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Frontier Communications Headed For Financial Disaster

Earlier this week, reports indicated that Frontier Communications (FTR) will acquire roughly $10B worth of wireline assets from Verizon (VZ). Being an investor in the telecom space, Frontier has been on our radar for a while now as a potential short target. With this recent development, it is clear the company is going in the gutter in the near future.

A similar deal happened in 2010 where Frontier acquired $8.7B worth of wireline assets from Verizon. Investors can read about what a catastrophe it was for Frontier here.

In summary, Frontier shareholders lost significant equity due to the extreme dilution resulting from the tripling of total shares outstanding.

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In addition, Frontier's debt soared and continues to rise at an unsustainable rate.

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Cash Flows And Debt

From a cash flow perspective, it is hard to view Frontier as anything but a disaster. Frontier's cash… Read More …