Secured Notes due 2027 (the New First Lien Notes), entered
into the $625 million revolving debtor-in-possession (DIP) facility (the DIP
Revolving Facility) and the $500 million DIP Term Loan Facility (DIP Term Loan
Facility). The Company used the proceeds from the offering of the New First Lien
Notes, together with the proceeds of the DIP Term Loan Facility and cash on
hand, to (i) repay in full the Company's 8.000% first lien secured notes due
2027 (the Original First Lien Notes) and (ii) pay related interest, fees and
expenses.

                                       49
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

During the third quarter of 2020, Frontier reported operating income of $270
million and net income of $15 million. This compares to operating income of $26
million and a net loss of $345 million reported in the third quarter of 2019. We
have continued to experience net losses in customers, which have contributed to
lower revenues and lower profitability. Our results in the third quarter of 2020
reflect $131 million of reorganization charges and $3 million of restructuring
and other charges. Contractual interest attributable to our unsecured
noteholders of $257 million was not recorded, as we do not expect those amounts
to be paid. Our results for the third quarter of 2019 included a $276 million
goodwill impairment, a loss on disposal of $30 million, and $27 million of
restructuring costs and other charges.

As discussed elsewhere in this Form 10-Q, our ability to continue as a going concern is contingent upon, among other things, our ability to successfully emerge from the Chapter 11 Cases and generate sufficient liquidity from the Restructuring to meet our obligations and operating needs.

Recent Developments

Chapter 11 Cases


On April 14, 2020, the Company Parties entered into a Restructuring Support
Agreement (the Restructuring Support Agreement) with certain of its noteholders
(the Consenting Noteholders). The Restructuring Support Agreement contemplates
agreed-upon terms for a pre-arranged financial restructuring plan that leaves
unimpaired all general unsecured creditors and holders of secured debt.

Under the Restructuring Support Agreement, the Consenting Noteholders agreed,
subject to certain terms and conditions, to support the Restructuring of the
existing debt of, existing equity interests in, and certain other obligations of
the Company Parties, pursuant to a plan to be filed in cases commenced under the
Bankruptcy Code.

To implement the Restructuring, on the Petition Date, the Company Parties filed
the Chapter 11 Cases in the Bankruptcy Court. Each Company Party continues to
operate its business as a "debtor in possession" under the jurisdiction of the
Bankruptcy Court and in accordance with the applicable provisions of the
Bankruptcy Code and the orders of the Bankruptcy Court. The Chapter 11 Cases are
being jointly administered under the caption In re Frontier Communications
Corporation., et al., Case No. 20-22476 (RDD).

On May 15, 2020, the Company Parties filed a proposed Joint Plan of
Reorganization and related Disclosure Statement, each of which were amended on
June 26, 2020, June 29, 2020 and June 30, 2020. On May 15, 2020, the Debtors
also filed a proposed order approving the Disclosure Statement and various plan
solicitation materials, including the solicitation and voting procedures, which
was revised on June 29, 2020 (including modifications to some of the exhibits).
On June 30, 2020, the Bankruptcy Court entered the modified order approving the
adequacy of the Disclosure Statement and the solicitation and notice procedures
and the forms of voting ballots and notices in connection therewith. The order
established June 29, 2020 as the voting record date, July 2, 2020 as the
solicitation launch date and July 31, 2020 as the voting deadline. On August 21,
2020, the Company Parties filed the Plan with the Bankruptcy Court.

On August 27, 2020, the Bankruptcy Court entered the Order Confirming the Fifth
Amended Joint Plan of Reorganization of Frontier Communications Corporation and
its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (the
Confirmation Order), which approved and confirmed the Plan. The effective date
of the Plan will occur once all conditions precedent to the Plan have been
satisfied (the Effective Date).

See "-(b) Liquidity and Capital Resources-Chapter 11 Cases and Other Related
Matters" and Note 3 of the Notes to Consolidated Financial Statements for more
information on the Restructuring and the Chapter 11 Cases. Refer to "-Going
Concern" and Note 1 of the Notes to Consolidated Financial Statements for
further discussion of the Company's ability to continue as a going concern and
Note 9 for further detail of our debt obligations as of and for the quarter
ended September 30, 2020.


?

                                       50
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

DIP Financing

On August 28, 2020, the Company Parties filed a motion (the DIP Financing
Motion) with the Bankruptcy Court to approve the indentures, credit, guarantee
and security documents governing the obligations under the senior secured
superpriority first lien and/or second lien notes to be issued by the Company or
an affiliate thereof, the proposed debtor-in-possession revolving facility (the
DIP Revolving Facility), the prosed senior secured superpriority term loan
facility (the New Term Loan Facility), the Exit Revolving Facility (as defined
herein), the Exit Term Loan Facility (as defined herein) and, if applicable, the
reinstated $1,740 million senior secured Term Loan B facility (the Term Loan B)
maturing on June 15, 2024 (collectively, the DIP Financing). On September 17,
2020, the Bankruptcy Court entered the final order approving the DIP Financing
Motion.

On October 8, 2020, the Company issued $1,150 million aggregate principal amount
of the New First Lien Notes, entered into a $625 million DIP Revolving Facility
and a $500 million DIP Term Loan Facility. The Company used the proceeds from
the offering of the New First Lien Notes, together with the proceeds of the DIP
Term Loan Facility, if any, and cash on hand, to (i) repay in full the Company's
Original First Lien Notes (ii) pay related interest, fees and expenses.

See "-(b) Liquidity and Capital Resources-Chapter 11 Cases and Other Related
Matters-DIP Financing" and "- Subsequent Events Related to the Chapter 11 Cases"
and Note 10 of the Notes to Consolidated Financial Statements for more
information on the DIP Financing.

Going Concern


In connection with the preparation of our interim unaudited consolidated
financial statements, we conducted an evaluation as to whether there were
conditions and events, considered in the aggregate, which raised substantial
doubt as to the Company's ability to continue as a going concern. As reflected
in our interim unaudited consolidated financial statements, the Company had
unrestricted cash and cash equivalents of $1,767 million and an accumulated
deficit of $8,925 million as of September 30, 2020. The Company also had
operating income of $682 million and a net loss of $352 million for the nine
months ended September 30, 2020.

As disclosed in "-Chapter 11 Cases," on April 14, 2020, the Company Parties entered into the Restructuring Support Agreement and filed the Chapter 11 Cases.


Our ability to continue as a going concern is contingent upon, among other
things, our ability to, subject to the Bankruptcy Court's approval, implement
the Plan, successfully emerge from the Chapter 11 Cases and generate sufficient
liquidity from the Restructuring to meet our obligations and operating needs. As
a result of risks and uncertainties related to (i) the Company's ability to
successfully consummate the Plan and emerge from the Chapter 11 Cases, (ii) the
effects of disruption from the Chapter 11 Cases making it more difficult to
maintain business, financing and operational relationships, together with the
Company's recurring losses from operations and accumulated deficit, substantial
doubt exists regarding our ability to continue as a going concern.

See Note 1 of the Notes to Consolidated Financial Statements for further
discussion of the Company's ability to continue as a going concern. See "-(b)
Liquidity and Capital Resources" and Note 3 of the Notes to Consolidated
Financial Statements for more information on the Restructuring and our limited
liquidity.


?

                                       51
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

Impact of COVID-19 Pandemic


On March 11, 2020, the World Health Organization declared the highly contagious
and lethal corona virus outbreak a global pandemic (COVID-19) and recommended
containment and other mitigation measures worldwide to lessen the transmission
of COVID-19. In the first half of 2020, governments from around the world,
including the United States federal government as well as state and local
governments reacted to this public health crisis, imposing travel restrictions
and restrictions on large gatherings of people, which includes school and
non-essential business closures. The rapid spread of COVID-19 and the drastic
responses being taken to curb its spread have resulted in a significant negative
impact to the global and domestic economies, which will increase the longer
these limitations are in place. In an effort to reduce the economic impacts of
COVID-19, the United States federal government has responded with multiple
stimulus bills, including the Coronavirus Aid, Relief, and Economic Security
(CARES) Act, the largest economic stimulus legislation in American history.
Despite these efforts, the short-term and long-term impacts of COVID-19 cannot
be determined.

With more people staying at home and an increased reliance on broadband and
telephone networks, the FCC issued the Keep Americans Connected Pledge on March
11, 2020, which provided for telecommunication providers, including Frontier, to
not terminate service and to waive any late payment fees for 60 days for certain
customers due to economic circumstances they are facing related to COVID-19 as
well as making WIFI hotspots available to all Americans who need them. In
addition, some of the states we operate in have issued executive orders as a
result of COVID-19 that further impact our business, including prohibiting the
disconnection of services for customers for the length of the state of
emergency. While the initial 60-day period of the Keep Americans Connected
Pledge has expired, state and federal governments continue to ask companies to
aid in pandemic response. While certain customers have taken advantage of our
COVID-19 related relief programs, as of September 30, 2020, very few had past
due balances beyond the point of normal disconnection.

In addition to committing to the Keep Americans Connected Pledge, Frontier's
response to COVID-19 has included several operational safety precautions such as
limiting our product offerings in certain markets for certain periods, including
not allowing our field service employees to enter a customer's home for a period
of time, a limitation which is no longer in effect. We are continuing to require
personal protective equipment on any employees entering a customer location. The
percentage of Frontier's employees who have reported testing positive for
COVID-19 is small and continues to track below the percentage of reported cases
both nationally and in those states in which Frontier has a significant number
of employees. Through September 30, 2020, we had not experienced any significant
disruptions in our supply chain; however, some of our business partners,
particularly those vendors operating outside of the United States, have been
more greatly impacted which has affected our service levels and distribution of
work.

As the COVID-19 pandemic continues, certain states are currently considering
legislation or other regulations to adopt additional protections for workers
impacted by COVID-19. To date, we have not experienced significant disruptions
in our workforce due to COVID-19 related absences or legislative or regulatory
changes.

Given the unprecedented and evolving nature of the pandemic and the swift moving
response of multiple levels of government as well as the uncertainty of funding
available for services provided, the full impact of these changes and potential
changes on the Company are unknown at this time.

While overall the operational and financial impacts to Frontier of the COVID-19
pandemic for the three and nine months ended September 30, 2020 were not
significant, we continue to closely monitor the ongoing impact to our employees,
our customers, our business and our results of operations. We have experienced a
slowdown in service activations and an increase in deactivations for our SMB
customers; to date, these negative impacts have been partially offset by higher
residential activations and lower churn. We also continue to closely track our
customers' payment activity as well as external factors, including the
expiration of federal wage subsidies for individuals and small businesses which
could materially impact payment trends. With more people working from home, we
have experienced higher demands on our network and higher sales activity for our
residential broadband service offering. This sustained increase in network
demand could lead to reduced network availability and potential outages, which
may impair our ability to meet customer service level commitments, lead to
higher costs, higher customer churn and potential increased regulatory actions.
These potential changes, among others, could have a material financial impact to
Frontier.

                                       52
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (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, 2019.

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).

(a)Results of Operations

Unless otherwise indicated, the discussion of the customer metrics and components of operating income that follows relates only to the Remaining Properties.

Customer counts, ARPC, and Consumer Customer Churn

                                                          As of or for the three months ended
                                       September 30, 2020                        September 30, 2019                  %
                             Consolidated   Northwest    Remaining    Consolidated    Northwest     Remaining    Remaining
                               Frontier        Ops      Properties      Frontier         Ops       Properties    Properties
Customers (in thousands)           3,620          N/A           N/A         4,193            N/A           N/A          N/A

Consumer customer metrics
Customers (in thousands)           3,305            -        3,305          3,812            341        3,471           -5%
Net customer additions
(losses)                             (36)           -          (36)           (90)           (7)          (83)         -57%
Average monthly consumer

revenue per customer $ 86.19 N/A $ 86.19$ 88.45$ 78.25$ 89.45

           -4%
Customer monthly churn              1.81%         N/A         1.81%         

2.24% 1.95% 2.27% -20%

Commercial customer
metrics
Customers (in thousands)             315          N/A           N/A           381            N/A           N/A          N/A

Broadband subscriber
metrics
Broadband subscribers (in
thousands)                         3,119            -        3,119          3,555           305         3,250           -4%
Net subscriber additions
(losses)                             (23)           -          (23)           (71)           (6)          (65)         -65%

Video (excl. DISH)
subscriber metrics
Video subscribers - in
thousands)                           518            -          518            698            31           667          -22%
Net subscriber additions
(losses)                             (42)           -          (42)           (40)           (2)          (38)          11%

DISH subscriber metrics
DISH subscribers (in
thousands)                           139            -          139            181            18           163          -15%
Net subscriber additions
(losses)                              (5)           -           (5)            (9)           (1)           (8)         -38%

Employees                         16,302            -       16,302        
19,132            950       18,182          -10%


                                       53
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

                                                                For the nine months ended
                                        September 30, 2020                         September 30, 2019                  %
                             Consolidated    Northwest     Remaining    Consolidated    Northwest     Remaining    Remaining
                               Frontier         Ops       Properties      Frontier         Ops       Properties    Properties

Consumer customer metrics
Net customer additions
(losses)                            (442)         (335)         (107)          (248)          (17)         (231)         -54%
Average monthly consumer
  revenue per customer        $    86.53$    76.74$    86.95$    88.79$    77.05$    89.94           -3%
Customer monthly churn              1.75%         1.51%         1.76%          2.12%         1.77%         2.16%         -19%

Broadband subscriber
metrics
Net subscriber additions
(losses)                            (394)         (302)          (92)          (180)          (13)         (167)         -45%

Video (excl. DISH)
subscriber metrics
Net subscriber additions
(losses)                            (142)          (29)         (113)          (140)           (7)         (133)         -15%

DISH subscriber metrics
Net subscriber additions
(losses)                             (34)          (17)          (17)           (24)           (2)          (22)         -23%


Consumer Customers

For the three and nine months ended September 30, 2020, Frontier lost 36,000, or
1%, and 107,000, or 3% of our consumer customers compared to 83,000, or 2% and
231,000, or 6% for the three and nine months ended September 30, 2019. As of
September 30, 2020, 51% of our consumer broadband customers also subscribed to
at least one other service offering. For the nine months ended September 30,
2020, we lost 1% of our consumer broadband subscribers, primarily to competitors
offering more attractive pricing or higher speeds. During the three months ended
September 30, 2020, net additions for our broadband subscribers were relatively
flat as compared to the third quarter of 2019. For the three and nine months
ended September 30, 2020 we experienced a 7% and 17% decline, respectively, in
our video subscribers as a result of shifting our focus away from the
acquisition of high cost video customers and existing customers opting for other
video services including Over the Top, in lieu of traditional video services.
During the third quarter of 2020, we also lost voice subscribers as a result of
customers choosing alternative voice products and as well as from reduced
attachment to broadband services.

Our average monthly consumer customer churn was 1.81% and 1.76% for the three
and nine months ended September 30, 2020 compared to 2.27% and 2.16% for three
and nine months ended September 30, 2019. The average monthly consumer revenue
per customer (consumer ARPC) decreased by $3.27 or 4% to $86.19 and $2.99 or 3%
to $86.95, respectively, during the three and nine months ended September 30,
2020 compared to the prior year period. The overall decrease in consumer ARPC is
primarily a result of decreased FiOS/Vantage video services along with decreased
consumer voice services, slightly offset by increased data equipment revenues.

                                       54

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

Financial Results

                                                For the three months ended September 30,
                                            2020                                            2019                              % Change
                       Consolidated          Northwest      Remaining     Consolidated     Northwest     Remaining    Consolidated   Remaining
                         Frontier               Ops        Properties       Frontier        Ops (1)     Properties      Frontier     Properties

Data and Internet
services               $         838          $        -   $      838    $         928    $       77$      851            -10%          -2%
Voice services                   500                   -          500              621            47           574            -19%         -13%
Video services                   186                   -          186              244            11           233            -24%         -20%
Other                            103                   -          103              113             7           106             -9%          -3%
Revenue from
contracts
with customers                 1,627                   -        1,627            1,906           142         1,764            -15%          -8%
Subsidy and other
revenue                           99                   -           99               91             6            85              9%          16%
Revenue                        1,726                   -        1,726            1,997           148         1,849            -14%          -7%

Operating expenses
(2):
Network access
expenses                         226                   -          226              307            12           295            -26%         -23%
Network related
expenses                         431                   -          431              464            20           444             -7%          -3%
Selling, general
and
administrative
expenses                         404                   -          404              445            17           428             -9%          -6%
Depreciation and
amortization                     392                   -          392              422              -          422             -7%          -7%
Goodwill impairment                 -                  -             -             276              -          276           -100%        -100%
Loss on disposal of
Northwest
Operations                          -                  -             -              30              -           30           -100%        -100%
Restructuring costs
and
other charges                      3                   -            3               27              -           27            -89%         -89%
Total operating
expenses              $        1,456        $          -   $    1,456$       1,971$       49$    1,922            -26%         -24%

Operating income
(loss)                           270                   -          270               26            99           (73)           938%        -470%

Consumer                         859                   -          859            1,024            81           943            -16%          -9%
Commercial                       768                   -          768              882            61           821            -13%          -6%
Revenue from
contracts
with customers                 1,627                   -        1,627            1,906           142         1,764            -15%          -8%
Subsidy and other
revenue                           99                   -           99               91             6            85              9%          16%
Total revenue          $       1,726          $        -   $    1,726$       1,997$      148$    1,849            -14%          -7%

(1)Amounts represent the financial results of the Northwest Operations for the three months ended September 30, 2019.

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

                                       55

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

                                              For the nine months ended September 30,
                                         2020                                         2019                              % Change
                       Consolidated     Northwest     Remaining     Consolidated     Northwest     Remaining    Consolidated   Remaining
                         Frontier        Ops (1)     Properties       Frontier        Ops (2)     Properties      Frontier     Properties

Data and Internet
services              $       2,644$      102$    2,542$       2,858$      234$   2,624             -7%          -3%
Voice services                1,595            57         1,538            1,900           140         1,760            -16%         -13%
Video services                  608            13           595              772            35           737            -21%         -19%
Other                           328            12           316              357            27           330             -8%          -4%
Revenue from
contracts
with customers                5,175           184         4,991            5,887           436         5,451            -12%          -8%
Subsidy and other
revenue                         285             8           277              278            19           259              3%           7%
Revenue                       5,460           192         5,268            6,165           455         5,710            -11%          -8%

Operating expenses
(3):
Network access
expenses                        767            14           753              963            40           923            -20%         -18%
Network related
expenses                      1,305            26         1,279            1,365            59         1,306             -4%          -2%
Selling, general
and
administrative
expenses                      1,255            26         1,229            1,346            54         1,292             -7%          -5%
Depreciation and
amortization                  1,204              -        1,204            1,360            60         1,300            -11%          -7%
Goodwill impairment                -             -             -           5,725              -        5,725           -100%        -100%
Loss on disposal of
Northwest
Operations                      160              -          160              414              -          414            -61%         -61%
Restructuring costs
and
other charges                    87              -           87               86             2            84              1%           4%
Total operating
expenses              $       4,778$       66$    4,712$      11,259$      215$   11,044            -58%         -57%

Operating income
(loss)                          682           126           556           (5,094)          240        (5,334)          -113%        -110%

Consumer                      2,729           102         2,627            3,151           243         2,908            -13%         -10%
Commercial                    2,446            82         2,364            2,736           193         2,543            -11%          -7%
Revenue from
contracts
with customers                5,175           184         4,991            5,887           436         5,451            -12%          -8%
Subsidy and other
revenue                         285             8           277              278            19           259              3%           7%
Total revenue         $       5,460$      192$    5,268$       6,165$      455$   5,710            -11%          -8%

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

(2)Amounts represent the financial results of the Northwest Operations for the nine months ended September 30, 2019.

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

                                       56

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

                                    REVENUE

Revenue for our consumer and commercial customers was as follows:

                                    For the three months ended
                                           September 30,            $ Increase      % Increase
   ($ in millions)                      2020            2019        (Decrease)      (Decrease)

   Consumer                         $        859$       943$       (84)         (9) %
   Commercial                                768            821             (53)         (6) %

Revenue from contracts with

   customers (1)                           1,627          1,764            (137)         (8) %
   Subsidy and other revenue                  99             85              14          16  %
   Total revenue                    $      1,726$     1,849$       (123)         (7) %

                                       For the nine months ended
                                             September 30,          $ Increase      % Increase
   ($ in millions)                      2020            2019        (Decrease)      (Decrease)

   Consumer                         $      2,627$     2,908$       (281)        (10) %
   Commercial                              2,364          2,543            (179)         (7) %

Revenue from contracts with

   customers (1)                           4,991          5,451            (460)         (8) %
   Subsidy and other revenue                 277            259              18           7  %
   Total revenue                    $      5,268$     5,710$       (442)         (8) %

(1)Amounts include approximately $16 million and $17 million and $50 million and $52 million of lease revenue for each of the three and nine months ended September 30, 2020 and 2019, respectively.

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


We generate revenues primarily through either a monthly recurring fee or a fee
based on usage, and revenue recognition is not dependent upon significant
judgments by management, with the exception of a determination of the provision
for uncollectible amounts.

For the three and nine months ended September 30, 2020, revenues decreased 7%
and 8%, respectively, as compared to the same periods in 2019. Decreases in
consumer revenues were primarily driven by the 5% decline in consumer customers
when compared to September 30, 2019, combined with decreased ARPC (as described
above) resulting in reduced revenues for consumer voice services, video
services, and to a lesser extent, data and internet services.

Decreases in commercial revenues for the three and nine months ended September
30, 2020 were primarily driven by reductions in wholesale revenues of 1% and 4%,
respectively, which comprised approximately 53% of our commercial revenues. The
decline in wholesale revenues were primarily a result of rate declines for our
network access services. Our SME revenues, decreased 12% and 10%, for the three
and nine months ended September 30, 2020 respectively, primarily as a result of
a decline in small business customers as compared to September 30, 2019.

The increases in subsidy and other revenue, were driven primarily by transition services provided in connection with the divestiture of the Northwest Operations. This increase was partially offset by scheduled reductions in subsidy funding levels, primarily funding related to CAF Phase II subsidies.

                                       57

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

                                    REVENUE

                                    For the three months ended
                                           September 30,            $ Increase      % Increase
   ($ in millions)                      2020            2019        (Decrease)      (Decrease)

   Data and Internet services       $        838$       851$        (13)         (2) %
   Voice services                            500            574             (74)        (13) %
   Video services                            186            233             (47)        (20) %
   Other                                     103            106              (3)         (3) %

Revenue from contracts with

   customers (1)                           1,627          1,764            

(137) (8) %

   Subsidy and other revenue                  99             85              14          16  %
   Total revenue                    $      1,726$     1,849$       (123)         (7) %

                                     For the nine months ended
                                           September 30,            $ Increase      % Increase
   ($ in millions)                      2020            2019        (Decrease)      (Decrease)

   Data and Internet services       $      2,542$     2,624$        (82)         (3) %
   Voice services                          1,538          1,760            (222)        (13) %
   Video services                            595            737            (142)        (19) %
   Other                                     316            330             (14)         (4) %

Revenue from contracts with

   customers (1)                           4,991          5,451            (460)         (8) %
   Subsidy and other revenue                 277            259              18           7  %
   Total revenue                    $      5,268$     5,710$       (442)         (8) %


(1)Amounts include approximately $16 million and $17 million and $50 million and
$52 million, of lease revenue for the each of the three and nine months ended
September 30, 2020 and 2019, respectively.

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


Data and Internet Services

Data and internet services revenue for the three and nine months ended September
30, 2020 decreased 2% and 3%, respectively, as compared with the comparative
periods in 2019. Broadband and data services revenues comprised 61% or $515
million, and 61% or $1,544 million, respectively of total Data and internet
services revenue, while network access revenues comprised 39% or $323 million,
and 39% or $998 million. Network access revenues include our data transmission
services to high volume commercial customers and other carriers with dedicated
high capacity circuits including services to wireless providers (wireless
backhaul).

For the three and nine months ended September 30, 2020, broadband and data
services revenue decreased by 1% and 3%, respectively, compared to the
corresponding periods in 2019. The decrease was primarily driven by a loss of
Consumer and SME customers combined with decreased other data services revenue.
For the three and nine months ended September 30, 2020, network access revenues
declined 1% and 4%, respectively, compared to the same periods in 2019. This
decrease was due to the migration of our carrier customers from legacy
technology circuits to lower priced ethernet circuits.

                                       58

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

Voice Services

Voice services include traditional local and long-distance wireline services, data-based Voice over Internet Protocol (VoIP) services, as well as voice messaging services offered to our consumer and commercial customers. Voice services also include the long-distance voice origination and termination services that we provide to our commercial customers and other carriers.

The decrease of 13% for the each of the three and nine month periods ended September 30, 2020 in voice services revenue was primarily due to a net loss in consumer customers and a net loss in commercial customers combined with a reduction in voice services being bundled with broadband services.

Video Services


Video services include revenues generated from services provided directly to
consumer customers through the FiOS video and Vantage video brands, and through
Dish satellite TV services.

The decrease of 20% and 19%, respectively for the three and nine months ended
September 30, 2020 in video services revenue was primarily due to net losses in
FiOS and Vantage terrestrial video customers.

Other


Other customer revenue includes switched access revenue and sales of Customer
Premise Equipment (CPE) to our business customers and directory services.
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 (switched access). These services are primarily billed on a
minutes-of-use basis applying tariffed rates filed with the FCC or state
agencies.

The decrease in other revenue for the three and nine months ended September 30,
2020 was primarily driven by decreases in switched access revenue due to reduced
rates mandated by the Universal Service Fund/Intercarrier Compensation Report
and Order with a related decline in operating expenses and activation associated
fees.

Subsidy and other revenue

Subsidy and other revenue includes revenue generated from cost subsidies from
state and federal authorities, including the Connect America Fund Phase II as
well as revenue generated from the transition services provided in connection
with our divestiture of the Northwest Operations.

The increases in subsidy and other revenue, were driven primarily by $25 million
in transition services provided to the purchaser of the Northwest Operations
since the May 1, 2020 sale date. This increase was partially offset by scheduled
reductions in subsidy funding levels, primarily funding related to CAF Phase II
subsidies.

                                       59
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

                               OPERATING EXPENSES

                            NETWORK ACCESS EXPENSES

                                   For the three months ended
                                         September 30,                 $ Increase      % Increase
  ($ in millions)                       2020              2019         (Decrease)      (Decrease)

  Network access expenses     $               226    $         295     $       (69)        (23) %

                                   For the nine months ended
                                         September 30,                 $ Increase      % Increase
  ($ in millions)                       2020              2019         (Decrease)      (Decrease)

  Network access expenses     $               753    $         923     $      (170)        (18) %


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, 2020, the decrease in network access expense was driven by lower
video content costs as a result of a decline in video customers and non-renewal
of certain content agreements as well as decreased CPE costs.

                            NETWORK RELATED EXPENSES

                                For the three months ended
                                       September 30,              $ Increase     % Increase
  ($ in millions)                    2020            2019         (Decrease)     (Decrease)

  Network related expenses    $          431    $         444     $      (13)        (3)  %

                                 For the nine months ended
                                       September 30,              $ Increase     % Increase
  ($ in millions)                    2020            2019         (Decrease)     (Decrease)

  Network related expenses    $        1,279$       1,306$      (27)        (2)  %


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. For the
three and nine months ended September 30, 2020 the decrease in Network related
expenses was driven by decreased compensation costs related to lower employee
headcount, slightly offset by the abandonment of certain in-progress capital
projects during the quarter.

                                       60

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

                  SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

                                For the three months ended
                                       September 30,              $ Increase     % Increase
   ($ in millions)                 2020              2019         (Decrease)     (Decrease)

   Selling, general and
   administrative expenses    $          404    $         428     $      (24)        (6)  %

                                 For the nine months ended
                                       September 30,              $ Increase     % Increase
   ($ in millions)                 2020              2019         (Decrease)     (Decrease)

   Selling, general and
   administrative expenses    $        1,229$       1,292$      (63)        (5)  %


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. For the three and nine months ended September 30,
2020, the decrease in SG&A expenses was driven by decreased compensation costs
related to lower employee headcount and reduced property taxes.

Pension and OPEB costs


Frontier allocates certain pension/OPEB expense to network related expenses and
SG&A expenses. Total consolidated pension and OPEB service costs for the three
and nine months ended September 30, 2020 and 2019 were as follows:

                              For the three months ended         For the nine months ended
                                    September 30,                      September 30,
  ($ in millions)              2020                 2019            2020            2019

  Total pension/OPEB
  service costs             $         29        $        25     $         88    $        77
  Less: costs
  capitalized into
  capital expenditures                (5)                (5)             (18)           (18)
  Net pension/OPEB
  costs                     $         24        $        20     $         70    $        59


                                       61
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

                     DEPRECIATION AND AMORTIZATION EXPENSE

                                For the three months ended
                                       September 30,              $ Increase     % Increase
   ($ in millions)                 2020              2019         (Decrease)     (Decrease)

   Depreciation expense       $          311    $         321     $      (10)         (3) %
   Amortization expense                   81              101            (20)        (20) %
   Depreciation and
   Amortization expense       $          392    $         422     $      (30)         (7) %

                                 For the nine months ended
                                       September 30,              $ Increase     % Increase
   ($ in millions)                 2020              2019         (Decrease)     (Decrease)

   Depreciation expense       $          941    $         968     $      (27)         (3) %
   Amortization expense                  263              332            (69)        (21) %
   Depreciation and
   Amortization expense       $        1,204$       1,300$      (96)         (7) %

The decreases in depreciation expense for the three and nine months ended September 30, 2020 were primarily driven by lower asset bases, refer to Note 6.

The decreases in amortization expense for the three and nine months ended September 30, 2020 were primarily driven by the accelerated method of amortization related to customer bases acquired in 2010, 2014, and 2016.

                    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.
There was no additional loss on disposal recorded during the third quarter of
2020.

                     RESTRUCTURING COSTS AND OTHER CHARGES

                              For the three months ended September 30,     $ Increase     % Increase
   ($ in millions)                   2020                     2019         (Decrease)     (Decrease)

   Restructuring costs and
   other charges               $                3        $          27     $      (24)        (89) %

                              For the nine months ended September 30,      $ Increase     % Increase
   ($ in millions)                   2020                     2019         (Decrease)     (Decrease)

   Restructuring costs and
   other charges               $               87        $          84     $        3           4  %


Restructuring costs and other charges consist of expenses related to changes in
the composition of our business, including workforce reductions, transformation
initiatives, other restructuring expenses, and corresponding changes to
retirement plans resulting from a voluntary severance program.

In 2018, Frontier launched a strategic transformation program with the aim of re-positioning the Company to be

                                       62

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

better able to react to current and future business and operational challenges
and to create long-term sustainable value. This program was reduced in scope and
largely completed during the first half of 2019.

During the three months ended September 30, 2020, we incurred $3 million in expenses consisting of severance and employee costs resulting from workforce reductions.


For the nine months ended September 30, 2020, the $87 million of restructuring
costs and other charges were comprised of $8 million in costs related to
transformation initiatives, $7 million in severance expense, and $72 million in
consulting and advisory costs related to our balance sheet restructuring
activities, respectively.

Following the filing of the Chapter 11 Cases, Frontier recorded all consulting
and advisory costs related to our balance sheet restructuring activities outside
of operating income in "Reorganization Items, net".

                     OTHER NON-OPERATING INCOME AND EXPENSE

                                   For the three months ended
                                         September 30,                $ Increase      % Increase
   ($ in millions)                   2020                2019         (Decrease)      (Decrease)

   Investment and other
   loss, net                   $             (14)   $         (10)    $        (4)         40  %
   Reorganization items,
   net                         $            (131)   $            -    $      (131)        100  %
   Interest expense            $            (121)   $        (382)$       261         (68) %
   Income tax benefit          $             (11)   $         (21)    $        10         (48) %

                                   For the nine months ended
                                         September 30,                $ Increase      % Increase
   ($ in millions)                   2020                2019         (Decrease)      (Decrease)

   Investment and other
   loss, net                   $             (29)   $         (28)    $        (1)          4  %
   Pension settlement costs    $            (159)   $            -    $      (159)        100  %
   Loss on extinguishment
   of debt                     $                -   $         (20)    $        20           NM
   Reorganization items,
   net                         $            (273)   $            -    $      (273)        100  %
   Interest expense            $            (664)   $      (1,144)$       480         (42) %
   Income tax benefit          $             (91)   $        (537)$       446           NM

   NM - Not meaningful

Investment and other loss, net

Investment and other loss, net for the nine months ended September 30, 2020 and 2019 included $35 million and $34 million, respectively, of non-operating pension and OPEB expense.

Pension settlement


During the nine months ended September 30, 2020, lump sum pension settlement
payments to terminated or retired individuals amounted to $465 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.

Loss on extinguishment of debt


Frontier recorded a loss on early extinguishment of debt of $20 million for the
nine months ended September 30, 2019 driven by the write-off of unamortized
original issuance costs that were retired along with the Term Loan A and the
2016 CoBank Credit Agreement.

                                       63
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

Reorganization items, net

The Company has incurred and will continue to incur significant costs associated
with the reorganization, primarily the write-off of certain debt issuance costs
and net discounts, financing costs, and legal and professional fees. Subsequent
to the Petition Date, these costs are being expensed as incurred and are
expected to significantly affect our consolidated results of operations. During
the three and nine months ended September 30, 2020, Frontier incurred $131
million and $273 million, respectively, million in reorganization costs
associated with the restructuring of our balance sheet.

Interest expense


For the nine months ended September 30, 2020 interest expense decreased $480
million, or 42%, as compared to the same period in 2019. Beginning on the
Petition Date, we ceased recording interest expense for our unsecured debt. The
contractual interest is $475 million higher than what we have recorded for our
debt obligations for the nine months ended September 30, 2020.

Income tax benefit


For the three and nine months ended September 30, 2020, Frontier recorded income
tax benefits of $11 million and $91 million, respectively on the pre-tax income
of $4 million and pretax loss of $443 million, respectively. The effective tax
rates on our pretax loss for the three and nine months ended September 30, 2020
were (336.1)% and 20.6%, respectively, compared with 5.6% and 8.5%,
respectively, for the pretax loss for the three and nine months ended September
30, 2019.

Basic and diluted net loss attributable to Frontier common shareholders


Basic and diluted net loss attributable to Frontier common shareholders for the
first nine months of 2020 was $352 million, or a loss of $3.37 per share, as
compared to a net loss of $5,749 million, or $55.26 per share, in the first nine
months of 2019. For 2020, our net loss was driven by non-cash pension settlement
charges of $159 million and $273 million of net reorganization items.


?

                                       64
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

(b) Liquidity and Capital Resources


Historically, our principal liquidity requirements have been to maintain and
expand our business, pay principal and interest obligations on our indebtedness,
including our Term Loan B, Revolver, the notes and other expenses, and for
capital expenditures to replace, upgrade, expand and improve our networks and
infrastructure, to integrate acquired businesses and to separate assets and
systems for sale.

Our ability to continue as a going concern is dependent upon our ability to,
subject to the Bankruptcy Court's approval, implement the Plan, successfully
emerge from the Chapter 11 Cases and generate sufficient liquidity from the
Restructuring to meet our obligations and operating needs. These factors,
together with the Company's recurring losses from operations and accumulated
deficit, create substantial doubt about the Company's ability to continue as a
going concern.

Refer to "-Chapter 11 Cases and Other Related Matters" for more information on the Chapter 11 Cases and their effect on our liquidity.

Analysis of Cash Flows


As of September 30, 2020, we had unrestricted cash and cash equivalents
aggregating $1,767 million. For the nine months ended September 30, 2020, we
used cash flow from operations, cash on hand, proceeds from the sale of the
Northwest Operations, and cash from prior year borrowings to principally fund
all of our cash investing and financing activities, which were primarily capital
expenditures and the repayment of the Revolver.

On May 1, 2020, we completed the sale of the Northwest Operations for gross
proceeds of $1,352 million, subject to certain closing adjustments. Net of
funding certain pension and other retiree medical liabilities, funding certain
escrows and other closing adjustments, we received $1,131 million in proceeds.
Revenues for the Northwest Operations represented approximately 7% of
consolidated revenue for the year ended December 31, 2019.

As of September 30, 2020, we had a working capital deficit of $4,474 million
compared to surplus of $233 million at December 31, 2019. The primary driver for
the working capital deficit at September 30, 2020 was the acceleration of the
maturities of our long-term debt that resulted from our filing of the Chapter 11
Cases.

                      Cash Flows from Operating Activities

Cash flows provided by operating activities increased $389 million to $1,492
million for the nine months ended September 30, 2020 as compared to the
corresponding period in 2019. The overall increase in operating cash flows was
the result of favorable changes in working capital, primarily attributable to
withholding payment of pre-petition trade accounts payable subsequent to the
filing of the Chapter 11 Cases as well as a reduction in cash payments for
interest as compared to the comparative period in 2019.

We paid $6 million and $5 million in net cash taxes during the nine months ended September 30, 2020 and September 30, 2019, respectively.

                      Cash Flows from Investing Activities

Cash flows provided by investing activities increased $1,135 million to $315 million for the nine months ended September 30, 2020 as compared to the corresponding period in 2019. The primary driver of this increase were cash proceeds of $1,131 million received for the sale of the Northwest Operations.

Capital Expenditures:


For the nine months ended September 30, 2020 and 2019, our capital expenditures
were $825 million and $898 million, respectively. Capital expenditures related
to CAF Phase II are included in our reported amounts for capital expenditures.
This reduction in capital expenditures was primarily driven by delays in
payments for certain prepetition capital expenditures following the filing of
the Chapter 11 Cases.

                                       65
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

                      Cash Flows from Financing Activities

DIP Financing Costs:

In connection with the filing of the Chapter 11 Cases, Frontier recorded approximately $19 million in financing costs related to the issuance of the DIP Credit Facility for the nine months ended September 30, 2020.

Debt Issuances and Debt Reductions:


On August 28, 2020, the Company Parties filed the DIP Motion with the Bankruptcy
Court to approve the indentures, credit, guarantee and security documents
governing the New First Lien Notes, the DIP Revolving Facility, the DIP Term
Loan Facility, the Exit Revolving Facility, the Exit Term Loan Facility and, if
applicable, the reinstated Term Loan B. On September 17, 2020, the Bankruptcy
Court entered the final order approving the DIP Financing Motion.

On October 8, 2020, the Company issued $1,150 million aggregate principal amount
of New First Lien Notes, entered into a $625 million DIP Revolving Facility and
a $500 million DIP Term Loan Facility. The Company used the proceeds from the
offering of the New First Lien Notes, together with the proceeds of the DIP Term
Loan Facility and cash on hand, to (i) repay in full the Company's Original
First Lien Notes and (ii) pay related interest, fees and expenses.

During the nine months ended September 30, 2020, Frontier used cash on hand for
the scheduled and early retirement of $753 million principal amount of senior
indebtedness.

On March 15, 2019, we completed a private offering of $1,650 million aggregate
principal amount of the Original First Lien Notes. The Original First Lien Notes
are guaranteed by each of the Company's subsidiaries that guarantees its senior
secured credit facilities. The guarantees are unsecured obligations of the
guarantors equal in right of payment to all of the guarantor's obligations under
the Company's senior secured credit facilities and certain other permitted
future senior indebtedness and senior in right of payment with all subordinated
obligations of the guarantors. The Original First Lien Notes are secured on a
first-priority basis by all the assets that secure Frontier's obligations under
its senior secured credit facilities on a first-priority basis. Interest on the
Original First Lien Notes is payable to holders of record semi-annually in
arrears on April 1 and October 1 of each year, commencing October 1, 2019.

During the nine months ended September 30, 2019, Frontier used cash on hand for
the scheduled retirement of $363 million principal amount of senior
indebtedness. In addition, Frontier used the proceeds from the offering of
Original First Lien Notes, together with cash on hand, to (i) repay in full the
outstanding borrowings under the senior secured term loan A facility under the
JPM Credit Agreement, which otherwise would have matured in March 2021, (ii)
repay in full the outstanding borrowings under the 2016 CoBank Credit Agreement,
which otherwise would have matured in October 2021, and (iii) pay related
interest, fees and expenses.

See "-Chapter 11 Cases and Other Related Matters-DIP Financing" and "-Subsequent Events Related to the Chapter 11 Cases" for more information about the DIP Financing.

Capital Resources


We are highly leveraged, and a substantial portion of our liquidity needs arise
from debt service on our outstanding indebtedness and from funding the costs of
operations, working capital and capital expenditures. Our primary sources of
cash are cash flows from operations, cash on hand and proceeds from debt
borrowings, including issuances of long-term debt and our $625 million undrawn
borrowing capacity under the DIP Revolving Facility (as reduced by $90 million
of Letters of Credit.)  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, 2020, 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 due under the
Plan, pay taxes and make other payments due under the Plan. 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. We completed the sale of the Northwest Operations on May 1, 2020.
Net of pension funding, certain escrows, and other closing adjustments, we
received $1,131 million in proceeds.

                                       66

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

However, our ability to continue as a going concern is dependent upon our
ability to, subject to the Bankruptcy Court's approval, implement the Plan,
successfully emerge from the Chapter 11 Cases and generate sufficient liquidity
from the Restructuring to meet our obligations and operating needs. Refer to
"-Chapter 11 Cases and Other Related Matters" for a description of the New First
Lien Notes, DIP Term Loan Facility, Exit Term Loan Facility, DIP Revolving
Facility and Exit Revolving Facility and for more information on the terms of
the Restructuring Support Agreement, the Chapter 11 Cases and the effects of
both on our liquidity.

Term Loan and Revolving Credit Facilities

See "-Chapter 11 Cases and Other Related Matters-DIP Financing" and "-Subsequent Events Related to the Chapter 11 Cases" for more information about the DIP Financing.

JP Morgan Credit Facilities:


On February 27, 2017, Frontier entered into a first amended and restated credit
agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the
lenders party thereto, pursuant to which Frontier combined its revolving credit
agreement, dated as of June 2, 2014, and its term loan credit agreement, dated
as of August 12, 2015. Under the JPM Credit Agreement (as amended to date, the
JPM Credit Agreement), Frontier has the $1,740 million Term Loan B maturing on
June 15, 2024. In addition, Frontier had an $850 million secured revolving
credit facility maturing on February 27, 2024 (the Revolver) which was repaid in
full on September 17, 2020, as described herein. The maturity of the Term Loan
B, if still outstanding, will be accelerated in the following circumstances: (i)
if, 91 days before the maturity date of any series of Senior Notes maturing in
2020, 2023 and 2024, more than $500 million in principal amount remains
outstanding on such series? or (ii) if, 91 days before the maturity date of the
first series of Senior Notes maturing in 2021 or 2022, more than $500 million in
principal amount remains outstanding, in the aggregate, on the two series of
Senior Notes maturing in such year. As of December 31, 2019, approximately $227
million principal amount, in the aggregate, remains outstanding on the two
series of senior notes maturing in 2020 and $309 million principal amount, in
the aggregate, remains outstanding on the two series of senior notes maturing in
2021.

The determination of interest rates for the Term Loan B under the JPM Credit
Agreement is based on margins over the Base Rate (as defined in the JPM Credit
Agreement) or over LIBOR, at the election of Frontier. Interest rate margins on
the Term Loan B are 2.75% for Base Rate borrowings and 3.75% for LIBOR
borrowings. The security package under the JPM Credit Agreement includes pledges
of the equity interests in certain Frontier subsidiaries and guarantees by
certain Frontier subsidiaries.

On September 17, 2020, Frontier repaid the $749 million of outstanding principal under the Revolver, plus accrued interest. The repayment in full of all revolving loans outstanding under the JPM Credit Agreement was a condition precedent to the entry into the DIP Revolving Facility.


On March 15, 2019, Frontier used proceeds from the offering of Original First
Lien Notes, together with cash on hand, to repay in full the outstanding
borrowings under its $1,625 million senior secured Term Loan A facility, which
otherwise would have matured in March 2021, as described above under "Existing
Debt Issuances and Reductions."

CoBank Credit Facilities:


Frontier had a $315 million senior term loan facility drawn in October 2016 (as
amended to date, the 2016 CoBank Credit Agreement) with CoBank, ACB, as
administrative agent, lead arranger and a lender, and the other lenders. On
March 15, 2019, Frontier used proceeds from the offering of the Original First
Lien Notes, together with cash on hand, to repay in full the outstanding
borrowings under the 2016 CoBank Credit Agreement, which otherwise would have
matured in October 2021.

Frontier had a separate $350 million senior term loan facility drawn in 2014
(the 2014 CoBank Credit Agreement) with CoBank which was repaid in full on July
3, 2018, as described above under "Existing Debt Issuances and Reductions."

                                       67

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

Letters of Credit

Frontier has a Continuing Agreement for Standby Letters of Credit with Deutsche
Bank AG New York Branch (the LC Agreement). After the filing of the Chapter 11
Cases, Frontier can no longer issue new letters of credit under the Revolver. As
of September 30, 2020, $49 million and $90 million of undrawn Standby Letters of
Credit had been issued under the LC Agreement and Revolver respectively. Letters
of credit under the LC Agreement are secured by a security package identical to
those contained in the JPM Credit Amendment.

Covenants


The terms and conditions contained in our indentures and the JPM Credit
Agreement include the timely payment of principal and interest when due, the
maintenance of our corporate existence, keeping proper books and records in
accordance with GAAP, restrictions on the incurrence of liens on our assets
securing indebtedness and our subsidiaries' assets, restrictions on the
incurrence of indebtedness by our subsidiaries and restrictions on asset sales
and transfers, mergers and other changes in corporate control subject to
important qualifications and exceptions.

The covenants under the JPM Credit Agreement provide for junior lien capacity on any indebtedness permitted under the credit agreement, while limiting the incurrence of first lien debt.


For information about covenants related to the DIP Financing, new term loan, and
New First Lien Notes, refer to Liquidity and Capital Resources-Subsequent Events
Related to the Chapter 11 Cases.

The indentures governing our secured notes and senior notes and debentures limit
our ability to create liens on our assets securing indebtedness and our
subsidiaries' assets or merge or consolidate with other companies, our
subsidiaries' ability to borrow funds and to engage in change of control
transactions, subject to important exceptions and qualifications. Our secured
notes, other than the New First Lien Notes, are guaranteed by each of our
subsidiaries that guarantees the JPM Credit Agreement. In addition, the secured
notes are secured on a first-priority basis and a second-priority basis, as
applicable, by all the assets that secure our obligations under the JP Credit
Agreement on a first-priority basis.

On April 14, 2020, the Company Parties filed the Chapter 11 Cases in the Bankruptcy Court. The filing of the Chapter 11 Cases constituted an Event of Default under our debt covenants.

Shareholder Rights Plan


On July 1, 2019, our Board of Directors adopted a shareholder rights plan
designed to protect our net operating losses for tax purposes (NOLs) from the
effect of limitations imposed by federal and state tax rules following a change
in the ownership of our stock. This plan was designed to deter an "ownership
change" (as defined in IRC Section 382) from occurring, and therefore protect
our ability to utilize our federal and state net operating loss carryforwards in
the future. Pursuant to the shareholder rights plan, if a shareholder (or group
of affiliated or associated persons) acquires beneficial ownership of 4.9
percent or more of the outstanding shares of Frontier's common stock without
prior approval of our Board of Directors or without meeting certain customary
exceptions (such as a result of repurchases of stock by Frontier, dividends or
distributions by Frontier or certain inadvertent actions by our stockholders),
the rights would become exercisable and entitle shareholders (other than the
acquiring shareholder or group) to purchase additional shares of Frontier at a
significant discount and result in significant dilution in the economic interest
and voting power of acquiring shareholder or group. For purposes of calculating
percentage ownership under the plan, "outstanding shares" of common stock
include all of the shares of common stock actually issued and outstanding.
Beneficial ownership is determined as provided in the rights plan and generally
includes, without limitation, any ownership of securities a person would be
deemed to actually or constructively own for purposes of Section 382 of the IRC
or the regulations promulgated thereunder.

The plan is not meant to be an anti-takeover measure and our Board of Directors
has established a procedure to consider requests to exempt the acquisition of
our common stock from the rights plan, if such acquisition would not limit or
impair the availability of our NOLs. Such determination will be made in the sole
and absolute discretion of our Board of Directors, upon request by any person
prior to the date upon which such person would otherwise become the beneficial
owner of 4.9 percent or more of the outstanding shares of our common stock. In
addition, if our Board of Directors determines in good faith that a person has
inadvertently become the beneficial owner of 4.9

                                       68

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

percent or more of the outstanding shares of our common stock, and such person
divests as promptly as practicable a sufficient number of shares of common stock
so that such person beneficially owns less than 4.9 percent, then such person
will not cause the rights under the plan to become exercisable.

This summary description of the rights plan does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement, dated as of
July 1, 2019, by and between us and Computershare Trust Company, N.A., as Rights
Agent, filed as an exhibit to our Periodic Report on Form 8-K filed on July 1,
2019.

Chapter 11 Cases and Other Related Matters

Restructuring Support Agreement


On April 14, 2020, the Company Parties entered into the Restructuring Support
Agreement with the Consenting Noteholders, pursuant to which the Consenting
Noteholders agreed, subject to certain terms and conditions, to support the
Restructuring of the existing debt of, existing equity interests in, and certain
other obligations of the Company Parties, pursuant to a pre-arranged Plan to be
filed in the Chapter 11 Cases.

In accordance with the Restructuring Support Agreement, the Consenting Noteholders agreed, among other things, to:

(i) support the transactions (the Restructuring Transactions) described in, within the timeframes outlined in, and in accordance with the Restructuring Support Agreement;


(ii) not take any action, directly or indirectly, that is reasonably likely to
interfere with acceptance, implementation, or consummation of the Restructuring
Transactions;

(iii) vote each of its Senior Notes Claims (as defined in the Restructuring Support Agreement) to accept the Plan; and

(iv) not transfer Senior Notes Claims held by each Consenting Noteholders except with respect to limited and customary exceptions, including requiring any transferee to either already be bound or become bound by the terms of the Restructuring Support Agreement.

In accordance with the Restructuring Support Agreement, the Company Parties agreed, among other things, to:

(i) support and take all steps reasonably necessary and desirable to consummate the Restructuring Transactions in accordance with the Restructuring Support Agreement;


(ii) support and take all steps reasonably necessary and desirable to obtain
entry of (a) the final orders of the Bankruptcy Court authorizing the relevant
Company Parties' entry into the documents governing a senior secured
superpriority DIP financing facility, (b) the order of the Bankruptcy Court
approving the disclosure statement related to the Plan pursuant to section 1125
of the Bankruptcy Code and (c) the Bankruptcy Court's order confirming the Plan;

(iii) use commercially reasonable efforts to obtain any and all required governmental, regulatory, and/or third-party approvals for the Restructuring Transactions;


(iv) act in good faith and use commercially reasonable efforts to execute and
deliver certain required documents and agreements to effectuate and consummate
the Restructuring Transactions as contemplated by the Restructuring Support
Agreement;

(v) operate their businesses in the ordinary course of business in a manner consistent with the Restructuring Support Agreement and past practice and use commercially reasonable efforts to preserve their businesses; and

(vi) not, directly or indirectly, object to, delay, impede, or take any other action to interfere with acceptance, implementation, or consummation of the Restructuring Transactions.


The Restructuring Support Agreement may be terminated upon the occurrence of
certain events, including the failure to meet specified milestones related to
consummation of the Plan. In addition, the Restructuring Support Agreement shall
automatically terminate on the Effective Date of the Plan once all conditions
precedent to the Plan have been satisfied.


?

                                       69
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

Chapter 11 Cases

As an initial step towards implementation of the Plan, on the Petition Date, the
Company Parties filed the Chapter 11 Cases in the Bankruptcy Court. Each Company
Party continues to operate its business as a "debtor in possession" under the
jurisdiction of the Bankruptcy Court and in accordance with the applicable
provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The
Chapter 11 Cases are being jointly administered under the caption In re Frontier
Communications Corporation., et al., Case No. 20-22476 (RDD).

In general, as debtors-in-possession under the Bankruptcy Code, we are
authorized to continue to operate as an ongoing business, however, we may not
engage in transactions outside the ordinary course of business without the prior
approval of the Bankruptcy Court. To that end, on the Petition Date, the Company
Parties filed the First Day Motions, which were approved after a final hearing
held on May 22, 2020. Pursuant to the First Day Motions, the Bankruptcy Court
authorized us to conduct our business activities in the ordinary course,
including, among other things and subject to the terms and conditions of such
orders: continue to operate our cash management system and honor certain
prepetition obligations related thereto; maintain existing business forms;
continue to perform intercompany transactions; obtain super priority
administrative expense status to post-petition intercompany balances; pay
certain prepetition claims of critical vendors, lien claimants and section
503(b)(9) of the Bankruptcy Code claimants in the ordinary course of business on
a post-petition basis; pay prepetition employee wages, salaries, other
compensation and reimbursable employee expenses and continue employee benefits
programs; pay obligations under prepetition insurance policies, continue to pay
certain brokerage fees; renew, supplement, modify or purchase insurance
coverage; maintain our surety bond program; pay certain prepetition taxes and
fees; honor certain prepetition obligations to customers and continue certain
customer programs in the ordinary course of business; and pay or honor
prepetition claims of content providers.

Plan and Disclosure Statement


On May 15, 2020, the Company Parties filed a proposed Joint Plan of
Reorganization and related Disclosure Statement, each of which were amended on
June 26, 2020, June 29, 2020 and June 30, 2020. On May 15, 2020, the Debtors
also filed a proposed order approving the Disclosure Statement and various plan
solicitation materials, including the solicitation and voting procedures, which
was revised on June 29, 2020 (including modifications to some of the exhibits).
On June 30, 2020, the Bankruptcy Court entered the modified order approving the
adequacy of the Disclosure Statement and the solicitation and notice procedures
and the forms of voting ballots and notices in connection therewith. The order
established June 29, 2020 as the voting record date, July 2, 2020 as the
solicitation launch date and July 31, 2020 as the voting deadline.

On August 21, 2020, the Company Parties filed the Plan with the Bankruptcy
Court. On August 27, 2020, the Bankruptcy Court entered the Confirmation Order,
which approved and confirmed the Plan. The Effective Date of the Plan will occur
once all conditions precedent to the Plan have been satisfied.

The Plan as approved and confirmed by the Bankruptcy Court provides for:


?the applicable (x) Debtors, with the consent of the Consenting Noteholders then
holding greater than 50.1% of the aggregate outstanding principal amount of
senior notes claims that are held by all Consenting Noteholders subject to the
Restructuring Support Agreement as of such date (the Required Consenting
Noteholders), or (y) Reorganized Debtors taking any action as may be necessary
or advisable to effectuate the restructuring transactions described in the Plan
and Restructuring Transactions Memorandum (as defined in the Plan), including;

othe execution, delivery, and filing of any organizational and governance documents for the Reorganized Company Parties;

oany and all actions necessary or appropriate to effectuate the Secured Creditor Settlement (as defined below); and


othe execution, delivery, and filing of all agreements, indentures, notes,
filings, documents, and instruments delivered or entered into in connection with
one or more DIP financing facilities, which shall be used to repay certain of
the Company Parties' prepetition secured indebtedness and shall convert into an
exit facility on the Effective Date (a DIP-to-Exit Facility), and a DIP
revolving financing

                                       70

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

facility, which shall, subject to certain conditions, convert into an exit revolving facility (a DIP-to-Exit Revolving Facility and, together with a DIP-to-Exit Facility, DIP Facilities);


?the final satisfaction, compromise, settlement, release, and discharge of
claims arising under, derived from, secured by, based on, or related to any
DIP-to-Exit Facility documents or DIP-to-Exit Revolving Facility documents, on
the Effective Date in exchange for payment in full in cash or, at the Company
Parties' election, and solely to the extent permitted under DIP-to-Exit Facility
documents or DIP-to-Exit Revolving Facility documents, as applicable, or as
otherwise agreed, such holder's pro rata share of the applicable exit
facilities;

?on the Effective Date, issuance of takeback debt by one or more of the Reorganized Company Parties (the Takeback Debt), in a principal amount of $750 million, which shall include the following terms:


oan interest rate that is either (a) no more than 2.50% higher than the interest
rate of the next most junior secured debt facility to be entered into on the
Effective Date if the Takeback Debt is secured on a third lien basis or (b) no
more than 3.50% higher than the interest rate of the most junior secured debt
facility to be entered into on the Effective Date if the Takeback Debt is
unsecured;

oa maturity of no less than one year outside of the longest-dated debt facility
to be entered into by the Reorganized Company Parties on the Effective Date,
provided that in no event shall the maturity of the Takeback Debt be longer than
eight years from the Effective Date;

oto the extent the claims related to the Company's 8.500% second lien secured
notes due April 1, 2026 (the Second Lien Notes) are reinstated under the Plan,
the Takeback Debt will be third lien debt, provided that to the extent the
Second Lien Notes claims are paid in full in cash during the pendency of the
Chapter 11 Cases or under the Plan, the Company Parties and the Required
Consenting Noteholders will agree on whether the Takeback Debt will be secured
or unsecured, within three business days of the Company Parties' delivery to the
Consenting Noteholders of a term sheet for the financing to repay the Second
Lien Notes in full in cash that contains terms and conditions reasonably
acceptable to the Company Parties and the Required Consenting Noteholders;

othe Takeback Debt amount is subject to downward adjustment by the Consenting
Noteholders holding at least sixty-six and two-thirds percent of the aggregate
outstanding principal amount of senior notes that are held by all Consenting
Noteholders; and

oall other terms including, without limitation, covenants and governance, shall
be reasonably acceptable to the Company Parties and the Required Consenting
Noteholders; provided that such terms shall not be more restrictive than those
in the indenture for the Second Lien Notes.

The Plan, among other things and subject to the terms of the Secured Creditor
Settlement, contemplates the following treatment of claims against and interests
in the Company Parties:

?at the option of the applicable Reorganized Company Party, holders of secured
claims against a Company Party that, absent its secured status, would be
entitled to priority in right of payment under section 507(a)(8) of the
Bankruptcy Code (determined irrespective of time limitations) (the Secured Tax
Claims) shall receive (i) payment in full in cash or (ii) payment in cash made
in equal semi-annual cash payments commencing as of the Effective Date or as
soon as reasonably practicable thereafter and continuing for five years, in an
aggregate amount equal to such claim, together with interest at the applicable
non-default contract rate under non-bankruptcy law;

?at the option of the applicable Company Party, holders of claims entitled to
priority in right of payment under section 507(a) of the Bankruptcy Code other
than Administrative Claims or Priority Tax Claims (each as defined in the Plan)
shall receive payment in full in cash or such other treatment rendering such
claims unimpaired;

?claims arising under, derived from, based on, or related to the Company's Revolver shall be repaid on or before the Effective Date, including payment of interest payments calculated at the non-default contract

                                       71

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

rate through the earlier of the Effective Date or repayment of the Revolver in full in cash (which shall include accrued but unpaid postpetition interest);


?claims arising under, derived from, based on, or related to the JPM Credit
Agreement shall be repaid on or before the Effective Date or reinstated on the
Effective Date solely in the event that financing to repay such claims cannot be
obtained, including payment of interest payments calculated at the non-default
contract rate through the earlier of the Effective Date or repayment of the Term
Loan B in full in cash (which shall include accrued but unpaid postpetition
interest);

?claims arising under, derived from, based on, or related to the Original First
Lien Notes, issued pursuant to the indenture, dated as of March 15, 2019, by and
among the Company, as issuer, the subsidiary guarantors party thereto, JPMorgan
Chase Bank, N.A., as collateral agent, and Wilmington Trust, National
Association, as successor trustee shall be repaid on or before the Effective
Date or reinstated on the Effective Date, including payment of interest payments
calculated at the non-default contract rate through the earlier of the Effective
Date or repayment of the Original First Lien Notes in full in cash (which shall
provide for the payment of accrued but unpaid postpetition interest);

?claims arising under, derived from, based on, or related to the Second Lien
Notes, issued pursuant to that certain indenture, dated as of March 19, 2018, by
and among the Company, as issuer, the subsidiary guarantors party thereto, and
Wilmington Savings Fund Society FSB, as successor trustee and successor
collateral agent (the Second Lien Notes Trustee) shall be repaid on or before
the Effective Date or reinstated on the Effective Date, including payment of
interest payments calculated at the non-default contract rate as required
through the earlier of the Effective Date or repayment of the Second Lien Notes
in full in cash (which shall provide for the payment of accrued but unpaid
postpetition interest);

?claims arising under, derived from, based on or related to (a) the 8.500%
secured notes due November 15, 2031, issued by Frontier Southwest Incorporated
pursuant to the Restated Indenture, dated June 1, 1940, by and among Frontier
Southwest Incorporated, as issuer, and BOKF, NA, as successor trustee, and (b)
Rural Utilities Service loan contracts due January 3, 2028 (collectively, the
Subsidiary Secured Notes) shall be reinstated on the Effective Date, with
holders of such claims receiving ordinary course cash interest payments at the
applicable non-default contract rate through the Effective Date;

?claims arising under, derived from, based on or related to the 6.750% unsecured
notes due May 15, 2027 issued by Frontier California Inc., the 6.860% unsecured
notes due February 1, 2028 issued by Frontier Florida LLC, the 6.730% unsecured
notes due February 15, 2028 issued by Frontier North Inc., the 8.400% unsecured
notes due October 15, 2029 issued by Frontier West Virginia Inc. and the
applicable indentures, debentures and purchase agreements associated therewith
shall be reinstated on the Effective Date, with holders of such claims receiving
ordinary course cash interest payments at the applicable non-default contract
rate through the Effective Date;

?holders of claims arising under, derived from, based on, or related to the
unsecured notes issued by the Company shall receive their (i) pro rata share of
and interest in the Incremental Senior Notes Payment Amount (as defined in the
Plan) and (ii) pro rata share of and interest in (after first reducing, for
distribution purposes only, the amount of each such holder's senior notes claim
on a dollar-for-dollar basis by the amount of Incremental Senior Notes Payments,
and solely to the extent actually paid): (a) 100% of the Reorganized Company's
new common stock, subject to dilution by the Reorganized Company's management
incentive plan; (b) the Takeback Debt, if any; and (c) the Surplus Cash (as
defined in the Plan), if any;

?to the extent not already satisfied during the Chapter 11 Cases, holders of
certain other claims that are not secured shall receive: (i) payment in full in
cash; (ii) reinstatement; or (iii) such other treatment rendering such claims
unimpaired, in each case as reasonably acceptable to the Company Parties and the
Required Consenting Noteholders;

?holders of secured claims (other than claims arising under, derived from, based
on or related to the Revolver, the Term Loan B, the Original First Lien Notes,
the Second Lien Notes, the Subsidiary Secured Notes, the Secured Tax Claims or
DIP Facilities) shall receive, at the option of the applicable Company

                                       72

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

Party: (i) payment in full in cash, (ii) reinstatement; (iii) delivery of the collateral securing such claim; or (iv) such other treatment rendering such claim unimpaired;

?claims subject to subordination under section 510(b) of the Bankruptcy Code shall be cancelled, released, discharged, and extinguished;

?all intercompany claims and intercompany interests shall be either (a) reinstated or (b) cancelled on the Effective Date; and

?all equity securities in the Company shall be cancelled, released and extinguished on the Effective Date.

For more information on the payment of the Revolver and the Original First Lien Notes, see -Term Loan and Revolving Credit Facilities.

Secured Creditor Settlement


The Plan will effectuate the settlement, release, compromise, discharge, and
other resolution of all outstanding claims, interests, and causes of action,
including the Objection of the Ad Hoc First Lien Committee to the Debtors' Third
Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy
Code [Docket No. 857], the Objection of the Second Lien Notes Trustee to the
Debtors' Third Amended Joint Plan of Reorganization Pursuant to Chapter 11 of
the Bankruptcy Code [Docket No. 858], and the Second Lien Committee's Joinder to
the Second Lien Notes Trustee's Objection [Docket No. 860], as between the
Company Parties, the ad hoc committee of certain unaffiliated holders of Term
Loan B claims and Original First Lien Notes claims (the First Lien Committee)
represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP and PJT Partners LP,
the Second Lien Notes Trustee, and the ad hoc committee of certain unaffiliated
holders of Second Lien Notes claims represented by Quinn Emanuel Urquhart &
Sullivan, LLP (the Second Lien Committee) (such settlement, the Secured Creditor
Settlement). The Secured Creditor Settlement includes, among other terms and
subject to certain conditions, the following key terms:

?holders of Term Loan B claims, Original First Lien Notes claims, and Second
Lien Notes claims, and the First Lien Committee and Second Lien Committee, shall
be deemed to have consented to reinstatement and shall not allege, and shall be
deemed to have waived and foregone any objections to, any defaults arising from
the transactions set forth in the Plan;

?holders of Term Loan B claims, Original First Lien Notes claims, and Second
Lien Notes claims, and the First Lien Committee and Second Lien Committee shall
be deemed to have consented to and shall not impede or otherwise delay the
Debtors' pursuit of certain debtor in possession/exit financing facilities;

?holders of Term Loan B claims, Original First Lien Notes claims, and Second
Lien Notes claims, and the First Lien Committee and Second Lien Committee, shall
waive and forgo any and all "make-whole" claims and claims to default interest
under the JPM Credit Agreement, the Original First Lien Notes indenture, and/or
the Second Lien Notes indenture, as applicable;

?holders of Revolver claims, Term Loan B claims, Original First Lien Notes
claims (including the First Lien Committee), the applicable agents, and the
Original First Lien Notes trustee shall be deemed to have waived any enforcement
of any turnover or payment over rights under the Junior Lien Intercreditor and
Subordination Agreement, dated as of March 19, 2018, against the Debtors, Second
Lien Notes Trustee, or holders of Second Lien Notes claims with respect to
certain obligations and amounts;

?the Company Parties shall make a $48,200,000 payment to holders of Term Loan B
claims, a $9,300,000 payment for the benefit of holders of Original First Lien
Notes claims, and, in the event that the Effective Date occurs on or after March
31, 2021, an incremental payment of $7,500,000 to holders of Term Loan B claims;

?the Company Parties or the Reorganized Company Parties, as applicable, shall
pay in full in cash all reasonable First Lien Committee fees and Second Lien
Committee fees that are due and owing under the applicable engagement letters;
and

?all adequate protection currently in effect shall remain in effect until entry
of a final adequate protection order and, upon the Company Parties' entry into
any DIP Facilities, the Bankruptcy Court shall enter a

                                       73

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

final adequate protection order granting, among other things, adequate protection to secured creditors in the form of (i) liens and claims on all collateral securing any future DIP Facilities, and (ii) cash payments in the amount of accrued interest.


DIP Financing

As previously disclosed, prior to the commencement of the Chapter 11 Cases, the
Company and certain of its domestic subsidiaries entered into that certain
Commitment Letter, dated April 14, 2020 (as amended by that certain Letter
Agreement, dated April 28, 2020, by that certain Letter Agreement, dated May 12,
2020, by that certain Letter Agreement, dated June 10, 2020, by that certain
Letter Agreement, dated June 29, 2020 and as further amended, modified or
supplemented from time to time, the Original Commitment Letter) with Goldman
Sachs Bank USA (GS Bank), Deutsche Bank AG New York Branch (DBNY), Deutsche Bank
Securities Inc. (DBSI and, collectively with DBNY, DB), Barclays Bank PLC
(Barclays), Morgan Stanley Senior Funding, Inc. (MSSF), Credit Suisse AG, Cayman
Islands Branch (CS) and Credit Suisse Loan Funding LLC (CSLF and, together with
CS and their respective affiliates, Credit Suisse, and together with GS Bank,
DB, Barclays and MSSF, the Original Commitment Parties), pursuant to which, and
subject to the satisfaction of certain customary conditions, including the
approval of the Bankruptcy Court, GS Bank, DBNY, Barclays, MSSF and CS committed
to provide a portion of the senior secured superpriority revolving credit
facility in an aggregate principal amount of $460 million, which, upon
satisfaction of certain conditions, including the effectiveness of the Plan,
would convert into a longer term revolving exit facility. The Original
Commitment Letter lapsed in accordance with its terms.

The Company and certain of its domestic subsidiaries entered into a Commitment
Letter, dated August 13, 2020, with the Original Commitment Parties, which was
amended and restated by that certain Amended and Restated Commitment Letter,
dated August 28, 2020, with the Original Commitment Parties and JPMorgan Chase
Bank, N.A. (JPM) (collectively, the New Commitment Parties), pursuant to which,
and subject to the satisfaction of certain customary conditions, including the
approval of the Bankruptcy Court, GS Bank, JPM, DBNY, MSSF and CS committed to
provide a portion of the $625 million DIP Revolving Facility, which, upon
satisfaction of certain conditions, including the effectiveness of the Plan,
would convert into a longer term revolving exit facility (the Exit Revolving
Facility).

On August 14, 2020, the Company and certain of its subsidiaries entered into an
engagement letter, which was amended and restated on August 28, 2020 by that
certain Amended and Restated Engagement Letter by and among the Company and
certain of its subsidiaries and Goldman Sachs & Co. LLC, J.P. Morgan Securities
LLC, DBSI, Barclays Capital Inc., Morgan Stanley & Co. LLC and Credit Suisse
Securities (USA) LLC, in connection with a proposed issuance, offering and sale
senior secured superpriority first lien and/or second lien notes to be issued by
the Company or an affiliate thereof.

The Company and certain of its domestic subsidiaries also entered into that
certain Engagement Letter, dated August 14, 2020, with GS Bank, which was
amended and restated by that certain Amended and Restated Engagement Letter,
dated August 28, 2020 with the New Commitment Parties, in connection with the
DIP Term Loan Facility, which, upon satisfaction of certain conditions,
including the effectiveness of the Plan, would convert into a term loan Exit
Facility (the Exit Term Loan Facility).

On August 28, 2020, the Company Parties filed a motion (the DIP Financing
Motion) with the Bankruptcy Court to approve the indentures, credit, guarantee
and security documents governing the obligations under the Notes, the DIP
Revolving Facility, the DIP Term Loan Facility, the Exit Revolving Facility, the
Exit Term Loan Facility and, if applicable, the reinstated Term Loan B
(collectively, the DIP Financing). On September 17, 2020, the Bankruptcy Court
entered the final order approving the DIP Financing Motion.

On October 8, 2020, the Company issued $1,150 million aggregate principal amount
of the New First Lien Notes, entered into a $625 million DIP Revolving Facility
and a $500 million DIP Term Loan Facility. The Company used the proceeds from
the offering of the New First Lien Notes, together with the proceeds of the DIP
Term Loan Facility and cash on hand, to (i) repay in full the Company's Original
First Lien Notes and (ii) pay related interest, fees and expenses.

                                       74

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

For information about subsequent events related to the DIP Financing, refer to "-Subsequent Events Related to the Chapter 11 Cases".

Regulatory Approvals


As set forth in the Plan and the Disclosure Statement, in order to implement the
restructuring contemplated by the Plan, the Company Parties must satisfy several
conditions after confirmation of the Plan but prior to emergence from Chapter
11. Among other things, the Company Parties must obtain requisite regulatory
approvals, including FCC and required PUC approvals in certain states. The level
of review undertaken by the FCC and state PUCs, and the length of time to
complete such review, varies. The Company is the subject of ongoing
investigations and reviews, which may have an impact on the timing of receipt of
FCC or PUC approvals and/or lead to the imposition of financial sanctions and/or
operational restrictions. In addition, the FCC and certain state PUCs may impose
conditions on the approval of the Restructuring Transactions, including
commitments to make significant capital expenditures to improve services. The
regulatory approval process is moving forward, and the Company has received PUC
approvals or favorable determinations in the majority of required states at this
time. No assurance can be given as to the terms, conditions, and timing of the
remaining required approvals or clearances.

Effects of the Restructuring and the Chapter 11 Cases on Our Liquidity


The filing of the Chapter 11 Cases constituted an event of default that
accelerated substantially all of our obligations under the documents governing
the JPM Credit Facilities, the Original First Lien Notes, the Second Lien Notes,
our unsecured notes and debentures and the secured and unsecured debentures of
our subsidiaries. However, pursuant to the Bankruptcy Code and as described in
"Part II. Other Information-Item 1. Legal Proceedings", the filing of the
Bankruptcy Petitions automatically stayed most actions against the Company
Parties, including most actions to collect indebtedness incurred prior to the
Petition Date or to exercise control over the Company Parties' property.
Accordingly, although the filing of the Bankruptcy Petitions triggered events of
default under our existing debt obligations, creditors are stayed from taking
action as a result of these defaults. Additionally, under Section 502(b)(2) of
the Bankruptcy Code, and subject to the terms of the DIP financing order
providing for adequate protection payments to certain of our prepetition
lenders, we are no longer required to pay interest on our indentures and credit
facilities accruing on or after the Petition Date.

Additionally, in connection with the Chapter 11 Cases, we have incurred, and
expect to continue to incur, significant professional fees and other costs in
connection with the Chapter 11 Cases. There can be no assurance that our current
liquidity is sufficient to allow us to satisfy our obligations related to the
Chapter 11 Cases or to pursue confirmation of the Plan.


?

                                       75
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

Subsequent Events Related to the Chapter 11 Cases

New First Lien Notes


On October 8, 2020, Frontier issued $1,150 million aggregate principal amount of
New First Lien Notes. The New First Lien Notes were issued pursuant to an
indenture, dated as of October 8, 2020 (the DIP Indenture), by and among
Frontier, the guarantors party thereto, the grantor party thereto, JPMorgan
Chase Bank N.A., as collateral agent and Wilmington Trust, National Association,
as trustee. The New First Lien Notes were issued in a private offering exempt
from the registration requirements of the Securities Act, to persons reasonably
believed to be qualified institutional buyers in accordance with Rule 144A under
the Securities Act and to persons outside the United States pursuant to
Regulation S under the Securities Act, at a purchase price equal to 100% of the
principal amount thereof.

Prior to the conversion date, the New First Lien Notes are secured on a
super-priority basis, subject to permitted liens and certain exceptions, by all
the assets that secure Frontier's obligations under the New DIP Revolving
Facility and the DIP Term Loan Facility on a super-priority basis. From the
conversion date, the New First Lien Notes are secured on a first-priority basis,
subject to permitted liens and certain exceptions, by all the assets that secure
Frontier's obligations under its senior secured credit facilities on a
first-priority basis.

The New First Lien Notes bear interest at a rate of 5.875% per annum and will
mature on October 15, 2027. Interest on the New First Lien Notes is payable to
holders of record semi-annually in arrears on April 15 and October 15 of each
year, commencing April 15, 2021.

Frontier may redeem the New First Lien Notes at any time, in whole or in part,
prior to their maturity. The redemption price for New First Lien Notes redeemed
before October 15, 2023 will be equal to 100% of the aggregate principal amount
thereof, together with any accrued and unpaid interest, if any, to, but not
including, the redemption date, plus a make-whole premium. The redemption price
for New First Lien Notes redeemed on or after October 15, 2023 will be equal to
the redemption prices set forth in the DIP Indenture, together with any accrued
and unpaid interest to the redemption date. In addition, at any time before
October 15, 2023, Frontier may redeem up to 40% of the New First Lien Notes
using the proceeds of certain equity offerings at a redemption price equal to
105.875% of the aggregate principal amount thereof, together with any accrued
and unpaid interest, if any, to, but not including, the redemption date.

In the event of a change of control triggering event, each holder of New First
Lien Notes will have the right to require Frontier to purchase for cash such
holder's New First Lien Notes at a purchase price equal to 101% of the principal
amount of the New First Lien Notes, plus accrued and unpaid interest, if any,
to, but not including, the date of repurchase.

The DIP Indenture contains customary negative covenants, subject to a number of
important exceptions and qualifications, including, without limitation,
covenants related to incurring additional debt and issuing preferred stock;
incurring or creating liens; redeeming and/or prepaying certain debt; paying
dividends on our stock or repurchasing stock; making certain investments;
engaging in specified sales of assets; entering into transactions with
affiliates; and engaging in consolidation, mergers and acquisitions. Certain of
these covenants will be suspended during such time, if any, that the New First
Lien Notes have investment grade ratings by at least two of Moody's, S&P or
Fitch. The DIP Indenture also provides for customary events of default which, if
any of them occurs, would permit or require the principal of and accrued
interest on the New First Lien Notes to become or to be declared due and
payable.


?

                                       76
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

DIP Term Loan Facility

On October 8, 2020, Frontier entered into a $500 million DIP Term Loan Facility,
pursuant to the credit agreement, dated as of October 8, 2020 (the DIP to Exit
Term Credit Agreement), by and among Frontier, as the borrower, JPMorgan Chase
Bank, N.A., as administrative agent and collateral agent and each lender from
time to time party thereto.

The DIP Term Loan Facility has a maturity of the earlier of (x) the date that is
twelve months after the closing date of the DIP Term Loan Facility and (y) the
date of the substantial consummation of the Plan; provided that to the extent
such substantial consummation has not occurred on or prior to the date referred
to in the foregoing clause (x), primarily because any condition precedent set
forth therein with respect to the procurement of regulatory approvals has not
been satisfied (and other than any other conditions that by their nature can
only be satisfied on the consummation date), the maturity date shall be extended
by an additional six months; provided that if certain conditions occur, the
maturity date shall be the earlier of (a) the date that is the seventh
anniversary of the closing date and (b) 90 days prior to the maturity date of
the Second Lien Notes so long as the aggregate principal amount of such notes is
in excess of a threshold amount.

At our election, the determination of interest rates for the DIP Term Loan
Facility are based on margins over the alternate base rate or over LIBOR. The
interest rate with respect to any LIBOR loan is 4.75% (or 3.75% for alternate
base rate loans, with a 1.00% LIBOR floor).

Subject to certain exceptions and thresholds, the security package under the DIP
Term Loan Facility includes pledges of the equity interests in certain of our
subsidiaries, which as of the issue date is limited to certain specified pledged
entities, substantially all personal property of Frontier Video Services Inc., a
Delaware corporation (Frontier Video), and, solely prior to the conversion date,
substantially all of the unencumbered assets and properties (the DIP Collateral)
of substantially all of the unencumbered assets and properties of Frontier and
Frontier Communications of Iowa, LLC, an Iowa limited liability company
(Frontier Iowa), which such security interest in the DIP Collateral was granted
solely pursuant to the DIP financing order issued by the Bankruptcy Court, which
same assets also secure the New First Lien Notes. The DIP Term Loan Facility is
guaranteed by the same subsidiaries that guarantee the New First Lien Notes.
Upon the conversion date, the security package will no longer include the DIP
Collateral.

The DIP Term Loan Facility includes usual and customary negative covenants for
DIP-to-exit loan agreements of this type, including covenants limiting Frontier
and its restricted subsidiaries' (other than certain covenants therein which are
limited to subsidiary guarantors) ability to, among other things, incur
additional indebtedness, create liens on assets, make investments, loans or
advances, engage in mergers, consolidations, sales of assets and acquisitions,
pay dividends and distributions and make payments in respect of certain material
payment subordinated indebtedness, in each case subject to customary exceptions
for exit loan agreements of this type.

The DIP Term Loan Facility also includes certain customary representations and
warranties, affirmative covenants and events of default, including, but not
limited to, payment defaults, breaches of representations and warranties,
covenant defaults, certain events under ERISA, upon the conversion date,
unstayed judgments in favor of a third party involving an aggregate liability in
excess of a certain threshold, change of control, upon the conversion date,
specified governmental actions having a material adverse effect or condemnation
or damage to a material portion of the collateral.

Upon the conversion date, subject to certain conditions, the DIP Term Loan Facility shall convert into the Exit Term Loan Facility with an aggregate principal amount of $500 million.


?

                                       77
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

DIP Revolving Facility

On October 8, 2020, Frontier entered into the DIP Revolving Facility, pursuant
to the senior secured superpriority debtor-in-possession credit agreement, dated
as of October 8, 2020, by and among Frontier, as the borrower, Goldman Sachs
Bank USA, as administrative agent and collateral agent and each lender and
issuing bank from time to time party thereto.

The DIP Revolving Facility has a maturity of the earlier of (x) the date that is
twelve months after the closing date of the DIP Revolving Facility and (y) the
date of the substantial consummation of the Plan; provided that to the extent
such substantial consummation has not occurred on or prior to the date referred
to in the foregoing clause (x), primarily because any condition precedent set
forth therein with respect to the procurement of regulatory approvals has not
been satisfied (and other than any other conditions that by their nature can
only be satisfied on the consummation date), the maturity date shall be extended
by an additional six months.

At our election the determination of interest rates for the DIP Revolving
Facility is based on margins over the alternate base rate or over LIBOR. The
interest rate with respect to any LIBOR loan is 3.25% (or 2.25% for alternate
base rate loans).

Subject to customary exceptions and thresholds, the security package under the
DIP Revolving Facility includes pledges of the equity interests in certain of
our subsidiaries, which as of the issue date is limited to certain specified
pledged entities, substantially all personal property of Frontier Video and
substantially all of the unencumbered assets and properties of Frontier and
Frontier Iowa, which security interest in such unencumbered assets and
properties was granted solely pursuant to the DIP financing order issued by the
Bankruptcy Court, which same assets also secure the New First Lien Notes. The
DIP Revolving Facility is guaranteed by the same subsidiaries that guarantee the
New First Lien Notes. After giving effect to $90 million of letters of credit
formerly outstanding under the Revolver that were rolled into, replaced or
otherwise accommodated for under the DIP Revolving Facility, the Company has
$535 million of available borrowing capacity under the DIP Revolving Facility.

The DIP Revolving Facility includes usual and customary negative covenants for
loan agreements of this type, including covenants limiting Frontier and its
restricted subsidiaries' (other than certain covenants therein which are limited
to subsidiary guarantors) ability to, among other things, incur additional
indebtedness, create liens on assets, make investments, loans or advances,
engage in mergers, consolidations, sales of assets and acquisitions, pay
dividends and distributions and make payments in respect of certain material
payment subordinated indebtedness, in each case subject to customary exceptions
for loan agreements of this type.

The DIP Revolving Facility also includes certain customary representations and
warranties, affirmative covenants and events of default, including, but not
limited to, payment defaults, breaches of representations and warranties,
covenant defaults, certain events under ERISA, change of control or damage to a
material portion of the collateral.

Upon the conversion date, subject to certain conditions, the DIP Revolving
Facility shall convert into the Exit Revolving Facility with an aggregate
principal amount of $625 million. The Exit Revolving Facility will be available
on a revolving basis during the period commencing on the conversion date and
ending on the date that is the earlier of (x) 3 years after the conversion date
and (y) 91 days prior to the earliest maturity date of permitted pari passu
refinancing debt, permitted junior refinancing debt, the term loans outstanding
under the prepetition credit agreement after giving effect to the consummation
of the Plan (or any indebtedness that replaces or refinances such term loans)
and any long term exit facilities so long as, in each case, the outstanding
principal amount of any such indebtedness is in excess of an amount set forth in
the definitive documentation with respect to the Exit Revolving Facility. The
determination of interest rates for the Exit Revolving Facility is based on
margins over the alternate base rate or over LIBOR, at our election. The
interest rate with respect to any LIBOR loan is 4.00% (or 3.00% for alternate
base rate loans).

                                       78
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

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 and the acceleration of substantially all of our debt as a
result, 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,
2019.

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 2020 (since extended through December 31,
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 term
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.

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 removal of goodwill impairment as a critical accounting policy
due to full impairment during fiscal 2019, 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, 2019.

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.


?

                                       79
--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

Regulatory Developments

Frontier accepted the FCC's CAF Phase II offer in 25 states, which provides $313
million in annual support through 2020 (since extended to 2021) in return for
the Company's commitment to make broadband available to households within
Frontier's footprint.

On January 30, 2020, the FCC adopted an order establishing the RDOF program.
With this order, the FCC plans to hold two auctions totaling $20.4 billion of
support over ten years. In the first auction (RDOF Phase I), the FCC plans to
offer up to $16 billion in support over ten years ($1.6 billion annually) for an
estimated 6 million locations that lack access to speeds of at least 25/3 Mbps
based on the FCC's current maps. After the FCC updates its maps with more
granular broadband availability information, the FCC plans to hold a second
auction (RDOF Phase II) for any remaining locations with the remaining funding
(including any locations not funded in RDOF Phase I), at least $4.4 billion.
Frontier timely filed an application to be eligible to participate in the RDOF
Phase I auction, which is scheduled to commence on October 29, 2020. Until after
the post-auction deadline for winning bidders in the RDOF Phase I auction has
passed, the FCC quiet period rules will apply.

Recognizing that RDOF support will not be made available before the end of the
sixth year of CAF Phase II support (i.e., December 31, 2020), the FCC's RDOF
order explains that CAF II recipients may elect to receive a seventh year of CAF
Phase II support through December 31, 2021, whether or not they participate, or
are successful in, an RDOF auction. Frontier timely elected to receive a seventh
year of model-based support in 25 states. As such, absent a change in FCC rules,
Frontier will continue to receive annual CAF Phase II support in these 25 states
until December 31, 2021. Implementation of the RDOF could result in a material
change in the level of funding that Frontier receives from the FCC under CAF II
as early as 2022.

On April 20, 2017, the FCC issued an order (the 2017 Order) that significantly
altered how commercial data services are regulated. Specifically, the 2017 Order
adopted a test to determine, on a county-by-county basis, whether price-cap ILEC
services, such as Frontier's DS1 and DS3 services, will continue to be
regulated. The test resulted in deregulation in a substantial number of our
markets and is allowing Frontier to offer its DS1 and DS3 services in a manner
that better responds to the competitive marketplace and allows for commercial
negotiation. The areas that remain regulated may be subject to price
fluctuations depending upon the price cap formula in each year. Multiple parties
appealed the 2017 Order to the 8th Circuit Court of Appeals. The Court of
Appeals issued a ruling on August 28, 2018 that upheld the majority of the 2017
Order easing regulation of business data services of internet service providers
and vacated and remanded one part of the order back to the FCC. On October 10,
2018, the FCC filed a Motion to Stay the Court's Decision. On July 12, 2019, the
FCC released an order addressing the matters remanded by the Court of Appeals.
As to the part of the decision that was vacated and remanded to the FCC, the FCC
has reinstated the deregulation and the FCC's decision to reaffirm its
deregulation has not been appealed.

In September 2018, California network neutrality legislation was signed into
law. The California legislation aims to reimpose the provisions of the FCC's
2015 Network Neutrality decision. The Department of Justice has filed a lawsuit
against California alleging that California's net neutrality law is preempted by
federal law. Four industry associations representing Internet Service Providers
(USTelecom, CTIA, NCTA and ACA) have also filed suit. The California Attorney
General has agreed to delay implementing the California law until the federal
lawsuit is resolved. Frontier cannot predict the outcome of this litigation and,
although Frontier's current practices comply with the California law, the extent
to which regulatory changes associated with the California law could affect
revenues at this time. In addition to California, several other states have
enacted net neutrality laws, and a number of additional states are currently
considering Network Neutrality legislation during their 2020 legislative
sessions.

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 remanded back to
the FCC other parts of the 2018 Order. On October 27, 2020, the FCC adopted an
order affirming its decision to classify broadband as an information service
subject to light-touch regulation and addressing the court's remand. We
anticipate that this ruling will be appealed.

                                       80

--------------------------------------------------------------------------------
                   PART I. FINANCIAL INFORMATION (Continued)

              FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                             (DEBTOR-IN-POSSESSION)

                                  (Unaudited)

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 for the following
60 days (i) not to terminate service to any residential or small business
customers because of their inability to pay their bills due to the disruptions
caused by the coronavirus pandemic? (ii) waive any late fees that any
residential or small business customers incur because of their economic
circumstances related to the coronavirus pandemic? and (iii) to open their Wi-Fi
hotspots to any American who needs them. Some of the states we operate in have
issued executive orders as a result of COVID-19 that further impact our
business, including prohibiting the disconnection of services for customers for
the length of the state of emergency. While the initial 60-day period of the
Keep Americans Connected Pledge has expired, state and federal governments
continue to ask companies to aid in pandemic response. Given the unprecedented
and evolving nature of the pandemic and the swift moving response of multiple
levels of government as well as the uncertainty of funding available for
services provided, the full impact of these changes and potential changes on the
Company are unknown at this time.

© Edgar Online, source Glimpses

All news about FRONTIER COMMUNICATIONS CORPORATION
01/20FRONTIER COMMUNICATIONS CORP : Regulation FD Disclosure, Financial Statements an..
AQ
2020FRONTIER COMMUNICATIONS : Q3 2020 Earnings Presentation
PU
2020FRONTIER COMMUNICATIONS CORP : Regulation FD Disclosure, Financial Statements an..
AQ
2020FRONTIER COMMUNICATIONS CORP : Regulation FD Disclosure, Financial Statements an..
AQ
2020FRONTIER COMMUNICATIONS CORP : Change in Directors or Principal Officers, Financ..
AQ
2020FRONTIER COMMUNICATIONS CORP : Regulation FD Disclosure (form 8-K)
AQ
2020FRONTIER COMMUNICATIONS CORP : Entry into a Material Definitive Agreement, Creat..
AQ
2020FRONTIER COMMUNICATIONS CORP : Regulation FD Disclosure, Financial Statements an..
AQ
2020FRONTIER COMMUNICATIONS : Fitch Affirms Frontier's IDR at 'BB-(EXP)'; No Impact ..
AQ
2020FRONTIER COMMUNICATIONS CORP : Results of Operations and Financial Condition, Fi..
AQ
More news