Frontier Communications (NASDAQ:FTR) is attractive at current price levels as most of the negatives have been priced in and the downside is limited. I was worried about further downside due to the reverse stock split. However, the stock price has in fact behaved positively since the reverse stock split took effect. Normally, stock price falls after the reverse stock split comes into effect. Frontier certainly has had a lot of issues. However, the current price is ignoring the quality of assets the company possesses.
It is true that the company is still losing customers, which will continue to affect EBITDA and cash flows. However, the churn rate seems to be coming down. While customer losses are still there, it cannot be ignored that the company has an extremely attractive asset base. It has access to some of the most attractive markets in the US. The use of data has been growing at an astonishing pace. In order to meet this data demand, companies will need a network of cables and access points. At current price levels, Frontier is sure to attract either a buyer for its assets or a merger proposal.
