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Commitments And Contingencies | 6 Months Ended
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Jun. 30, 2025
Commitments And Contingencies [Abstract] |
Commitments And Contingencies | (17) Commitments and Contingencies: We are party to various legal proceedings (including individual actions, class and putative class actions, and governmental investigations) arising in the normal course of our business covering a wide range of matters and types of claims including, but not limited to, general contract disputes, billing disputes, rights of access, taxes and surcharges, consumer protection, advertising, sales and the provision of services, intellectual property, including, trademark, copyright, and patent infringement, employment, regulatory, environmental, tort, claims of competitors and disputes with other carriers. Litigation is subject to uncertainty and the outcome of individual matters is not predictable. However, we believe that the ultimate resolution of all such matters, after considering insurance coverage or other indemnities to which we are entitled, will not have a material adverse effect on our financial position, results of operations, or cash flows. During the second quarter of 2025, Frontier accrued an incremental $66 million for legal disputes and settlements, primarily relating to the settlement of certain intellectual property disputes and pole attachment matters. On October 22 and October 23, 2024, two complaints were filed in the Supreme Court of the State of New York, County of New York by purported Company stockholders against the Company, the Board, Verizon and Merger Sub in connection with the Merger. The complaints assert claims of negligent misrepresentation and concealment and negligence under New York common law. Among other remedies, the complaints seek an order enjoining the defendants from proceeding with the Merger unless and until the defendants disclose certain allegedly material information that was allegedly omitted from the proxy statements, rescinding the Merger to the extent already consummated or granting rescissory damages, awarding the plaintiffs costs and disbursements of the action, including reasonable attorneys’ and expert fees and expenses, and granting such other and further relief as the court may deem just and proper. Additional lawsuits arising out of the proposed Merger may also be filed in the future. Furthermore, the Company has received demand letters from purported Company stockholders alleging disclosure deficiencies in the preliminary proxy statement and/or definitive proxy statement and demanding that the Company and the Board of Directors promptly issue corrective disclosures to cure the proxy statement prior to the anticipated stockholder vote on the proposed Merger. The Company believes that the allegations contained in the complaints and demands have no merit. We do not at this time consider there to be any reasonably possible material loss arising from the demands. There can be no assurance regarding the likelihood that the Company’s defense of any actions will be successful. During the second quarter of 2024, Frontier reached a settlement with a net financial impact of $25 million resolving a dispute with the Chief Executive Officer of Frontier’s predecessor company, who left his position with the company in 2004, concerning split-dollar life insurance benefits granted during his employment. In November 2021, Congress passed the IIJA which provides $65 billion to fund broadband connectivity programs, including broadband deployment to unserved and underserved locations. The National Telecommunications and Information Administration (NTIA) is administering the principal last mile infrastructure funding program in the amount of $42.5 billion, the Broadband Equity, Access & Deployment Program (BEAD), and will distribute funding through direct grants to states, who will then award the funds based on competitive grant programs. The NTIA has allocated approximately $25.5 billion to states in Frontier’s footprint. We participated in each of Frontier’s state challenge programs and pre-application and application processes. We are continuing to actively pursue awards of these stimulus funds; however, any awards that we ultimately receive under the IIJA may require significant up-front capital expenditures or other costs. On June 6, 2025, NTIA issued a BEAD Restructuring Policy Notice to modify and replace certain requirements outlined in the BEAD Notice of Funding Opportunity. The Policy Notice rescinded all preliminary and provision subgrantee award selections and requires states to run at least one Benefit of the Bargain application round, in which minimal BEAD program outlay is the principal selection criteria. NTIA prohibited states from awarding additional points for 100% fiber projects but permitted them to prioritize “priority broadband projects” as that term is defined in the Infrastructure Investment and Jobs Act. The NTIA’s changes did not reduce the amount of funding allocated to each state for broadband infrastructure but eliminated certain potentially costly obligations associated with accepting BEAD awards, including middle-class affordability and low-cost offer pricing standards, open access, and climate change requirements, among others. It is uncertain if these changes will limit or impact Frontier’s participation in the BEAD program or its success in securing BEAD awards. We are closely tracking developments in this area, and additional revision to the program could have a material adverse effect on the BEAD program, any funding we receive and the costs of completing BEAD award projects. On April 14, 2024, we detected that a third party had gained unauthorized access to portions of our information technology environment. Upon detection, the Company immediately activated its incident response plan, took action to contain the incident, launched an investigation with the assistance of leading cybersecurity experts, and notified law enforcement and applicable regulatory authorities. We worked with a leading e-discovery firm to undertake a thorough review of the impacted data to identify and provide notice to individuals whose information was impacted. Since the incident, the Company has also taken steps to further strengthen its information technology security. While the incident did not have a material impact on our financial condition or results of operations, the containment measures, which included shutting down certain of the Company’s systems, resulted in an operational disruption. In October 2013, the California Attorney General’s Office notified certain Verizon companies, including one of the subsidiaries that we acquired in the CTF transaction, of potential violations of California state hazardous waste statutes primarily arising from the disposal of electronic components, batteries, and aerosol cans at certain California facilities. We have reached a settlement with the California Attorney General’s Office, which was approved by the court and paid by the Company in the second quarter 2025. We accrue an expense for pending litigation when we determine that an unfavorable outcome is probable, and the amount of the loss can be reasonably estimated. Legal defense costs are expensed as incurred. None of our existing accruals for pending matters, after considering insurance coverage, is material. We monitor our pending litigation for the purpose of adjusting our accruals and revising our disclosures accordingly, when required. Litigation is, however, subject to uncertainty, and the outcome of any particular matter is not predictable. We will vigorously defend our interests in pending litigation, and as of this date, we believe that the ultimate resolution of all such matters, after considering insurance coverage or other indemnities to which we are entitled, will not have a material adverse effect on our consolidated financial position, results of operations, or our cash flows. In 2015, Frontier accepted the FCC’s CAF Phase II offer, which provided $313 million in annual support through 2021 in our current 25 states in return for the Company’s commitment to make broadband available to households within the CAF II eligible areas. The Company was required to complete the CAF II deployment by December 31, 2021. Thereafter, the FCC has been reviewing carriers’ CAF II program completion data, and if the FCC determines that the Company did not satisfy applicable FCC CAF Phase II requirements, Frontier could be required to return a portion of the funds previously received and may be subject to certain fines, requirements and obligations. On January 30, 2020, the FCC adopted an order establishing the RDOF competitive reverse auction to provide support to serve high-cost areas. Under the FCCs RDOF Phase I auction, we were awarded approximately $371 million over ten years to build gigabit-capable broadband over a fiber-to-the-premises network to approximately 127,000 locations in eight states (California, Connecticut, Florida, Illinois, New York, Pennsylvania, Texas, and West Virginia). We began receiving RDOF funding in the second quarter of 2022 and we will be required to complete the buildout to the awarded locations by December 31, 2028, with interim annual target milestones starting December 31, 2025. To the extent Frontier is unable to fulfill the RDOF requirements, meet the milestones or construct to all locations by the required deadlines, funding to us could be discontinued and Frontier could be required to return a portion of funds previously received and may be subject to certain fines, requirements and obligations. On July 24, 2024, the U.S. Court of Appeals for the Fifth Circuit held that certain delegations of authority in the USF contribution system are unconstitutional. The court remanded the case to the FCC. The Fifth Circuit subsequently stayed the decision to allow the FCC to file a petition with the U.S. Supreme Court seeking review. The stay allowed for the continued collection of USF contributions while the Supreme Court considered the case. On June 27, 2025 the Supreme Court issued its opinion and upheld the legality of the current USF framework. We conduct certain of our operations in leased premises and lease certain equipment and other assets pursuant to operating leases. The lease arrangements have terms ranging from 1 to 99 years and several contain rent escalation clauses providing for increases in monthly rent at specific intervals. When rent escalation clauses exist, we record annual rental expense based on the total expected rent payments on a straight-line basis over the lease term. Certain leases also have renewal options. Renewal options that are reasonably assured are included in determining the lease term. As of June 30, 2025, we had total “Accounts payable and accrued liabilities” of $1.2 billion, of which $968 million is related to accounts payable. As of December 31, 2024, we had total “Accounts payable and accrued liabilities” of $1.0 billion, of which $758 million is related to accounts payable. Although from time to time we make short-term purchasing commitments to vendors with respect to capital expenditures, we generally do not enter into firm, written contracts for such activities. In connection with the fiber expansion build, we have prioritized diversifying our vendor base and solidifying partnership agreements with vendors for relevant labor and materials, to enable our build growth and customer expansion. Some of these key supplier agreements have multi-year terms and purchase commitments as we deem advisable in order to strengthen future supply. In addition, we have negotiated favorable payment terms with some of our vendors that allow for a longer payment period than our normal customary terms (referred to as vendor financing), which are excluded from capital expenditures and reported as financing activities on the statement of cash flows. As of June 30, 2025, we had $0 million of vendor financing liabilities included in “Other current liabilities” on our consolidated balance sheets. For the six months ended June 30, 2025 we made $16 million in vendor financing payments related to capital expenditures. We are party to contracts with several unrelated long-distance carriers. The contracts provide fees based on traffic they carry for us subject to minimum monthly fees.

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