To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
1
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
Don
Banowetz
SVP
& GM, New York
Frontier
Communications
October
29th,
2009
Filed by
Frontier Communications Corporation
Pursuant
to Rule 425 under the Securities Act of 1933
Under the
Securities Exchange Act of 1934
Subject
Company: Frontier Communications Corporation
Registration
Statement No. 333-160789
Midwest
Telcom Expo
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
2
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
Safe
Harbor Statement
Forward-Looking
Language
This
presentation contains forward-looking statements that are made pursuant to the
safe harbor provisions of The Private Securities Litigation Reform Act of
1995. These
statements are made on the basis of management’s views and assumptions regarding
future events and business performance. Words
such as “believe,” “anticipate,” “expect” and similar expressions are intended
to identify forward-looking statements. Forward-looking
statements (including oral representations) involve risks and uncertainties that
may cause actual results to differ materially from any future results,
performance or achievements expressed or implied by such statements. These risks
and uncertainties are based on a number of factors, including but not limited
to: Our ability to complete the acquisition of access lines from Verizon; the
failure to obtain, delays in obtaining or adverse conditions contained in any
required regulatory approvals for the Verizon transaction; the failure to
receive the IRS ruling approving the tax-free status of the Verizon transaction;
the ability to successfully integrate the Verizon operations into Frontier’s
existing operations; the effects of increased expenses due to activities related
to the Verizon transaction; the ability to migrate Verizon’s West Virginia
operations from Verizon owned and operated systems and processes to Frontier
owned and operated systems and processes successfully; the risk that the growth
opportunities and cost synergies from the Verizon transaction may not be fully
realized or may take longer to realize than expected; the sufficiency of the
assets to be acquired from Verizon to enable us to operate the acquired
business; disruption from the Verizon transaction making it more difficult to
maintain relationships with customers, employees or suppliers; the effects of
greater than anticipated competition requiring new pricing, marketing strategies
or new product or service offerings and the risk that we will not respond on a
timely or profitable basis; reductions in the number of our access lines and
High-Speed Internet subscribers; our ability to sell enhanced and data services
in order to offset ongoing declines in revenue from local services, switched
access services and subsidies; the effects of ongoing changes in the regulation
of the communications industry as a result of federal and state legislation and
regulation; the effects of competition from cable, wireless and other wireline
carriers (through voice over internet protocol (VOIP) or otherwise); our ability
to adjust successfully to changes in the communications industry and to
implement strategies for improving growth; adverse changes in the credit markets
or in the ratings given to our debt securities by nationally accredited ratings
organizations, which could limit or restrict the availability, or increase the
cost, of financing; reductions in switched access revenues as a result of
regulation, competition and/or technology substitutions; the effects of changes
in both general and local economic conditions on the markets we serve, which can
impact demand for our products and services, customer purchasing decisions,
collectability of revenue and required levels of capital expenditures related to
new construction of residences and businesses; our ability to effectively manage
service quality; our ability to successfully introduce new product offerings,
including our ability to offer bundled service packages on terms that are both
profitable to us and attractive to our customers; changes in accounting policies
or practices adopted voluntarily or as required by generally accepted accounting
principles or regulators; our ability to effectively manage our operations,
operating expenses and capital expenditures, to pay dividends and to repay,
reduce or refinance our debt; the effects of bankruptcies and home foreclosures,
which could result in increased bad debts; the effects of technological changes
and competition on our capital expenditures and product and service offerings,
including the lack of assurance that our ongoing network improvements will be
sufficient to meet or exceed the capabilities and quality of competing networks;
the effects of increased medical, retiree and pension expenses and related
funding requirements; changes in income tax rates, tax laws, regulations or
rulings, and/or federal or state tax assessments; the effects of state
regulatory cash management policies on our ability to transfer cash among our
subsidiaries and to the parent company; our ability to successfully renegotiate
union contracts expiring in 2009 and thereafter; declines in the value of our
pension plan assets, which could require us to make contributions to the pension
plan beginning no earlier than 2010; our ability to pay dividends in respect of
our common shares, which may be affected by our cash flow from operations,
amount of capital expenditures, debt service requirements, cash paid for income
taxes and our liquidity; the effects of any unfavorable outcome with respect to
any of our current or future legal, governmental or regulatory proceedings,
audits or disputes; the possible impact of adverse changes in political or other
external factors over which we have no control; and the effects of hurricanes,
ice storms or other severe weather. These
and other uncertainties related to our business are described in greater detail
in our filings with the Securities and Exchange Commission, including our
reports on Forms 10-K and 10-Q, and the foregoing information should be
read in conjunction with these filings. We do
not intend to update or revise these forward-looking statements to reflect the
occurrence of future events or circumstances.
Additional
Information and Where to Find It
This
filing is not a substitute for the definitive prospectus/proxy statement
included in the Registration Statement on Form S-4 that Frontier filed, and the
SEC has declared effective, in connection with the proposed transactions
described in the definitive prospectus/proxy statement. INVESTORS
ARE URGED TO READ THE DEFINITIVE PROSPECTUS/PROXY STATEMENT BECAUSE IT CONTAINS
IMPORTANT INFORMATION, INCLUDING DETAILED RISK FACTORS. The
definitive prospectus/proxy statement and other documents filed or to be filed
by Frontier with the SEC are or will be available free of charge at the SEC’s
website, www.sec.gov, or by directing a request when such a filing is made to
Frontier, 3 High Ridge Park, Stamford, CT 06905-1390, Attention: Investor
Relations.
This
communication shall not constitute an offer to sell or the solicitation of an
offer to buy securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of such
jurisdiction.
Frontier’s
stockholders approved the proposed transactions on October 27, 2009, and no
other vote of the stockholders of Frontier or Verizon is required in connection
with the proposed transactions.
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
3
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
Frontier’s
Enhanced Footprint
Existing
Frontier Properties
New
Frontier Properties
FY
2008 Key Metrics
Frontier
Standalone
Standalone
Frontier
Pro
Forma
|
Revenue:
|
|
$2.2B
|
|
$6.5B
|
|
EBITDA
(a):
|
|
$1.2B
|
|
$3.1B
|
|
Ending
Access Lines:
|
|
2.3M
|
|
7.0M
|
|
Number
of States:
|
|
24
|
|
27
|
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
4
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
Existing
Frontier Properties
New
Frontier Properties
Frontier’s
Midwestern Landscape
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
5
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
• What
differentiates this transaction from previous RBOC line purchases?
|
System
Conversion Experience
|
13
states run on a separate billing platform that comes with Spinco.
in
the acquisition; Only one state is required to be converted at closing; No application development - existing Frontier software applications (billing, financial, HR, workforce management, etc.) are all scalable. |
|
De-leveraging
Transaction
|
This
is a de-leveraging transaction. FY 2008 pro forma combined
leverage of 2.6x - approaching investment grade |
|
Strong
Rural Markets
|
Similar
rural profile as Frontier has today; 37 households /
sq. mile; less
than 1% of the footprint is urban |
|
Track
Record of Successful Integrations
|
Frontier
management successfully operates a 2M + access line business,
generating $2.2B of revenue in 24 states. We have successfully integrated Rochester Telephone, Commonwealth Telephone and Global Valley Networks, and have consolidated 5 billing systems in the past 5 years |
|
|
|
The
“New” Frontier….
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
6
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
q
The
Acquisition of Verizon Markets by Frontier Creates the 5th Largest
ILEC
l
Commitment to Customers
Ø Expansion of
products and services in these markets
Ø Deliver a unique
customer experience
Ø Local Engagement
Model
Ø Small and Medium
business focus
l
Commitment
to Employees
Ø Honor current
collective bargaining agreements
Ø No layoffs of
Installers and Technicians for 18 months
Ø Customer focus
provides employment growth opportunities
l
Commitment
to Communities
Ø Employees live and
work in their markets
Ø Active in local
clubs, associations and event participation
Ø Responsible for
helping our communities be viable
The
“New” Frontier….
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
7
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
l
Strong
Balance Sheet for Viability
Ø Investment grade
credit rating metrics and commitment
Ø Low debt leverage
of 2.6x
Ø 25% dividend
reduction to shift spending to customer products and network
improvements
Ø Lower dividend
payout ratio
l
Track
record of Investment in Broadband
Ø High Speed reach and
availability
Ø Peace of Mind
services
Ø Strong growth in
broadband penetration
Ø Free PC
promotions
Ø Product bundle
options
l
Management
Team that Delivers Best-in-Class Results
Ø Proven ability to
integrate acquired properties
Ø Bench strength and
experience
The
“New” Frontier….
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
8
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
●
Deliver
a Differentiated Customer Experience
Ø US based 24/7
customer service with state queues
Ø Full
installations/maintenance of voice and broadband
Ø Simple bill
format
Ø On line ordering,
service and payment options
●
Leverage
Frontier’s Performance Culture
Ø Sales and service
focus to drive best in class results
●
Local
Engagement Model
Ø Local presence and
ownership of market performance
Ø Community
involvement for competitive advantage
Ø Drive customer
acquisition and retention
●
Investment
in Network Infrastructure
Ø Expansion of
broadband reach, speed and capacity
Ø Support for new
product and service offerings for customer revenue
growth
Ø Product quality and
reliability
The
“New” Frontier….
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
9
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
Product
Evolution
&
Innovation
&
Innovation
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
10
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
Mission
Critical Offsite Hosting
A
TIER 1, “WORLD CLASS”, COMPLEX WEB
HOSTING FACILITY
HOSTING FACILITY
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
11
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
Commercial
Product Evolution
Small
Business to
Enterprise Segments
Enterprise Segments
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
12
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
Peace
of Mind Services (Resi)
13
Our
Mission
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
At
Home
In
the Office
Wireless
Landline
VoIP
On
the Road
Product
Innovation
What
is FMC?
Fixed
Mobile Convergence is
an Emerging Trend that
Aims to Provide Fixed and
Mobile Telephony Services
with a Single Customer
Preferred Device
an Emerging Trend that
Aims to Provide Fixed and
Mobile Telephony Services
with a Single Customer
Preferred Device
14
Our
Mission
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
Wireless
Carrier
Fixed
Mobile Converged Network Configuration
15
Our
Mission
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
Superior
Data
Throughput
on Wifi
Unified
& Integrated
Voice
mail box
Better
Indoor
Coverage
Single
Bucket
Of
minutes
Integration
with
Landline
services
Single
Phone
Number
Wireless
Customer
Converged
Wireless Voice Attributes
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
16
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
FiTV
Product
Innovation
● Market
Destination Site for Premium, Episodic & TV Content
Ø Target Baby Boomer
and Gen X Segments (82M HH)
Ø User-Interface will
be Based on the TV Schedule Grid
Ø Network Prime-time
Free Content
●
One
Stop Television Viewing
Ø Local
Shows
Ø Subscription
Content
●
Frontier
Branding Co-Content
Ø Frontier - Yahoo
Search Tool
Ø Predictive
Acquisition Marketing Based on Characteristics
Ø Revenue Share for
Predictive Banner Placement
To be the leader in
providing communications services to residential and
business customers in our markets
business customers in our markets
17
Our
Mission
©This
document contains proprietary and/or confidential information. This
document is intended only for the party to whom it is presented and copying and
re-distribution are strictly prohibited.
Questions?