Connecticut Attorney General William Tong has called on the state’s Public Utilities Regulatory Authority to reject Frontier Communications’ request to change ownership, which is part of the telecom’s plan to emerge from Chapter 11 bankruptcy.
Frontier’s proposed restructuring, which was approved by the court in August, would eliminate $10 billion in debt in exchange for giving senior creditors an ownership stake in a newly formed parent company.
The Norwalk-based provider of phone, video and internet services has pledged to use the freed up cash to upgrade its fiber networks and improve customer service, but it has not said whether any of that new investment would take place in Connecticut.
In a brief filed Monday, Tong urged PURA to deny the buyout, arguing that Frontier has refused to make any commitments to invest in its Connecticut operations or even to keeping its headquarters in the state. He said the company has also failed to identify its post-restructuring management or directors.
“The entire transaction presents substantial risks to Connecticut, including a loss of local control, loss of capital investment and degradations in the quality of service,” Tong argues. “The petitioners have not met their burden of demonstrating the new management’s suitability to provide safe, adequate or reliable service to the public.”
Meanwhile, the Communications Workers of America, which represents more than 1,600 Frontier workers in Connecticut, filed its own brief Monday asking PURA to impose “strict enforceable conditions” on Frontier in exchange for approving the plan.
Those conditions include, among other things, requiring the company to reinvest profits and cash flow generated in Connecticut into Connecticut’s network, and to maintain its current Connecticut capital spending and workforce through at least 2024.
The union has raised concerns that four Wall Street investment firms — Elliot Management, Franklin Mutual, Golden Tree Asset Management and HG Vora — will own 20% to 28% of the company after the restructuring.
The union says the firms “have a track record of extracting short-term profits at the expense of investment and long-term growth.”
“We want to make sure that PURA uses its oversight process to hold Frontier accountable to its consumers and workers — not Wall Street hedge funds,” said CWA Local 1298 President Dave Weidlich in a statement.
Frontier spokesman Javier Mendoza did not directly address Tong’s or the union’s specific complaints in a statement emailed to New Haven BIZ Tuesday morning. But he said “we look forward to addressing all appropriate issues in our few remaining approval states, including Connecticut.”
“The Company’s successful restructuring will enable it to make investments in its network and operations, and to continue to be a competitive provider of communications services in Connecticut and twenty-four other states,” he added.
He said the company has already received approval to emerge from Chapter 11 bankruptcy from regulators in 18 states, including New York.
PURA is slated to make a decision on Frontier’s request in February.
Contact Natalie Missakian at news@newhavenbiz.com
