Shares of Frontier Communications Corp. (OTC:FTR) tumbled on Wednesday after Bloomberg reported that the company's asset auction failed to generate an acceptable offer. The company is now reportedly in talks with bondholders. Frontier stock was down about 12.2% at market close.
Frontier received multiple bids for its landline assets in Florida, according to Bloomberg's sources, but decided not to sell because the offers weren't high enough. The company has been weighing sales of landline assets in California, Florida, and Texas this year as it grapples with a balance sheet weighed down by debt. At the end of the first quarter, Frontier had about $17.5 billion of debt on the books, compared to a current market capitalization of less than $700 million.
Frontier was expected to use the proceeds from any asset sales to pay down its debt. It's now talking with bondholders to come up with a new strategy. A Frontier spokeswoman declined to comment to Bloomberg on the matter.
Frontier generated 32% of its revenue from voice services during the first quarter, down 6.5% year over year. Other parts of the business aren't doing much better, with customers leaving in droves. Data and internet services revenue slumped 0.8%, while video services revenue tumbled 19.3%.
Frontier paid $10.5 billion for assets from Verizon two years ago, and it's now having trouble unloading the landline assets at an acceptable price. The company desperately needs to knock down its debt. It may be forced to sell at a deep discount down the road if no other options materialize.