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Frontier’s 2017 Capital Expenditure Budget

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Frontier’s capital expenditure

Frontier Communications (FTR) is continuously investing in capex (capital expenditure) to improve its network. In 3Q17, Frontier spent $0.27 billion on capex compared to $0.4 billion in 3Q16. The telecom (telecommunications) company has been spending a lot to improve its network potential, extend Internet access availability, and improve speed upgrades. In order to compete with cable firms such as Charter (CHTR) and Comcast (CMCSA), which witnessed the maximum broadband net customer additions, speed superiority would play a major role for Frontier.

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During the recent Frontier’s 3Q17 earnings conference call, Frontier’s management indicated that “The Connect America Fund or CAF II program requires companies that accepted funds to deploy broadband to 40% of eligible locations by the end of 2017. We have reached that milestone in nine states and are on track to accomplish this requirement in the remaining states. Frontier now offers broadband capability to 277,000 locations in its CAF II eligible areas.”

Expected capex investments in 2017

Frontier’s management expects its capex to be $1.15 billion–$1.2 billion in 2017. By comparison, Windstream (WIN) and CenturyLink (CTL) are anticipated to spend $0.84 billion and $2.6 billion, respectively, on capex in 2017.

In 3Q17, Frontier reported adjusted free cash flow (or FCF) of $182 million compared to $168 million in the year-ago period. Frontier’s management expects its adjusted FCF to be $730 million–$750 million in 2017.

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