12 Best Telecom Stocks To Invest In Now

4. Frontier Communications Parent Inc. (NASDAQ:FYBR)

Number of Hedge Fund Holders: 52

Frontier Communications Parent Inc. (NASDAQ:FYBR) provides a range of communication and technology services across the US, including broadband internet, video, voice, and data services. It serves a diverse customer base, including large enterprises, small and medium businesses, and wholesale customers. It offers a range of solutions, from basic internet access to advanced data networking and unified communications services.

The company’s third-quarter 2024 results were driven by the addition of 381,000 fiber passings, bringing the total number of locations passed with fiber to 7.6 million. It also added 108,000 fiber broadband customers during the quarter, resulting in a remarkable 19.3% year-over-year growth in fiber broadband subscribers.

This translated into a significant 21.8% year-over-year increase in consumer fiber broadband revenue, attributed to the addition of new fiber broadband subscribers and a slight increase in the average revenue per user to $65.40. By aggressively investing in its fiber network and attracting new fiber broadband subscribers, Frontier Communications Parent Inc. (NASDAQ:FYBR) is solidifying its position as a leading provider of high-speed internet services.

Cooper Investors Global Equities Fund (Hedged) stated the following regarding Frontier Communications Parent, Inc. (NASDAQ:FYBR) in its Q3 2024 investor letter:

“The largest contributors were Frontier Communications Parent, Inc. (NASDAQ:FYBR) and Eurofins Scientific (ERF)

Frontier is a US based broadband company converting its legacy copper network into future-proof fibre infrastructure. The completed network will produce highly resilient cash flows which we believe will be worth multiples of the company’s current market value. Frontier began its multi-billion dollar network upgrade in 2021 and is expected to complete the build in mid-2026, at which point cash flows will inflect positively.

During the quarter, leading US telco Verizon entered into an agreement to acquire Frontier for US$38.50 per share, circa 38% above the undisturbed price. The shares have settled at a price of circa US$35.50 reflecting the roughly 18-month approval process required to close the transaction. Despite this premium it is our view that the US$38.50 price is highly opportunistic, coming at a time when the risks of the network build (funding, costs) are decreasing in advance of the inflection in cash flows, which will persist for decades.

Frontier has one of the highest calibre management teams in global telecommunications and we have observed them execute their strategy over the three years accordingly, such that the standalone prospects and value of the company are not reflected in the offer price,  let alone any synergies on offer via a combination with Verizon.”