Attorney General William Tong and the Communications Workers of America are voicing concerns over whether Frontier Communications”™ bankruptcy organization will ultimately lead the Norwalk company to exit the state.
Frontier filed for Chapter 11 bankruptcy protection in April; its restructuring plan has been approved by 11 states, including Connecticut and New York.
Upon emergence from Chapter 11, Frontier has said it will have reduced its total outstanding indebtedness by more than $10 billion and achieved significant financial flexibility to support continued investment in its long-term growth. Its April filing listed total debt of $21.9 billion against assets of $17.4 billion.
The CWA has asked the Connecticut Public Utilities Regulatory Authority (PURA) to impose conditions on the organization, including improved service for customers and the preservation of its Connecticut workforce, which includes some 1,600 CWA members.
According to a statement issued by the union, “CWA technicians have watched in frustration as Frontier has failed to invest in its network and workforce in recent years, leading to the declining condition of Frontier”™s Connecticut plant. Significant cuts in staffing have meant fewer technicians in the field to provide critical maintenance and respond to customer issues.”
In April of 2016, the union represented 2,397 Frontier employees in Connecticut; over the last four years, the company has cut 740 positions.
“This failed strategy has taken a toll on the quality of service Frontier is able to offer Connecticut customers and contributed to the bankruptcy reorganization that is now before PURA,” the CWA said.
“The CWA members who work at Frontier know firsthand what the company needs to do to come out of this bankruptcy process stronger and ready to provide quality service to its customers,” CWA Local 1298 President Dave Weidlich said in a statement. “That”™s why 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 like Elliott Management that only care about making a quick buck.”
Along with Elliott, three other investment firms will own between 20% and 28% of Frontier under the current plan: Franklin Mutual, Golden Tree Asset Management and HG Vora.
The CWA is asking PURA to:
- “Impose strict, enforceable conditions that require the profits and cash flow generated in Connecticut to be reinvested in Connecticut”™s network” which “should be coupled with service quality and employment requirements to ensure no further deterioration in” the company”™s services, and that Frontier “has adequate personnel to serve its customers and properly maintain and upgrade its facilities.”
- Require the company to maintain the current level of capital spending and in-state employment at least through 2024 (the period covered by the financial projections that are part of the restructuring plan). The Authority also should consider requiring approval of any acquisitions or divestitures by Frontier in other jurisdictions.”
Meanwhile, Tong has filed a brief with PURA asking it to deny the change of ownership.
“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 wrote. “The petitioners have not met their burden of demonstrating the new management”™s suitability to provide safe, adequate or reliable service to the public. In fact, they have not even identified who that management might be.
“This failure is compounded by the absence of any commitments whatsoever to protect the interests of Connecticut customers or with any demonstration that the transaction is in the public interest,” he added.
Frontier acquired Southern New England Telephone Company (SNET) in 2014. In the years since, the Office of the Attorney General and Department of Consumer Protection (DCP) have received “well over 1,000 consumer complaints regarding excessive charges, poor service quality and unsatisfactory customer service,” according to Tong.
Both his office and DCP are currently investigating the company for possible violations of the Connecticut Unfair Trade Practices Act.
