THE "NEW" FRONTIER

(CWA Research Dept. brief, July 23, 2010)

Union Representation
Union membership increased from 52% of total employees before the merger to 64% after the
merger (according to Frontier S-4 filing with the FCC). This should give union members greater
power within the company. However, workers' power is fragmented by many different contracts
(Frontier, Verizon-GTE and Verizon) with widely differing wages, benefits, contract language
and expiration dates.

Frontier has become a much larger company

• States: 27 states – up from 24 pre-merger
• Access Lines: 6.01 million – up from 2.1 million
• Revenue: $6.07 billion – up from $2.1 billion
• Debt: $8 billion – up from $4.55 billion
• Interest Expense: $663 million – up from $378 million
• Employees: 13,800 – up from 5,400

Opportunities
Frontier has an "opportunity to restructure and improve the performance of the acquired assets
over the next three years" according to a Citigroup Global Markets analysis.1 During that time
period, the company will try to:
• Expand broadband availability and deepen its market penetration
• Reduce the rate of line loss with "more prolific product bundles"
• Reduce annual operating costs by $500 million by year-end 2012 as promised by Frontier.
[Note that Wall Street's view of an opportunity is a potential threat to workers.]
Frontier management will need labor cooperation to achieve these goals!

Risks and Challenges

• Integration of the new operations may not go smoothly. Condition of plant may be worse
than expected, issues connected to systems integration may arise and the state of labor
relations may deteriorate. All of these would increase expenses and the efficient delivery of
products and services.
• Revenue may erode even more than expected; further straining Frontier's ability to meet
expenses.
• Increased competition from cable and wireless may not only result in greater access line loss
but also retard broadband take up by consumers. Verizon may return to its former territories
to cherry pick market. These trends could adversely affect revenue, cash flow and financial
stability.
• The company will be under pressure to meet regulatory conditions set by various states.
• Frontier may seek another deal as per its business model. Within 2 years, Frontier needs
Verizon's ok, after that it can make a deal as it wants.

1
Citigroup Global Markets, Frontier Communications Corp: Mapping the New Frontier with Initial Pro Forma Forecasts,
May 26, 2010.
 Total and Union Employment
(as of March 31, 2010)

13,800

8,400

5,400

8,800 union
or 64%

6,050 union
or 72%

2,750 union
or 51%

Former Frontier Spinco New Frontier

Source: Frontier Communications Corp., S-4 Filing with the SEC, filed July 2, 2010, p. 12, 13.
 Frontier Before and After the Sale
Based on 2009 Actual Figures

Frontier Now Spinco Frontier Change

After Percent

Telco Rank in Size 6th 5th

States 24 27

Connections*
Access Lines 2.1 million 3.96 million 6.01 million 187%
High Speed
Internet 644,000 1.05 million 1.7 million 163%
Satellite + FiOS 176,000 314,000 490,000 178%

Employees
Total 5,400 8,400 13,800 156%
Union 2,750 6,050 8,050 220%

Revenue** $2.12 billion $4.06 billion $6.07 billion 187%

Debt*** $4.8 billion $3.45 billion $8.25 billion 72%

Interest Expense $378 million $285 million $663 million 75%

*First Quarter 2010.

**$6.07 billion after adjustments
*** Includes approximately $125 million in transition costs.

Source: Frontier Communications, “Welcome to the New Frontier, May 13, 2009 and S-4 Registration
Statement filed with the SEC, July 24, 2009; Frontier Communications, “Investor Presentation” June 8, 2010.