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Why Frontier Communications Stock Jumped Wednesday

By Daniel Sparks - May 29, 2019 at 12:32PM

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Here's how the telecom may significantly reduce its debt.

What happened

Shares of regional telecom company Frontier Communications (FTR) jumped on Wednesday, rising as much as 25.4%. As of 11:50 a.m. EDT, the stock was up 9.3%.

The gain follows an announcement from Frontier on Wednesday morning about its plans to sell assets in four states to raise cash. 

A blue and orange chart showing a stock price moving higher

Image source: Getty Images.

So what

Frontier said it is selling its operations and assets in Washington, Oregon, Idaho, and Montana to WaveDivision Capital and Searchlight Capital Partners. The sale will give the telecom $1.352 billion in cash.

"The sale of these properties reduces Frontier's debt and strengthens liquidity," said Frontier CEO Dan McCarthy.

Now what

This news follows a sharp pullback in Frontier's stock price earlier this month after the company reported a worse-than-expected loss in its first quarter. Losses and debt have been plaguing the telecom, and they spurred its decision last year to suspend its dividend. Such a substantial influx of cash from the sale of these assets could give Frontier a better chance of turning things around.

The transaction "is subject to regulatory approvals and other customary closing conditions, with closing anticipated to occur within one year," Frontier said in the press release.

 

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