The accompanying Notes are an integral part of these Consolidated Financial Statements.

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2018 AND 2017 ~~AND 2016~~

The accompanying Notes are an integral part of these Consolidated Financial Statements.

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2018 AND 2017 ~~AND 2016~~

The accompanying Notes are an integral part of these Consolidated Financial Statements.

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2018 AND 2017 ~~AND 2016~~

The accompanying Notes are an integral part of these Consolidated Financial Statements.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1)

~~(1)~~ Summary of Significant Accounting Policies:

(a) Basis of Presentation and Use of Estimates:

Frontier Communications Corporation and its subsidiaries are referred to as “we,” “us,” “our,” “Frontier,” or the “Company” in this report. Our interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. Certain reclassifications of amounts previously reported have been made to conform to the current ~~presentation, as described in Note 2 – Recent Accounting Literature.~~ presentation. All significant intercompany balances and transactions have been eliminated in consolidation. These interim unaudited consolidated financial statements include all adjustments (consisting of normal recurring accruals) considered necessary, in the opinion of Frontier’s management, to present fairly the results for the interim periods shown. Revenues, net loss and cash flows for any interim periods are not necessarily indicative of results that may be expected for the full year. For our interim financial statements as of and for the period ended ~~September 30, 2017,~~March 31, 2018, we evaluated subsequent events and transactions for potential recognition or disclosure through the date that we filed this Form 10-Q with the Securities and Exchange Commission (SEC).

Effective April 1, 2016, Frontier’s scope of operations and balance sheet changed materially as a result of the completion of the CTF Acquisition, as described in Note 3 – Acquisitions. Historical financial data presented for Frontier is not indicative of the future financial position or operating results for Frontier, and includes the results of the CTF Operations, as defined in Note 3 – Acquisitions, from the date of acquisition on April 1, 2016.

The preparation of our interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities at the date of the financial statements, (ii) the disclosure of contingent assets and liabilities, and (iii) the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates. Estimates and judgments are used when accounting for the allowance for doubtful accounts, asset impairments, indefinite-lived intangibles, depreciation and amortization, income taxes, business combinations, and pension and other postretirement benefits, among others.

We operate in one reportable segment. Frontier provides both regulated and unregulated voice, data and video services to consumer, commercial and wholesale customers and is typically the incumbent voice services provider in its service areas.

On July 10, 2017, we effected a one for fifteen reverse stock split of our common stock. The reverse stock split reduced the number of common shares issued (which includes outstanding shares and treasury shares) from approximately 1,193,000,000 shares to 80,000,000 shares, and reduced shares outstanding from 1,178,000,000 shares to 79,000,000 shares. In addition, and at the same time, the total number of shares of common stock that Frontier is authorized to issue changed from 1,750,000,000 shares to 175,000,000 shares. There was no change in the par value of the common stock, and no fractional shares were issued. All share and per share amounts in the financial statements and footnotes have been retroactively adjusted for all periods presented to give effect to the reverse stock split. As a result of our reverse stock split the conversion rates of our Series A Preferred Stock were proportionately adjusted.

(b) Accounting Changes:

Except for the changes discussed below, Frontier has consistently applied the accounting policies to all periods presented in these unaudited consolidated financial statements.

Effective January 1, 2018, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers,” as modified (ASC 606). Frontier applied ASC 606 using the modified retrospective method – i.e., by recognizing the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of equity at January 1, 2018. The historical periods have not been adjusted and continue to be reported under ASC 605 “Revenue Recognition.” See Note 3 for additional details.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The table below summarizes the impact of the adoption of ASC 606 on revenue, operating expenses, and operating income for the three months ended March 31, 2018:




	For the three months ended March 31, 2018
					Amounts without
			Adjustments		adoption of
	As Reported		for ASC 606		ASC 606

Revenue	$	2,199	$	(6)	$	2,193
Operating expenses		1,833		1		1,834
Operating income	$	366	$	(7)	$	359

Revenue for Voice services, Data & internet services, Video services, Switched and non-switched access services will be recognized as the service is ~~recognized when services~~provided. Services that are ~~provided or when products are delivered to customers. Revenue that is~~ billed in advance ~~includes~~include monthly recurring network access services (including data services), special access services, and monthly recurring voice, video, and related charges. The unearned portion of these fees is initially deferred as a component of “Advanced billings” on our consolidated balance sheet and recognized as revenue over the period that the services are provided. ~~Revenue~~Services that isare billed in arrears ~~includes~~include non-recurring network access services (including data services), switched access services, and non-recurring voice and video services. The earned but unbilled portion of these fees is recognized as

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

revenue in our consolidated statements of operations and accrued in “Accounts receivable” on our consolidated balance sheet in the period that ~~the~~ services are provided. Excise taxes are recognized as a liability when billed. Installation fees and their related direct and incremental costs are initially deferred and recognized as revenue and expense over the average term of a customer relationship. We recognize as current period expense the portion of installation costs that exceeds installation fee revenue.

Frontier collects various taxes from its customers and subsequently remits these taxes to governmental authorities. Substantially all of these taxes are recorded through the consolidated balance sheet and presented on a net basis in our consolidated statements of operations. We also collect Universal Service Fund (USF) surcharges from customers (primarily federal USF), $57 million and $53 million for the three months ended March 31, 2018 and 2017, respectively, and video franchise fees of $12 million and $14 million for the three months ended March 31, 2018 and 2017, respectively, that we have recorded on a gross basis in our consolidated statements of operations and included within “Revenue” and “Network related ~~expenses” of $52 million and $60 million, and $160 million and $161 million for the three and nine months ended September 30, 2017 and 2016, respectively.~~expenses.”

In 2015, we accepted the FCC’s Connect America Fund (CAF) Phase II offer of support, which is a successor to and augments the USF frozen high cost support that we had been receiving pursuant to a 2011 FCC order. Upon completion of the ~~CTF Acquisition,~~2016 acquisition of properties in California, Texas, and Florida with Verizon (CTF Acquisition), Frontier assumed the CAF Phase II support and related obligations that Verizon had previously accepted with regard to California and Texas. ~~CAF Phase II funding is a program intended to subsidize the high cost of establishing and delivering communications services to certain unserved or underserved areas.~~ We are recognizing these subsidies into revenue on a straight line basis, which is consistent with how the costs related to these subsidies are being and are expected to be incurred. CAF Phase II is a multi-year program which requires us to deploy broadband to a specified number of households in each of the states where funding was accepted. Failure to meet our deployment obligations at the end of the program in 2020 would result in a return of a portion of the funding received. We regularly evaluate our ability to meet our broadband deployment obligations and adjust revenue accordingly.straight-line basis.

~~We categorize~~For additional information about our ~~products, services~~revenue policies and other ~~revenues among the following five categories:~~

~~Data and Internet services~~ include broadband services for consumer and commercial customers. We provide data transmission services to high volume commercial customers and other carriers with dedicated high capacity circuits (“nonswitched access”) including services to wireless providers (“wireless backhaul”);

~~Voice services~~ include traditional local and long distance wireline services, Voice over Internet Protocol (VoIP) services, as well as a number of unified messaging services offered to our consumer and commercial customers. Voice services also include the long distance voice origination and termination services that we provide to our commercial customers and other carriers;

~~Video services~~ ~~include services provided directly to consumer customers through the FiOS~~® ~~and Vantage video brands, and through DISH~~® ~~satellite TV services;~~

~~Other~~ ~~includes sales of customer premise equipment to our commercial customers and directory services, less our provision for bad debts; and~~

~~Switched Access and Subsidy~~ revenues include revenues derived from allowing other carriers to use our network to originate and/or terminate their local and long distance voice traffic (“switched access”). These services are primarily billed on a minutes-of-use basis applying tariffed rates filed with the FCC or state agencies. We also receive cost subsidies from state and federal authorities, including the Connect America Fund Phase II.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~required disclosures in accordance with ASC 606, refer to Note 3.

~~The following table provides a summary of revenues from external customers by the categories of Frontier’s products and services:~~

For the three months ended

For the nine months ended

September 30,

September 30,

($ in millions)

2017

2016

2017

2016

Data and Internet services

$
956

$
1,045

$
2,923

$
2,680

Voice services

702

809

2,177

2,112

Video services

318

392

994

879

Other

84

73

231

218

Customer revenue

2,060

2,319

6,325

5,889

Switched access and subsidy

191

205

586

598

Total revenue

$
2,251

$
2,524

$
6,911

$
6,487

~~(c)~~(d) Goodwill and Other Intangibles:

Goodwill represents the excess of purchase price over the fair value of identifiable tangible and intangible net assets acquired in a business combination. We have undertaken studies to determine the fair values of assets and liabilities acquired as well as to allocate the purchase price to assets and liabilities, including property, plant and equipment, goodwill and other identifiable intangibles. We examine the carrying value of our goodwill and trade name annually as of December 31, or more frequently as circumstances warrant, to determine whether there are any impairment losses. We test for goodwill impairment at the “operating segment” level, as that term is defined in GAAP.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

We determined that we have one operating segment based on a number of factors that our management uses to evaluate and run our business operations, including similarities of customers, products and technology. ~~We tested goodwill for impairment~~No triggering events were identified as of September 30, 2017 as a result of the continued decline in share price of our common stock since June 30, 2017, the date of our last goodwill impairment test. Refer to Note 6 for a discussion of our goodwill impairment testing and results as of September 30, 2017. As stated in Note 2, we early adopted ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” during the second quarter of 2017 in conjunction with our goodwill impairment assessment.March 31, 2018.

Frontier amortizes finite-lived intangible assets over their estimated useful lives on the accelerated method of sum of the years digits. We review such intangible assets at least annually as of December 31 to assess whether any potential impairment exists and whether factors exist that would necessitate a change in useful life and a different amortization period.

(2) Recent Accounting Literature:

~~Recent~~Recently Adopted Accounting Pronouncements ~~Not Yet Adopted~~

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, ~~“Revenue~~“Revenue from Contracts with Customers.” This standard, along with its related amendments, requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which they expect to be entitled in exchange for those goods or services. ~~This new standard will be~~Frontier adopted ~~by Frontier for annual and interim reporting periods beginning with the first quarter of 2018.~~

The FASB allows two adoption methods under ASC 606. Companies are permitted to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. We currently plan to adopt the standard induring the first quarter of 2018, using themodified retrospective method – i.e., by recognizing the cumulative effect of initially applying Accounting Standards Codification Topic (ASC) 606 as an adjustment to the opening balance of shareholders’ equity at January 1, 2018. The comparative information for historical periods has not been adjusted and continues to be reported under ASC 605. See Note 3 for additional details and disclosures.

Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

Effective January 1, 2018, we adopted FASB ASU No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” This standard was established to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost by requiring that an employer disaggregate the service cost component of periodic benefit cost from the other components of net benefit cost. The amendments in the update also provide explicit guidance on how to present the service cost component and other components of net benefit cost in the income statement and allow only the service cost components of net benefit cost to be eligible for capitalization. For adoption, Frontier retrospectively applied changes to our presentation of pension settlement costs and certain other benefit costs.

The following table summarizes the impacts of adopting ASU No. 2017-07.



	For the three months ended March 31, 2017
			Impact of adoption
($ in millions)	As Reported		of ASU 2017-07		As Restated
Operating expenses:
Network related expenses	$	494	$	(1)	$	493
Selling, general and administrative expenses	$	544	$	(2)	$	542
Pension settlement costs	$	43	$	(43)	$	-

Non-operating income/expenses:
Investment and other income, net	$	3	$	(3)	$	-
Pension settlement costs	$	-	$	43	$	43

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

“modified retrospective method.” Under that method, we will apply the rules to all contracts existing as of January 1, 2018, recognizing, in beginning retained earnings, a cumulative-effect adjustment to include the establishment of contract asset and contract liability accounts with a corresponding adjustment to retained earnings. We will also provide additional disclosures comparing revenue recognized under ASC 606 to revenue as reported prior to the adoption of the standard.

Upon initial evaluation, we believe the key changes in the standard that impact our revenue recognition relate to the allocation of contract revenues among various services and equipment, and the timing of when those revenues are recognized. Additionally, the new standard will impact the timing of recognizing costs to obtain contracts. This includes a change in our existing policy related to the way we account for customer incentives, upfront non-recurring charges, commission payments, customer disputes and the allocation of discounts.

~~We are in the process of identifying and implementing changes to our systems, processes, policies and internal controls to meet the standard’s reporting and disclosure requirements.~~Recent Accounting Pronouncements Not Yet Adopted

Leases

In February 2016, the FASB issued ASU No. 2016 – 02, “Leases (Topic 842).” This standard establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. Upon implementation, lessees will need to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. It will be critical to identify leases embedded in a contract to avoid misstating the lessee’s balance sheet. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. Lessor accounting is similar to the current model but updated to align with certain changes to the lessee model and the new revenue recognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees and lessors. The new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years using modified retrospective application. Early application is permitted. Frontier is in the initial stages of evaluating the potential impact this new standard may have on the consolidated financial statements.

~~Compensation – Retirement Benefits~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

In ~~March 2017, the~~February 2018, FASB issued ASU ~~No. 2017-07, “Improving~~2018-02, which allows for the ~~Presentation~~reclassification of ~~Net Periodic Pension Cost~~certain income tax effects related to the Tax Cuts and ~~Net Periodic Postretirement Benefit Cost”.~~Jobs Act (the “Tax Act”) between “Accumulated other comprehensive income” and “Retained earnings.” This ~~standard was established~~ASU relates to ~~improve~~ the ~~presentation of net periodic pension cost~~requirement that adjustments to deferred tax liabilities and ~~net periodic postretirement benefit cost by requiring that an employer disaggregate~~assets related to a change in tax laws or rates to be included in “Income from continuing operations,” even in situations where the ~~service cost component of periodic benefit cost~~related items were originally recognized in “Other comprehensive income” (rather than in “Income from ~~the other components of net benefit cost.~~continuing operations”). The amendments in the update also provide explicit guidance on how to present the service cost component and other components of net benefit cost in the income statement and allow only the service cost components of net benefit cost to be eligible for capitalization. The new guidance isthis ASU are effective for ~~annual periods~~all entities for fiscal years beginning after December 15, ~~2017, including~~2018, and interim periods within those ~~annual periods and requires the presentation~~fiscal years, with early adoption permitted. Adoption of ~~the income statement~~this ASU is to be applied ~~retrospectively. As a result~~either in the period of adoption or retrospectively to each period in which the effect of the ~~standard, pension settlement costs~~change in the tax laws or rates were recognized. We are still evaluating certain aspects of this ASU as well as the related impacts it may have on our financial statements.

(3)ASC 606 Adoption and ~~certain benefit costs which are currently included in operating expense, would~~Revenue Recognition:

Frontier applied ASC 606 using the modified retrospective method – i.e., by recognizing the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of equity at January 1, 2018. The historical periods have not been adjusted and continue to be reported as other non-operating expense and will no longer be capitalized. This will have a material impact on previously reported operating income and may have a material impact to operating income in future periods, however, the impact to pre-tax income is not expected to be material.under ASC 605 “Revenue Recognition.”

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~Recently Adopted Accounting Pronouncements~~

~~Share-Based Payments - Scope of Modification Accounting~~

In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting which amends the scope of modification accounting for share-based payment arrangements. This standard provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The new guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods and early adoption is permitted including in any interim period. Frontier has adopted this standard during the second quarter 2017, with no impact to our share-based payment awards.

~~Intangibles – Goodwill~~

In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment.” This standard was established to simplify how an entity is required to test goodwill for impairment by eliminating Step 2from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment chargefollowing table includes information for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The FASB also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Frontier early adopted this standard during the second quarter of 2017 in conjunction with our goodwill impairment assessment. See Note 1 and Note 6 for further discussion.

~~Compensation – Stock Compensation~~

In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting,” to amend ASC Topic 718, “Compensation – Stock Compensation.” The ASU is part of the FASB’s ongoing simplification initiative, which is designed to reduce cost and complexity while maintaining or improving the usefulness of the information provided to the users of financial statements. The simplifications address a variety of areas for public entities, including the following: 1) accounting for income taxes, 2) classification of excess tax benefits on the statement of cash flows, 3) forfeitures, 4) minimum statutory tax withholding requirements, 5) classifications of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes, and 6) classification of awards with repurchase features. This guidance was effective for Frontier as of the third quarter of 2017. During the nine months ended September 30, 2017, Frontier recognized $2 million of income tax expense and recorded a cumulative effecttransition adjustment ~~to beginning accumulated deficit of $1 million to recognize all unrecognized deferred tax benefits~~ recorded as of January 1, ~~2017. For~~2018 to record the ~~nine months ended September 30, 2016, Frontier reclassified $10~~cumulative impact of adoption of ASC 606 for prior periods.



			(Unaudited)
	As Reported		ASC 606		Adjusted
($ in millions)	December 31, 2017		Transition Adjustment		January 1, 2018
Assets
Accounts receivable, net	$	819	$	(32)	$	787
Contract acquisition costs	$	-	$	87	$	87
Other current assets	$	64	$	4	$	68
Property, plant and equipment, net	$	14,377	$	15	$	14,392
Other assets	$	97	$	127	$	224

Liabilities and Equity
Other current liabilities	$	330	$	5	$	335
Other liabilities	$	317	$	(9)	$	308
Deferred income taxes	$	1,139	$	51	$	1,190
Accumulated deficit	$	(2,263)	$	154	$	(2,109)

The details of the significant changes are set out below.

Bundled Service and Allocation of Discounts

When customers purchase more than one service, the amount allocable to each service under ASC 606 is being determined based upon the relative stand-alone selling price of each service received. While this change results in different allocations to each of the services, it does not change total customer revenue.

Customer Incentives

When customers purchase more than one service, the amount allocable to each service under ASC 606 is determined based upon the relative stand-alone selling price of each service received. While this change results in different allocations to each of the services, it does not change total customer revenue. Under ASC 606, services, discounts, and other incentives offered to customers are considered separate performance obligations and a portion of consideration received from the customer over the contract will be allocated to them. Other customer revenue is recognized when the incentives are granted to the customer and our performance obligation is satisfied. The costs for these incentives will continue to be recognized as marketing expense and included in Selling, general and administrative expenses. Under ASC 606, cash equivalent customer incentives reduce the total contract value, which reduces revenue over the contract term, or in the case of a month-to-month contract over the expected contract term. When customer incentives issued exceed the reduction of revenue recorded over the contract term, a contract asset is generated. As part of the above transition adjustment, $40 million and $37 million of ~~taxes~~Short-term and Long-term contract assets were recorded, respectively. As of March 31, 2018, we have included $39 million of Short-term contract assets in Other current assets and $37 million of Long-term contract assets in Other assets on our consolidated balance sheet.

Upfront Fees

Under ASC 606, upfront non-refundable fees for carrier contracts that provide the customer with a material right to renew must be deferred and amortized into revenue over the typical contract term. Previously, these were recognized as revenue when billed. When upfront fees paid by customers exceeds the revenue recognized for the satisfaction of the performance obligations, a contract liability is generated. As part of the transition adjustment above, $13 million and $9 million of Short-term and Long-term contract liabilities were recorded, respectively, for carrier upfront fees. As of March 31, 2018, we have included $13 million of Short-term contract liabilities in Other current liabilities and $9 million of Long-term contract liabilities in Other liabilities on ~~behalf of employees~~our consolidated balance sheet related to ~~shares withheld from “Cash flows provided from (used by) operations” to “Cash flows used by financing activities” in accordance with the new standard.~~ carrier upfront fees.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Contract Acquisition Costs

~~(3)~~ Under ASC 606, certain costs to acquire customers must be deferred and amortized over the related contract period or expected customer life (average of 3.8 years). For Frontier, this includes certain commissions paid to acquire new customers. Beginning January 1, 2018, commissions attributable to new customer contracts are being deferred and amortized into expense.Historically these acquisition costs were expensed as incurred. Frontier expects that the incremental commissions paid as a result of acquiring customers are recoverable and therefore, as part of the transition adjustment above, short-term acquisition costs of $87 million and long-term contract acquisition costs of $117 million were capitalized. For the three months ended March 31, 2018, Frontier capitalized and deferred $33 million of costs and amortized deferred costs of $25 million to Selling, general and administrative expens~~Acquisitions~~e. :As of March 31, 2018, we have recorded short-term contract acquisition costs of $91 million and included $121 million of long-term contract acquisition costs in Other assets on our consolidated balance sheet.

~~The CTF Acquisition~~Reserves and Disputes

For carrier disputes, Frontier previously recorded a reserve as a reduction of commercial revenue on a case by case basis once the carrier claim was validated by Frontier. Under ASC 606, credits issued for disputes are variable consideration and an estimate for the credits to be issued is now being recorded at the time of customer billing and the related contract liability is reflected in our Allowance for doubtful accounts (see Note 4). Other than the transition adjustment, there was no impact to our operating results for the three months ended March 31, 2018 related to this change.

Switched Access

Contributions in Aid of Construction (CIAC)

It is customary for us to charge customers for certain construction activities requested by them. Historically, these amounts were reflected as offsets to the costs of construction and were recorded net in property, plant and equipment accounts. Under ASC 606, certain CIAC amounts will now be recognized as other customer revenue. For the three months ended March 31, 2018, we recognized $5 million in Revenue for performance obligations that were satisfied during the period.

USF Fees

~~On April 1, 2016, Frontier acquired~~Universal Service Fund Fees assessed to our customers were previously reflected in regulatory revenue. Under ASC 606, these amounts are being included in contract value and allocated to the ~~wireline operations of Verizon Communications, Inc. in California, Texas and Florida (the CTF Operations) for a purchase~~services which have been delivered based on relative stand-alone selling price of ~~$10,540 million in cash and assumed debt (the CTF Acquisition), pursuant to the February 5, 2015 Securities Purchase Agreement, as~~ each service.~~amended.~~ The final allocation of the purchase price presented below represents the effect of recording the fair value of assets acquired and liabilities assumed as of the date of the CTF Acquisition, based on the total transaction cash consideration of $9,871 million.



~~($ in millions)~~

~~Current assets~~	$	~~353~~
~~Property, plant & equipment~~		~~6,096~~
~~Goodwill~~		~~2,606~~
~~Other intangibles - primarily customer list~~		~~2,262~~
~~Current liabilities~~		~~(579)~~
~~Long-term debt~~		~~(544)~~
~~Other liabilities~~		~~(323)~~
~~Total net assets acquired~~	$	~~9,871~~

The fair value estimates related to the allocation of the purchase price to Other intangibles were revised and updated during the first quarter of 2017 from the previous estimates as of December 31, 2016. The allocation that was reported as of December 31, 2016 for Other intangibles increased $100 million, from $2,162 million to $2,262 million. These measurement period adjustments resulted in $20 million of amortization expense during the first quarter of 2017 that would have been recorded in 2016 if the adjustments had been recognized as of the acquisition date. Other adjustments to the allocation of the purchase price for the CTF Acquisition during the first quarter of 2017 resulted in a $140 million decrease in Property, plant & equipment, a $61 million increase in Current liabilities, and a $98 million increase in Goodwill.

The total consideration exceeded the net estimated fair value of the assets acquired and liabilities assumed by $2,606 million, which we recognized as goodwill. This goodwill is attributable to strategic benefits, including enhanced financial and operational scale, market diversification and leveraged combined networks that we expect to realize. This amount of goodwill associated with the CTF Acquisition will be deductible for income tax purposes.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following ~~unaudited pro forma financial information presents~~tables summarize the ~~combined results~~impacts of adopting ASC 606 on Frontier’s consolidated balance sheet and statement of operations ~~of Frontier and the CTF Operations as if the CTF Acquisition had occurred~~ as of ~~January 1, 2016. The pro forma information is not necessarily indicative of what~~and for the financial position or results of operations actually would have been had the CTF Acquisition been completed as of January 1, 2016. In addition, the unaudited pro forma financial information is not indicative of, nor does it purport to project, the future financial position or operating results of Frontier. The unaudited pro forma financial information excludes acquisition and integration costs and does not give effect to any estimated and potential cost savings or other operating efficiencies that may result from the CTF Acquisition. three months ended March 31, 2018.



	March 31, 2018
			Impact of		Amounts Excluding
($ in millions)	As Reported		Adoption of ASC 606		adoption of ASC 606
Assets
Accounts receivable, net	$	778	$	32	$	810
Prepaid expenses	$	78	$	4	$	82
Contract acquisition costs	$	91	$	(91)	$	-
Other current assets	$	54	$	(2)	$	52
Property, plant and equipment, net	$	14,321	$	(24)	$	14,297
Other assets	$	228	$	(130)	$	98

Liabilities and Equity
Other current liabilities	$	334	$	(9)	$	325
Other liabilities	$	280	$	10	$	290
Deferred income taxes	$	1,217	$	(53)	$	1,164
Accumulated deficit	$	(2,089)	$	(159)	$	(2,248)




	~~(Unaudited)~~
	~~For the nine months ended~~
~~($ in millions, except per share amounts)~~	~~September 30, 2016~~

~~Revenue~~		$	~~7,846~~

~~Operating income~~		$	~~1,129~~

~~Net loss attributable to Frontier common shareholders~~		$	~~(164)~~

~~Basic and diluted net loss per share attributable~~
~~to Frontier common shareholders~~		$	~~(2.10)~~



	For the three months ended March 31, 2018
			Impact of		Amounts Excluding
	As Reported		Adoption of ASC 606		Adoption of ASC 606
($ in millions)
Revenue	$	2,199	$	(6)	$	2,193

Operating expenses:
Network access expenses		372		(3)		369
Network related expenses		483		-		483
Selling, general and administrative expenses		469		4		473
Other operating expenses		509		-		509
Total operating expenses		1,833		1		1,834

Operating income	$	366	$	(7)	$	359

~~Acquisition~~The impact of adoption of ASC 606 on net income, basic and ~~Integration Costs~~diluted net loss per share, consolidated statement of comprehensive income, and the consolidated statement of cash flows were not material for the three months ended March 31, 2018.

~~Acquisition costs include financial advisory, accounting, regulatory, legal~~

We categorize our products, services and other ~~related costs. Integration costs include expenses that are incremental and directly related to~~revenues into the acquisition, which were incurred to integrate the network and information technology platforms. Integration costs also include costs to achieve synergies and operational efficiencies directly associated with the acquisition. following categories:

~~Frontier incurred operating expenses related~~Data and internet services include broadband services for residential and business customers. We provide data transmission services to ~~the CTF Acquisition as follows~~:high volume business customers and other carriers with dedicated high capacity circuits (“nonswitched access”) including services to wireless providers (“wireless backhaul”);

For the three months ended September 30,

For the nine months ended September 30,
($ in millions)

2017

2016

2017

2016

Acquisition costs

$
-

$
-

$
-

$
23
Integration costs

1

122

15

364
Total acquisition and

integration costs

$
1

$
122

$
15

$
387

Voice services include traditional local and long distance wireline services, Voice over Internet Protocol (VoIP) services, as well as a number of unified messaging services offered to our residential and business customers. Voice services also include the long distance voice origination and termination services that we provide to our business customers and other carriers;

~~We also invested $19 million~~Video services include revenues generated from services provided directly to residential customers through the FiOS® and ~~$99 million in capital expenditures related~~Vantage video brands, and through DISH® satellite TV services;

Other customer revenue includes switched access revenue, sales of customer premise equipment to our business customers, rents collected for collocation services, and revenue from other services and fees. Switched access revenue includes revenues derived from allowing other carriers to use our network to originate and/or terminate their local and long distance voice traffic (“switched access”). These services are primarily billed on a minutes-of-use basis applying tariffed rates filed with the ~~CTF Acquisition during the nine months ended September 30, 2017~~FCC or state agencies; and ~~2016, respectively.~~

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~(4)Accounts Receivable~~Subsidy and other regulatory revenue: includes revenues generated from cost subsidies from state and federal authorities, including the Connect America Fund Phase II.

The ~~components~~following table provides a summary of ~~accounts receivable, net are~~revenues, by category. Because of limited comparability for historical periods, we have reflected the current period under both an ASC 606 basis as ~~follows~~:well as the historical ASC 605 basis.

($ in millions)

September 30, 2017

December 31, 2016

Retail and wholesale

$
768

$
979
Other

81

90
Less: Allowance for doubtful accounts

(69)

(131)
Accounts receivable, net

$
780

$
938



	For the three months ended March 31,
	2018

			Impact		Amounts Excluding
			Adoption of		Adoption of
($ in millions)	As reported		ASC 606		ASC 606		2017

Data and Internet services	$	985	$	(43)	$	942	$	993
Voice services		702		(32)		670		751
Video services		280		29		309		347
Other		135		(50)		85		68
Revenue from contracts
with customers		2,102		(96)		2,006		2,159
Subsidy and other regulatory revenue		97		90		187		197
Total revenue	$	2,199	$	(6)	$	2,193	$	2,356

We maintain an allowance for doubtful accounts based on our estimate of our ability to collect accounts receivable. During 2017, we resolved settlements with carriers resulting in a reduction to our reserves of approximately $35 million. Bad debt expense, which is recorded as a reduction to revenue, was as follows:


									For the three months ended March 31,
									2018

											Impact of		Amounts Excluding
	For the three months ended September 30,				For the nine months ended September 30,						Adoption of		Adoption of
($ in millions)	2017		2016		2017		2016		As reported		ASC 606		ASC 606		2017

Bad debt expense	$	26	$	56	$	83	$	104

Consumer									$	1,128	$	(39)	$	1,089	$	1,164
Commercial										974		(57)		917		995
Revenue from contracts
with customers										2,102		(96)		2,006		2,159
Subsidy and other regulatory revenue										97		90		187		197
Total revenue									$	2,199	$	(6)	$	2,193	$	2,356

~~(5)~~ ~~Property, Plant~~Frontier satisfies its obligations to customers by transferring goods and ~~Equipment~~:

~~Depreciation expense is principally based on~~services in exchange for consideration received from the ~~composite group method. Depreciation expense was as follows~~:

~~We adopted new estimated remaining useful lives for certain plant assets as~~customer. The timing of ~~October 1, 2016, as a result of an annual independent study~~Frontier’s performance often differs from the timing of the ~~estimated remaining useful lives~~customer’s payment, which results in the recognition of ~~our plant assets, with~~a contract asset or a contract liability. Frontier recognizes a contract asset or liability when the Company transfers goods or services to a customer and bills an ~~insignificant impact~~amount which differs from the revenue allocated to ~~depreciation expense.~~

In 2017, we sold certain properties, generating $102 million in net proceeds, of which $97 million relates to property subject to leasebacks. For these properties, we have deferred $66 million in related gains that will be amortized over the related lease terms of two years. For the nine months ended September 30, 2017, amortization of these deferred gains totaled $14 million, which are included in “Selling, general and administrative expenses” on our consolidated income statement. We have remaining deferred gain balances of $52 million, which are included in “Other liabilities”.

~~The activity in goodwill from January 1, 2017 to September 30, 2017 was~~closing balances of Frontier’s contract asset, contract liability, receivables, and advanced billings balances for the three months ended March 31, 2018 are as ~~follows~~: follows:

~~We are required~~The activity in contract assets included our recognition of reductions to ~~perform impairment tests~~revenue related to ~~our goodwill annually, which we perform as~~discounts and other customer incentives of ~~December 31, or sooner if an indicator~~$11 million and contract assets generated by issuance of ~~impairment occurs. Due~~new discounts and customer incentives to customers of $10 million.

The increase in contract liabilities was driven primarily by the ~~continued decline in our stock price we had triggering events in each~~deferral of revenue for $29 million exceeding the $24 million of revenue recognized for the satisfaction of the ~~three quarters in 2017.~~

We use a market multiples approach to determine fair value. Marketplace company comparisons and analyst reports within the telecommunications industry have historically supported a range of fair values of multiples between 5.0x and 7.9x annualized EBITDA (defined as operating income, net of acquisition and integration costs, pension/OPEB expense, pension settlement costs, stock-based compensation expense, goodwill impairment, storm-related costs, and restructuring costs and other charges, as well as depreciation and amortization). We estimated the enterprise fair value using a multiple of 5.8x EBITDA.

Our second quarter quantitative assessment indicated that the carrying value of the enterprise exceeded its fair value and, therefore, an impairment existed, principally due to the decline in our profitability during the second quarter of 2017. We elected to early adopt the simplified goodwill method under ASU 2017-04, and recorded our goodwill impairment based on the amount that the enterprise carrying value exceeded the fair value, which resulted in a goodwill impairment of $670 million.

~~Our first and third quarter quantitative assessments indicated that the fair value of the enterprise exceeded its carrying value and, therefore, no indication of impairment existed in either period.~~

~~The market multiples approach that we use incorporates significant estimates and assumptions~~performance obligations related to the ~~forecasted results for~~deferred revenue.

Short-term contract assets, Long-term contract assets, Short-term contract liabilities, and Long-term contract liabilities are included in other current assets, other assets, other current liabilities, and other liabilities, respectively, on our consolidated balance sheet.

The following table includes estimated revenue expected to be recognized in the ~~remainder~~future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the ~~year including revenues, expenses, and the achievement of other cost synergies.~~ Our assessment includes many qualitative factors that require significant judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding the need for, or size of, an impairment. Continued declines in our profitability or cash flows or in the sustained, historically low trading prices of our common stock may result in further impairment.reporting period.

We also considered whether the carrying values of finite-lived intangible assets and property plant and equipment may not be recoverable or whether the carrying value of certain indefinite-lived intangible assets were impaired, noting no additional impairment was present as of September 30, 2017.

We maintain an allowance for doubtful accounts based on our estimate of our ability to collect accounts receivable. A transition adjustment of $32 million was recorded for the impact of ASC 606 to the Allowance for doubtful accounts as of January 1, 2018 to reflect the cumulative impact of this change on prior periods.

In 2018, we sold certain properties subject to leaseback, generating $10 million in net proceeds. For these properties, we have deferred $9 million in related gains that will be amortized over the related lease terms of two years.

For the three months ended March 31, 2018, amortization of deferred gains for properties sold in 2017 and 2018 totaled $8 million, which are included in “Selling, general and administrative expenses” on our consolidated statement of operations. We have a remaining deferred gain balance of $44 million, which is included in “Other current liabilities.”

Depreciation expense is principally based on the composite group method. Depreciation expense was as follows:

We adopted new estimated remaining useful lives for certain plant assets as of October 1, 2017, as a result of an annual independent study of the estimated remaining useful lives of our plant assets, with an insignificant impact to depreciation expense.

We are required to perform impairment tests related to our goodwill annually, which we perform as of December 31, or sooner if an indicator of impairment occurs. Accumulated goodwill impairment charges were $2,788 million as of March 31, 2018 and December 31, 2017. During the first quarter of 2018, Frontier has not identified any trigger events that would indicate impairment of goodwill, or any other intangible assets.

Amortization expense primarily represents the amortization of our customer base acquired as a result of ~~the CTF Acquisition, the acquisition of AT&T wireline properties~~our acquisitions in ~~Connecticut in~~2010, 2014, and ~~the acquisition of certain Verizon properties in 2010~~2016 with each based on a useful life of 8 to 12 years on an accelerated method.

The following table summarizes the carrying amounts and estimated fair values for long-term debt at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017. For the other financial instruments including cash, accounts receivable, long-term debt due within one year, accounts payable and other current liabilities, the carrying amounts approximate fair value due to the relatively short maturities of those instruments.

The fair value of our long-term debt is estimated based upon quoted market prices at the reporting date for those financial instruments.

The activity in our long-term debt from January 1, ~~2017~~2018 through ~~September 30, 2017~~March 31, 2018 is summarized as follows:

* Interest rate includes amortization of debt issuance costs and debt premiums or discounts. The interest rates at ~~September 30, 2017~~March 31, 2018 represent a weighted average of multiple issuances.

Additional information regarding our ~~senior unsecured~~long-term debt ~~senior secured debt~~as of March 31, 2018 and ~~subsidiary debt~~December 31, 2017 is as follows:

(1) Represents borrowings under the 2014 CoBank Credit Agreement, as defined below.

(2) Represents borrowings under the JPM Credit Agreement Term Loan A, as defined below.

(3) Represents borrowings under the 2016 CoBank Credit Agreement, as defined below.

(4) Represents borrowings under the JPM Credit Agreement Term Loan B, as defined below.

(5) Interest rate represents a weighted average of the stated interest rates of multiple issuances.

~~In September 2017,~~On March 19, 2018, Frontier ~~used proceeds from Term Loan B (see definition and note discussion below) to retire $24~~completed a private offering of $1,600 million aggregate principal amount of 8.500% Second Lien Secured Notes due ~~2020, $10 million~~2026 (the “Second Lien Notes”). The Second Lien Notes are guaranteed by each of ~~9.250%~~the Company’s subsidiaries that guarantees its senior secured credit facilities. The guarantees are unsecured obligations of the guarantors and subordinated in right of payment to all of the guarantor’s obligations under the Company’s senior secured credit facilities and certain other permitted future senior indebtedness but equal in right of payment with all other unsubordinated obligations of the guarantors. The Second Lien Notes ~~due 2021, $6 million~~indenture provides that (a) the aggregate amount of ~~7.125%~~all guaranteed obligations guaranteed by the guarantees are limited and shall not, at any time, exceed the lesser of (x) the principal amount of the Second Lien Notes ~~due 2019,~~then outstanding and ~~$5 million~~(y) the Maximum Guarantee Amount (as defined in the Second Lien Notes indenture), and (b) for the avoidance of ~~8.125%~~doubt, nothing in the Second Lien Notes ~~due 2018. Frontier recorded~~indenture shall, on any date or from time to time, allow the aggregate amount of all such guaranteed obligations guaranteed by the guarantors to cause or result in the Company or any subsidiary violating any indenture governing the Company’s existing senior notes. The Second Lien Notes are secured on a ~~gain~~second-priority basis by all the assets that secure Frontier’s obligations under its senior secured credit facilities on a first-priority basis. The collateral securing the Second Lien Notes and the Company’s senior secured credit facilities is limited to the equity interests of ~~$1 million driven primarily by discounts~~certain subsidiaries of the Company and substantially all personal property of Newco West Holdings LLC. The Second Lien Notes bear interest at a rate of 8.500% per annum and mature on April 1, 2026. Interest on the ~~retirement~~Second Lien Notes is payable to holders of record semi-annually in arrears on April 1 and October 1 of each year, commencing October 1, 2018.

During the ~~notes. On April 17, 2017,~~three months ended March 31, 2018, Frontier used cash ~~available~~ on hand ~~to retire $210~~for the scheduled retirement of $41 million contractual payments of ~~8.25% Senior Notes that matured on such date.~~

~~In June 2017,~~principal indebtedness. Additionally, Frontier used cash proceeds from ~~Term Loan B (see definition~~the $1,600 million Second Lien Notes offering and ~~note discussion below)~~cash on hand to retire ~~$763~~an aggregate principal amount of $1,651 million senior unsecured notes prior to maturity, consisting of ~~8.875% Notes due 2020 and $527~~$447 million of 8.500% ~~Notes~~senior notes due ~~2020.~~2020, $249 million 8.875% senior notes due 2020, $555 million of 6.250% due 2021, and $400 million of 9.250% senior notes due 2021. During the first three months of 2018, Frontier recorded a ~~loss~~gain on early extinguishment of debt of ~~$90~~$33 million driven primarily by discounts received on the retirement of certain notes, slightly offset by premiums paid to retire ~~the~~certain notes and unamortized original issuance costs.

On February 27, 2017, Frontier entered into a first amended and restated credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto, pursuant to which Frontier combined its revolving credit agreement, dated as of June 2, 2014, and its term loan credit agreement, dated as of August 12, 2015. Under the JPM Credit Agreement, as further amended on June 15, 2017 by Increase Joinder No.1 (as so amended, the JPM Credit Agreement), Frontier has a $1,625 million senior secured term loan A facility (the Term Loan A) maturing on March 31, 2021, an $850 million undrawn secured revolving credit facility maturing on February 27, 2022 (the Revolver), and $1,500 million senior secured term loan B facility (the Term Loan B) maturing on June 15, 2024. The maturities of the Term Loan A, the Revolver, and the Term Loan B, in each case if still outstanding, will be accelerated in the following circumstances: (i) if, 91 days before the maturity date of any series of Senior Notes maturing in 2020, 2023 and 2024, more than $500 million in principal amount remains outstanding on such series; or (ii) if, 91 days before the maturity date of the first series of Senior Notes maturing in 2021 or 2022, more than $500 million in principal amount remains outstanding, in the aggregate, on the two series of Senior Notes maturing in such year. The determination of interest rates for each of the facilities under the JPM Credit Agreement is based on margins over the Base Rate (as defined in the JPM Credit Agreement) or over LIBOR, at the election of Frontier. Interest rate margins on the Term Loan A and Revolver (ranging from 0.75% to 1.75% for Base Rate borrowings and 1.75% to 2.75% for LIBOR borrowings) are subject to adjustment based on Frontier’s Total Leverage Ratio (as defined in the JPM Credit Agreement). The interest rate on the Term Loan A as of ~~September 30, 2017~~March 31, 2018 was LIBOR plus 2.75%. Interest rate margins on the Term Loan B (2.75% for Base Rate borrowings and 3.75% for LIBOR borrowings) are not subject to adjustment. The security package under the JPM Credit Agreement includes pledges of the equity interests in certain Frontier subsidiaries and guaranties by certain Frontier subsidiaries. As of ~~September 30, 2017,~~March 31, 2018, the ~~revolving credit facility was fully available and~~company had no borrowings ~~had been made thereunder. The revolving~~outstanding under the revolver (with letters of credit ~~facility is available for general corporate purposes but may not be used to fund dividend payments.~~issued under the revolver totaling $62 million).

Frontier has two senior secured credit agreements with CoBank, ACB, as administrative agent, lead arranger and a lender, and the other lenders party thereto: the first, for a $350 million senior term loan facility drawn in 2014 (the 2014 CoBank Credit Agreement), matures on October 24, 2019, and the second, for a $315 million senior term loan facility drawn in October 2016 (the 2016 CoBank Credit Agreement), matures on October 12, 2021. We refer to the 2014 CoBank Credit Agreement and the 2016 CoBank Credit Agreement collectively as the CoBank Credit Agreements.

Repayment of the outstanding principal balance under each of the CoBank Credit Agreements is being made in quarterly installments ($9 million, with respect to the 2014 CoBank Credit Agreement, and $8 million, with respect to the 2016 CoBank Credit Agreement), in each case with the remaining outstanding principal balance to be repaid on the applicable maturity date. Borrowings under each of the CoBank Credit Agreements bear interest based on the margins over the Base Rate (as defined in the applicable CoBank Credit Agreement) or over LIBOR, at the election of Frontier.

On March 29, 2017, Frontier amended the 2014 and 2016 CoBank Credit Agreements. The amendments provide that interest rate margins under each of these facilities will range from 0.875% to 3.875% for Base Rate borrowings and 1.875% to 4.875% for LIBOR borrowings, subject to adjustment based on our Total Leverage Ratio, as defined in each credit agreement. The interest rate on each of the facilities as of ~~September 30, 2017~~March 31, 2018 was LIBOR plus ~~3.875%~~4.375%. In addition, the amendments provide for increases in the maximum Leverage Ratio and expansion of the security package identical to those contained in the JPM Credit Agreement.

On January 25, 2018 Frontier further amended its credit agreements with JP Morgan Chase and CoBank. The amendments, among other things, expanded the security package to include the interests of certain subsidiaries previously not pledged and replaced the net leverage ratio maintenance test with a first lien net leverage ratio maintenance test.

As of ~~September 30, 2017,~~March 31, 2018, we were in compliance with all of our indenture and credit facility covenants.

Our scheduled principal payments are as follows as of ~~September 30, 2017:~~March 31, 2018:

As of ~~September 30, 2017,~~March 31, 2018, restructuring related liabilities of ~~$12~~$9 million pertaining to employee separation charges were included in “Other current liabilities” in our consolidated balance sheet.

Restructuring costs and other charges, primarily consisting of severance and other employee-related costs of ~~$46~~$4 million and $12 million in connection with workforce reductions, are included in “Restructuring costs and other charges” in our consolidated statement of operations for the ~~nine~~three months ended ~~September 30, 2017. During the second quarter of 2017, Frontier sold its Frontier Secure Strategic Partnerships business at a loss of $9 million, which is also included in restructuring costs~~March 31, 2018 and ~~other charges for the nine months ended September 30,~~ 2017.

The following is a summary of the changes in the liabilities established for restructuring programs at ~~September 30, 2017:~~March 31, 2018:

The following is a summary of the components of Investment and Other Income for the three months ended March 31, 2018 and 2017:

The following is a reconciliation of the provision for income taxes computed at the federal statutory rate to income taxes computed at the effective rate:

Under ASC 605, income tax expense would have been $2 million lower for the three months ended March 31, 2018, as a result of changes in pre-tax income as discussed in Note 3.

Amounts pertaining to income tax related accounts of $0 million and $2 million are included in “Income taxes and other current assets” in the consolidated balance sheets as of March 31, 2018 and December 31, 2017, respectively.

~~The following is a reconciliation of the provision for income taxes computed at the federal statutory rate to income taxes computed at the effective rate:~~

~~Income taxes for the nine months ended September 30, 2017 includes the federal tax impact of $107 million related to the goodwill impairment recorded during the second quarter of 2017.~~

Income taxes for the nine months ended September 30, 2017 includes the impact of $2 million of income tax expense resulting from the adoption of ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting.”

Amounts pertaining to income tax related accounts of $48 million and $55 million are included in “Income taxes and other current assets” in the consolidated balance sheets as of September 30, 2017 and December 31, 2016, respectively.

~~During the first nine months of 2017, we received net state income tax refunds of $4 million. In October 2017, we received federal tax refunds of $48 million.~~

All share and per share amounts in the tables below have been retroactively adjusted for all periods presented to give effect to the reverse stock split. See Note 1 – Summary of Significant Accounting Policies for additional details.

In calculating diluted net loss per common share for the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2018 and 2017, the effect of all common stock equivalents is excluded from the computation as the effect would be antidilutive.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ previously granted options to purchase ~~2,664~~1,334 and 2,667 shares, issuable under employee compensation plans were excluded from the computation of diluted earnings (loss) per share (EPS) for those periods because the exercise prices were greater than the average market price of our common stock and, therefore, the effect would be antidilutive.

At ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ we had ~~161,020~~244,337 and ~~116,223~~139,666 stock units, respectively, issued under the Non-Employee Directors’ Deferred Fee Equity Plan (Deferred Fee Plan), the Non-Employee Directors’ Equity Incentive Plan (Directors’ Equity Plan), the 2013 Equity Incentive Plan and the 2017 Equity Incentive Plan. These securities have not been included in the diluted EPS calculation for the three months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016 and the nine months ended September 30, 2016~~ because their inclusion would have an antidilutive effect. Compensation costs associated with the issuance of stock units were ~~($4)~~$0 and $(2) million for the ~~nine~~three months ended ~~September 30, 2017. There were no compensation costs associated with the issuance of stock units for the nine months ended September 30, 2016.~~March 31, 2018 and 2017, respectively.

The impact of the common share equivalents associated with approximately 19,250,000 shares of Series A Preferred stock were not included in the diluted EPS calculation as of ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ as their impact was antidilutive.

At ~~September 30, 2017,~~March 31, 2018, we had seven stock-based compensation plans under which grants were made and awards remained outstanding. No further awards may be granted under six of the plans: the 1996 Equity Incentive Plan (the 1996 EIP), the Amended and Restated 2000 Equity Incentive Plan (the 2000 EIP), the 2009 Equity Incentive Plan (the 2009 EIP), the 2013 Equity Incentive Plan (the 2013 EIP), the Deferred Fee Plan and the Directors’ Equity Plan. At ~~September 30, 2017,~~March 31, 2018, there were approximately 5,667,000 shares authorized for grant and approximately ~~4,381,000~~2,270,000 shares available for grant under the 2017 Equity Incentive Plan (the 2017 EIP and together with the 1996 EIP, the 2000 EIP, the 2009 EIP and the 2013 EIPS, the EIPs). ~~Our general policy is to issue treasury shares upon the grant of restricted shares and the exercise of options.~~

On February ~~16, 2017,~~14, 2018, the Compensation Committee of our Board of Directors granted approximately ~~157,400~~284,000 performance shares under the Frontier Long Term Incentive Plan (the LTIP) and set the operating cash flow performance goal for 2017, which applies to the first year in the 2017-2019 measurement period, the second year of the 2016-2018 measurement period and the third year of the 2015-2017 measurement period.

The following summary presents information regarding LTIP target performance shares as of ~~September 30, 2017~~March 31, 2018 and changes during the ~~nine~~three months then ended with regard to LTIP shares awarded under the 2013 EIP and the 2017 EIP:

For purposes of determining compensation expense, the fair value of each performance share is measured at the end of each reporting period and, therefore, will fluctuate based on the price of Frontier common stock as well as performance relative to the targets. For the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ we recognized net compensation expense, reflected in “Selling, general and administrative expenses,” of $0$1 million and $4$(1) million, respectively, for the LTIP.

The following summary presents information regarding unvested restricted stock as of ~~September 30, 2017~~March 31, 2018 and changes during the ~~nine~~three months then ended with regard to restricted stock granted under the 2013 EIP and the 2017 EIP:

For purposes of determining compensation expense, the fair value of each restricted stock grant is estimated based on the average of the high and low market price of a share of our common stock on the date of grant, for shares granted prior to May 10, 2017. Beginning on May 10, 2017, the fair value of each restricted stock grant is estimated based on the closing price of a share of our common stock on the date of the grant. Total remaining unrecognized compensation cost associated with unvested restricted stock awards that is deferred at ~~September 30, 2017~~March 31, 2018 was ~~$26~~$43 million, and the weighted average vesting period over which this cost is expected to be recognized is approximately ~~1.5~~2 years.

Shares of restricted stock granted during the first ~~nine~~three months of ~~2016~~2017 totaled ~~375,133.~~431,000. The total fair value of shares of restricted stock granted and vested at ~~September 30, 2016~~March 31, 2017 was approximately ~~$23 million and $15 million, respectively.~~$14 million. The total fair value of unvested restricted stock at ~~September 30, 2016~~March 31, 2017 was ~~$37~~$24 million. The weighted average grant date fair value of restricted shares granted during the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2017 was ~~$78.60~~$49.95 per share.

We have granted restricted stock awards to employees in the form of our common stock. None of the restricted stock awards may be sold, assigned, pledged or otherwise transferred, voluntarily or involuntarily, by the employees until the restrictions lapse, subject to limited exceptions. The restrictions are time-based. Compensation expense, recognized in “Selling, general and administrative expenses,” of ~~$14~~$3 million and $4 million for each of the ~~nine~~three month periods ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~respectively, has been recorded in connection with these grants.

Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting shareholders’ investment and pension/postretirement benefit (OPEB) liabilities that, under GAAP, are excluded from net loss.

The components of accumulated other comprehensive loss, net of tax at ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ and changes for the ~~nine~~three months then ended, are as follows:

As a result of ~~the~~ pension settlement accounting, ~~discussed in Note 14,~~ the Frontier Communications Pension Plan (the Pension Plan) was remeasured as of ~~September 30, 2017. This remeasurement resulted in a decrease in the discount rate from 4.10% at~~ March 31, 2017 to 3.8% at June 30, 2017 and September 30, 2017, in addition to census data changes resulting in the recording of a loss on remeasurement to Other comprehensive income (loss) during each of the quarters.2017. For the ~~nine~~three months ended ~~September 30,~~March 31, 2017, Frontier recorded a net loss on remeasurement of ~~$32~~$48 million to Other comprehensive income (loss). Additionally, during this period Frontier recorded pension settlement charges totaling ~~$77~~$43 million ~~($48 million net of tax)~~ to Other comprehensive income (loss). Refer to Note 1415 for details about the settlement accounting.

The significant items reclassified from each component of accumulated other comprehensive loss for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ are as follows:

(b) These accumulated other comprehensive loss components are included in the computation of net periodic pension and OPEB costs (see Note 1415 - Retirement Plans for additional details).

During the first ~~nine~~three months of ~~2017~~2018 and ~~2016,~~2017, we capitalized ~~$20~~$7 million and ~~$18~~$7 million, respectively, of pension and OPEB expense into the cost of our capital expenditures, as the costs relate to our engineering and plant construction activities.

The Pension Plan contains provisions that provide certain employees with the option of receiving a lump sum payment upon retirement. Frontier’s accounting policy is to record these payments as a settlement only if, in the aggregate, they exceed the sum of the annual service and interest costs for the Pension Plan’s net periodic pension benefit cost. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2017, lump sum pension settlement payments to terminated or retired individuals amounted to ~~$87 million and $449~~$255 million, which exceeded the settlement threshold of ~~$224~~$234 million, and as a result, Frontier recognized a non-cash settlement ~~charges totaling $77~~charge of $43 million during the first ~~nine months~~quarter of 2017. The non-cash charge accelerated the recognition of a portion of the previously unrecognized actuarial losses in the Pension Plan. These non-cash charges increased our recorded net loss and accumulated deficit, with an offset to accumulated other comprehensive loss in shareholders’ equity. ~~An additional pension settlement charge will be required in the fourth quarter of 2017, the amount of which will be dependent on the lump sum benefit payments made during the fourth quarter.~~ As a result of the recognition of the settlement charges in the first ~~nine~~three months of 2017, the net pension plan liability was remeasured as of ~~September 30, 2017, June 30, 2017 and~~ March 31, 2017 to be ~~$717~~$655 million, ~~$711 million and $665million, respectively,~~ as compared to the $699 million measured and recorded at ~~December 31, 2016. The remeasured funded status of the Pension Plan was approximately 80%, as of September 30, 2017, similar to~~ December 31, 2016. Frontier did not record any adjustment to the pension plan liability, beyond the settlement charge, as a result of this remeasurement.

Our Pension Plan assets decreased from $2,674 million at December 31, 2017 to $2,558 million at March 31, 2018, a decrease of $116 million, or 4%. This decrease was a result of benefit payments of $102 million and negative investment returns of $45 million, net of investment management and administrative fees, partially offset by contributions of $31 million.

Our Pension Plan assets decreased from $2,766 million at December 31, 2016 to $2,604 million at September 30, 2017, a decrease of $162 million, or 6%. This decrease was a result of benefit payments of $492 million, partially offset by positive investment returns of $270 million, net of investment management and administrative fees, and contributions in excess of the Differential (as defined below) of $60 million, during the first nine months of 2017.

As part of the CTF Acquisition, Verizon was required to make a cash payment to Frontier for the difference in assets initially transferred by Verizon into the Pension Plan and the related obligation (the Differential). In the third quarter of 2017, we received the $131 million Differential payment from Verizon, and have remitted an equivalent amount to the Pension Plan as of September 30, 2017. As the Differential was reflected as a receivable of the Pension Plan at December 31, 2016, the cash funding had no impact to plan assets.

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 June 2015, Frontier accepted the Federal Communications Commission’s (FCC) offer of support to price cap carriers under the Connect America Fund (CAF) Phase II program, which is intended to provide long-term support for broadband in high cost unserved or underserved areas. This program provides $332 million in annual support ~~including $49 million in annual support related to the properties acquired in the CTF Acquisition,~~ through 2020 to make available 10 Mbps downstream/1 Mbps upstream broadband service to approximately 774,000 households across certain of the 29 states where we ~~now~~ operate. To the extent we do not enable the required number of households with 10 Mbps downstream/1 Mbps upstream broadband service by the end of the CAF Phase II term in 2020, we would be required to return a portion of the funds previously received. Frontier’s frozen high-cost phasedown support is expected to be $6 million in 2018.

On April 20, 2017, the FCC issued an Order that ~~will~~ significantly ~~alter~~altered how Commercial Data Services are ~~regulated once the rules go into effect.~~regulated. Specifically, the Order adopted a test to determine, on a county-by-county basis, whether price cap ~~ILECs’,~~ILECs, like Frontier’s DS1 and DS3 services, will continue to be regulated. The test ~~is likely to result~~resulted in deregulation in a substantial number of our ~~markets. Once implemented, the deregulation will allow~~markets and is allowing Frontier to offer its DS1 and DS3 services in a manner that better responds to the competitive marketplace and allows for commercial negotiation. The areas that remain regulated may be subject to price fluctuations depending upon the price cap formula that year. Multiple parties have appealed ~~and requested a stay of this Order.~~the Order, which is pending in the 8th Circuit. Frontier cannot predict the extent to which these regulatory changes will ~~result in changes to~~affect revenues at this time.

On April 30, 2018, an amended consolidated class action complaint was filed in the United States District Court for the District of Connecticut on behalf of certain purported stockholders against Frontier, certain of its current and former directors and officers and the underwriters of certain Frontier securities offerings. The complaint is brought on behalf of all persons who (1) acquired Frontier common stock between February 6, 2015 and February 28, 2018, inclusive, and/or (2) acquired Frontier common stock or Mandatory Convertible Preferred Stock either in or traceable to Frontier’s offerings of common and preferred stock conducted on or about June 2, 2015 and June 8, 2015. The complaint asserts, among other things, violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 thereunder, Section 20(a) of the Exchange Act and Sections 11 and 12 of the Securities Act of 1933, as amended, in connection with certain disclosures relating to the CTF Acquisition. The complaint seeks, among other things, damages and equitable and injunctive relief. We dispute the allegations in the complaint described above and intend to vigorously defend against such claims. Given that this matter is in the early stages of litigation, we are unable to estimate a reasonably possible range of loss, if any, that may result from this matter.

In addition, we are party to various other legal proceedings (including individual, class and putative class ~~actions)~~actions as well as 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 contracts, billing disputes, rights of access, taxes and surcharges, consumer protection, trademark and patent infringement, employment, ~~shareholder,~~ regulatory, tort, claims of competitors and disputes with other carriers. Such matters are subject to uncertainty and the outcome of individual matters is not predictable. However, we believe that the ultimate resolution of these 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.

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 October 2013, the California Attorney General’s Office notified certain Verizon companies, including one of the subsidiaries that we acquired in the CTF Acquisition, 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 are cooperating with this investigation. We have accrued an amount for potential penalties

that we deem to be probable and reasonably estimated, and we do not expect that any potential penalties, if ultimately incurred, will be material in comparison to the established accrual.

2930

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains"forward-looking statements" related to future events. Forward-looking statements address our expected future business and financial performance and financial condition, and contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "may," “will,” "would," or "target." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:

competition from cable, wireless and wireline carriers, satellite, and OTT companies, and the risk that we will not respond on a timely or profitable basis;

our ability to successfully adjust to changes in the communications industry, including the effects of technological changes and competition on our capital expenditures, products and service offerings;

our ability to implement organizational structure changes successfully;

risks related to the operation of our properties and our ability to retain or attract new customers;

our ability to realize anticipated cost savings and meet commitments made in connection with the Verizon acquisition;

reductions in revenue from our voice customers that we cannot offset with increases in revenue from broadband and video subscribers and sales of other products and services;

our ability to maintain relationships with customers, employees or suppliers;

the effects of governmental legislation and regulation on our business, such as action on net neutrality, including costs, disruptions, possible limitations on operating flexibility and changes to the competitive landscape resulting from such legislation or regulation;

the impact of regulatory, investigative and legal proceedings and legal compliance risks;

government infrastructure projects (such as highway construction) that impact our capital expenditures;

continued reductions in switched access revenues as a result of regulation, competition or technology substitutions;

the effects of changes in the availability of federal and state universal service funding or other subsidies to us and our competitors;

our ability to meet our remaining CAF II funding obligations on a timely basis and that we could be subject to penalties or obligations to return certain CAF II funds;

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

our ability to effectively manage service quality in our territories and meet mandated service quality metrics;

our ability to successfully introduce new product offerings;

the effects of changes in accounting policies or practices, including potential future impairment charges with respect to our intangible assets;

our ability to effectively manage our operations, operating expenses, capital expenditures, debt service requirements and cash paid for income taxes and liquidity;

the effects of changes in both general and local economic conditions in the markets that we serve;

the effects of increased medical expenses and pension and postemployment expenses;

the effects of changes in income tax rates, tax laws, regulations or rulings, or federal or state tax assessments, including the risk that such changes may benefit our competitors more than us;

our ability to successfully renegotiate union contracts;

changes in pension plan assumptions, interest rates, discount rates, regulatory rules and/or the value of our pension plan assets, which could require us to make increased contributions to our pension plans;

adverse changes in the credit markets;

adverse changes in the ratings given to our debt securities by nationally accredited ratings organizations;

the availability and cost of financing in the credit markets;

covenants in our indentures and credit agreements that may limit our operational and financial flexibility as well as our ability to access the capital markets in the future;

the effects of state regulatory cash management practices that could limit our ability to transfer cash among our subsidiaries or dividend funds up to the parent company;

the effects of severe weather events or other natural or man-made disasters, which has, and may in the future, increase our operating and capital expenses or adversely impact customer revenue;

the impact of potential information technology or data security breaches or other disruptions; and

the risks and other factors contained in our other filings with the SEC.

Any of the foregoing events, or other events, could cause our results to vary from management’s forward-looking statements included in this report. You should consider these important factors in evaluating any statement in this report or otherwise made by us or on our behalf. We have no obligation to update or revise these forward-looking statements and do not undertake to do so.

Investors should also be aware that while we do, at various times, communicate with securities analysts, it is against our policy to disclose to them selectively any material non-public information or other confidential information. Accordingly, investors should not assume that we agree with any statement or report issued by an analyst, irrespective of the content of the statement or report. To the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Forward-Looking Statements~~Overview

This Quarterly Report on Form 10-Q contains "forward-looking statements," related to future, not past, events. Forward-looking statements address our expected future business and financial performance and financial condition, and contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," or "target." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:

~~competition from cable, wireless and wireline carriers, satellite, and OTT companies, and the risk that we will not respond on a timely or profitable basis;~~

risks related to the operation of properties acquired from Verizon, including our ability to retain or obtain customers in those markets, our ability to realize anticipated cost savings, and our ability to meet commitments made in connection with the acquisition;

~~reductions in revenue from our voice customers that we cannot offset with increases in revenue from broadband and video subscribers and sales of other products and services;~~

~~our ability to maintain relationships with customers, employees or suppliers;~~

~~our ability to attract/retain key talent;~~

~~the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks;~~

~~continued reductions in switched access revenues as a result of regulation, competition or technology substitutions;~~

~~the effects of changes in the availability of federal and state universal service funding or other subsidies to us and our competitors;~~

~~our ability to effectively manage service quality in our territories and meet mandated service quality metrics;~~

~~our ability to successfully introduce new product offerings;~~

~~the effects of changes in accounting policies or practices, including potential future impairment charges with respect to our intangible assets;~~

our ability to effectively manage our operations, operating expenses, capital expenditures, debt service requirements and cash paid for income taxes and liquidity, which may affect payment of dividends on our common and preferred shares;

~~the effects of changes in both general and local economic conditions on the markets that we serve;~~

~~the effects of increased medical expenses and pension and postemployment expenses;~~

~~the effects of changes in income tax rates, tax laws, regulations or rulings, or federal or state tax assessments;~~

~~our ability to successfully renegotiate union contracts;~~

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

changes in pension plan assumptions, interest rates, regulatory rules and/or the value of our pension plan assets, which could require us to make increased contributions to the pension plan in 2017 and beyond;

~~adverse changes in the credit markets;~~

~~adverse changes in the ratings given to our debt securities by nationally accredited ratings organizations;~~

~~the availability and cost of financing in the credit markets;~~

~~covenants in our indentures and credit agreements that may limit our operational and financial flexibility;~~

~~the effects of state regulatory cash management practices that could limit our ability to transfer cash among our subsidiaries or dividend funds up to the parent company;~~

~~the effects of severe weather events or other natural or man-made disasters, which may increase our operating expenses or adversely impact customer revenue;~~

~~the impact of potential information technology or data security breaches or other disruptions; and~~

~~the risks and other factors contained in our other filings with the U.S. Securities and Exchange Commission, including our reports on Form 10-K.~~

~~Any~~Frontier Communications Corporation (Frontier) is a provider of the foregoing events, or other events, could cause our results to vary from management’s forward-looking statements included in this report. You should consider these important factors in evaluating any statement in this report or otherwise made by us or on our behalf. The following information is unaudited and should be read in conjunction with the consolidated financial statements and related notes included in this report. We have no obligation to update or revise these forward-looking statements and do not undertake to do so.

Investors should also be aware that while we do, at various times, communicate with securities analysts, it is against our policy to disclose to them selectively any material non-public information or other confidential information. Accordingly, investors should not assume that we agree with any statement or report issued by an analyst irrespective of the content of the statement or report. To the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~Management’s Discussion and Analysis~~

~~On April 1, 2016, we completed our acquisition of Verizon’s wireline properties in California, Texas, and Florida (the CTF Acquisition, of the CTF Operations).~~Frontier’s scope of operations and balance sheet changed materially as a result of the completion of the CTF Acquisition. Historical financial and operating data presented for Frontier includes the results of the CTF Operations that were acquiredcommunications services in the ~~CTF Acquisition from the date~~United States, with approximately 4.3 million customers, 3.9 million broadband subscribers and 22,100 employees, operating in 29 states. We offer a broad portfolio of ~~acquisition~~communications services for consumer and commercial customers. These services which include data and internet services, video services, voice services, access services, and advanced hardware and network solutions, are offered on ~~April 1, 2016 and is not indicative of future operating results. The financial discussion below includes~~either a ~~comparative analysis of our results of operations~~standalone basis or in a bundled package, depending on ~~a historical basis as of and for the nine months ended September 30, 2017 and 2016.~~each customer’s needs.

On July 10, 2017, we effected a one for fifteen reverse stock split of our common stock. The reverse stock split reduced the number of common shares issued (which includes outstanding shares and treasury shares) from approximately 1,193,000,000 shares to 80,000,000 shares, and reduced shares outstanding from 1,178,000,000 shares to 79,000,000 shares. In addition, and at the same time, the total number of shares of common stock that Frontier is authorized to issue changed from 1,750,000,000 shares to 175,000,000 shares. There was no change in the par value of the common stock, and no fractional shares were issued. All share and per share amounts in the financial discussion below have been retroactively adjusted for all periods presented to give effect to the reverse stock split. As a result of our reverse stock split the conversion rates of our Series A Preferred Stock were proportionately adjusted.

Our financial results for the first nine months of 2017 include the CTF Operations for the first quarter of 2017. With the acquisition occurring April 1, 2016, there are no comparative results for the corresponding period in 2016. The table below reflects the results of operations for the CTF Operations for the first quarter of 2017. In the narrative that follows for the nine month period, unless otherwise noted we will only discuss the remaining variance.



	~~For the three months ended~~
(~~$ in millions~~)	~~March 31, 2017~~

~~Data and Internet services~~	$	~~422~~
~~Voice services~~		~~327~~
~~Video services~~		~~281~~
~~Other~~		5
~~Customer revenue~~		~~1,035~~
~~Switched access and subsidy~~		52
~~Total revenue~~	$	~~1,087~~

~~Network access expenses~~	$	~~261~~
~~Network related expenses~~		~~197~~
~~Selling, general and administrative expenses~~		~~226~~
~~Depreciation and amortization~~		~~280~~
~~Acquisition and integration costs~~		-
~~Pension settlement costs~~		22
~~Restructuring costs and other charges~~		1
~~Total operating expenses~~	$	~~987~~

3233

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

Effective January 1, 2018, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers,” as modified (ASC 606) using the modified retrospective method. Under this approach, prior period results were not restated to reflect the impact of ASC 606, resulting in limited comparability between 2017 and 2018 operating results. The table below reflects the results for the three months ended March 31, 2018 under the historical method of accounting as well as under ASC 606. The significant adjustments have been broken out and a brief explanation for each provided. See Notes to the Consolidated Financial Statements for additional details.


		For the three months ended March 31, 2018
	Amounts						Switched
	excluding		Discounts				access				As reported
	adoption of		and		Upfront		and USF				under
($ in millions)	ASC606		incentives		fees		Fees		Other		ASC606

Revenue:
Data and Internet services	$	942	$	23	$	16	$	4	$	-	$	985
Voice services		670		(14)		(3)		51		(2)		702
Video services		309		(20)		(10)		1		-		280
Other		85		10		(1)		34		7		135
Revenue from contracts
with customers		2,006		(1)		2		90		5		2,102
Subsidy and other
regulatory revenue		187		-		(1)		(90)		1		97
Total revenue	$	2,193	$	(1)	$	1	$	-	$	6	$	2,199

Operating Expenses:
Network access expenses	$	369	$	4	$	-	$	-	$	(1)	$	372
Network related expenses		483		-		-		-		-		483
Selling, general and
administrative expenses		473		-		3		-		(7)		469
Depreciation and
amortization		505		-		-		-		-		505
Restructuring costs and
other charges		4		-		-		-		-		4
Total operating expenses	$	1,834	$	4	$	3	$	-	$	(8)	$	1,833

Operating income		359		(5)		(2)		-		14		366

Customer Revenue:
Consumer	$	1,089	$	9	$	-	$	29	$	1	$	1,128
Commercial		917		(10)		2		61		4		974
Revenue from contracts
with customers	$	2,006	$	(1)	$	2	$	90	$	5	$	2,102

Average monthly consumer
revenue per customer	$	83.26									$	86.21

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

Discounts and Incentives

Upfront Fees

Under ASC 606, upfront non-refundable customer fees that provide the customer with a material right to renew must be deferred and amortized into revenue over the typical contract term. For our carrier customers, these were previously recognized as revenue when billed.

Switched Access and USF Fees

Under ASC 606, switched access revenue, which has been historically reflected in Other regulatory revenue, is considered revenue from a customer; therefore, will be reflected in commercial customer revenue on a prospective basis. Universal Service Fund Fee assessed to our customers were previously reflected in regulatory revenue. Under ASC606, these amounts are being included in contract value and allocated to the services which have been delivered based on relative stand-alone selling price of each service.

The sections below include tables that present customer counts, average monthly consumer revenue per customer (ARPC) and consumer customer churn, which we define as the average of the number of consumer customer deactivations during the month divided by the number of consumer customers at the beginning of the month.

Management believes that consumer customer counts and average monthly revenue per customer are important factors in evaluating our consumer customer trends. Among the key services we provide to consumer customers are voice service, data service and video service. We continue to explore the potential to provide additional services to our customer base, with the objective of meeting all of our customers’ communications needs.

The following should be read in conjunction with Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~(a)~~

~~Results of Operations~~

~~CUSTOMER RELATED METRICS~~

As of or for the three months ended

September 30, 2017

December 31, 2016

% Increase (Decrease)

September 30, 2016

% Increase (Decrease)

Customers (in thousands)

4,949

5,393

(8)
%

5,551
(1)
(11)
%

Consumer customer metrics

Customers (in thousands)

4,486

4,891

(8)
%

5,035
(1)
(11)
%

Net customer additions/(losses)

(99)

(144)

(31)
%

(155)

(36)
%

Average monthly consumer

revenue per customer

$
80.91

$
80.33

1
%

$
82.34

(2)
%

Customer monthly churn

2.08%

2.08%

-
%

2.08%

-
%

Commercial customer metrics

Customers (in thousands)

463

502

(8)
%

516
(1)
(10)
%

Broadband subscriber metrics

(in thousands)

Broadband subscribers

4,000

4,271

(6)
%

4,362
(2)
(8)
%

Net subscriber additions/(losses)

(63)

(91)

(31)
%

(99)

(36)
%

Video (excl. DISH) subscriber metrics

(in thousands)

Video subscribers (in thousands)

981

1,145

(14)
%

1,222
(2)
(20)
%

Net subscriber additions/(losses)

(26)

(77)

(66)
%

(82)

(68)
%

DISH subscriber metrics

(in thousands)

DISH subscribers (in thousands)

244

274

(11)
%

281
(2)
(13)
%

Net subscriber additions/(losses)

(10)

(7)

43
%

(11)

(9)
%

Employees

23,181
(3)

28,332

(18)
%

30,358

(24)
%

As of or for the nine months ended

September 30, 2017

September 30, 2016

% Increase

Consumer customer metrics

Average monthly consumer

revenue per customer

$
80.73

$
76.11

6
%

Customer monthly churn

2.23%

1.94%

15
%

⁽¹⁾

~~2,283,000 consumer customers, 250,000 commercial customers and 2,533,000 total customers were acquired at the time of the April 2016 CTF Acquisition.~~

⁽²⁾

~~2,052,000 broadband subscribers and 1,165,000 video subscribers were acquired at the time of the April 2016 CTF Acquisition.~~

⁽³⁾

~~At December 31, 2016, we had approximately 1,900 employees in our Frontier Secure Strategic Partnerships business, which was sold in May 2017.~~

~~Customer Trends and Revenue Performance~~

We provide service and product options in our consumer and commercial offerings in each of our markets. As of September 30, 2017, 68% of our consumer broadband customers were subscribed to at least one other service offering.

We had approximately 4,486,000 and 5,035,000 total consumer customers as of September 30, 2017 and 2016, respectively. Our consumer customer churn was 2.08% for the three months ended September 30, 2017 (1.92% for Frontier legacy and 2.33% for CTF Operations) compared to 2.08% (1.89% for Frontier legacy and 2.34% for CTF Operations) for the third quarter of 2016 and 2.24% (1.95% for Frontier legacy and 2.69% for CTF Operations) for the second quarter of 2017, respectively. The consolidated average monthly consumer revenue per customer

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

(consumer ARPC) decreased by $1.43 or 2% to $80.91 during the third quarter of 2017 compared to the prior year period. The overall decrease in consumer ARPC is a result of lower voice services revenue and lower video revenue from our CTF Operations, partially offset by higher Frontier Secure revenue.

Our consumer customer churn was 2.23% for the nine months ended September 30, 2017 (1.94% for Frontier legacy and 2.68% for CTF Operations) compared to 1.94% (1.81% for Frontier legacy and 2.27% for CTF Operations) for the nine months ended September 30, 2016. The consolidated average monthly consumer revenue per customer (consumer ARPC) increased by $4.62 or 6% to $80.73 during the first nine months of 2017 compared to the prior year period. The overall increase in consumer ARPC is a result of higher revenue due to having nine months of CTF Operations in 2017 and only six months in 2016, partially offset by lower voice services revenue.

We had approximately 463,000 and 516,000 total commercial customers as of September 30, 2017 and 2016, respectively. We lost approximately 10,000 commercial customers during the three months ended September 30, 2017 compared to a loss of 12,000 customers for the three months ended September 30, 2016 and a loss of 11,000 for the three months ended June 30, 2017. Frontier expects the declines in voice services revenue and wireless backhaul revenues from commercial customers to continue for the remainder of 2017. Our Ethernet product revenues from our SME (small business, medium business and larger enterprise customers) and carrier customers have grown by 9% for the Frontier legacy operations during the third quarter of 2017, compared to the prior year period, and declined by 3% (including CTF Operations) compared to the second quarter of 2017.

We had approximately 4,000,000 and 4,362,000 broadband subscribers as of September 30, 2017 and 2016, respectively. During the three months ended September 30, 2017, we lost approximately 63,000 net broadband subscribers compared to a loss of 99,000 and a loss of 99,000 for the three months ended September 30, 2016 and June 30, 2017, respectively.

~~We offer video services under the Vantage brand to certain of our customers in portions of Connecticut, North Carolina, South Carolina and Minnesota, and under the FiOS~~® brand in portions of California, Texas, and Florida (and on a limited basis in Indiana, Oregon and Washington). We also offer satellite TV video service to our customers under an agency relationship with DISH® in all of our markets. For the three months ended September 30, 2017, we lost approximately 36,000 net video subscribers across all markets. At September 30, 2017, we had 981,000 linear video subscribers that are served with FiOS or Vantage video service. In addition to our linear video subscribers, we have approximately 244,000 DISH satellite video customers.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(a)

Results of Operations

~~REVENUE~~CUSTOMER RELATED METRICS

Because of the limited comparability between ASC 606 results and historical results, the comparative analysis that follows is based upon the historical comparative results assuming ASC 606 was not implemented, unless otherwise noted.

For the three months ended September 30,

$ Increase

% Increase
($ in millions)

2017

2016

(Decrease)

(Decrease)

Data and Internet services (1)

$
956

$
1,045

$
(89)

(9)
%
Voice services

702

809

(107)

(13)
%
Video services

318

392

(74)

(19)
%
Other

84

73

11

15
%
Customer revenue (1)

2,060

2,319

(259)

(11)
%
Switched access and

subsidy

191

205

(14)

(7)
%
Total revenue (1)

$
2,251

$
2,524

$
(273)

(11)
%

For the three months ended September 30,

$ Increase

% Increase

2017

2016

(Decrease)

(Decrease)

Consumer

$
1,102

$
1,272

$
(170)

(13)
%
Commercial

958

1,047

(89)
��

(9)
%
Customer revenue (1)

2,060

2,319

(259)

(11)
%
Switched access and

subsidy

191

205

(14)

(7)
%
Total revenue (1)

$
2,251

$
2,524

$
(273)

(11)
%

For the nine months ended September 30,

$ Increase

% Increase
($ in millions)

2017

2016

(Decrease)

(Decrease)

Data and Internet services (1)

$
2,923

$
2,680

$
243

9
%
Voice services

2,177

2,112

65

3
%
Video services

994

879

115

13
%
Other

231

218

13

6
%
Customer revenue (1)

6,325

5,889

436

7
%
Switched access and

subsidy

586

598

(12)

(2)
%
Total revenue (1)

$
6,911

$
6,487

$
424

7
%

For the nine months ended September 30,

$ Increase

% Increase

2017

2016

(Decrease)

(Decrease)

Consumer

$
3,390

$
3,187

$
203

6
%
Commercial

2,935

2,702

233

9
%
Customer revenue (1)

6,325

5,889

436

7
%
Switched access and

subsidy

586

598

(12)

(2)
%
Total revenue (1)

$
6,911

$
6,487

$
424

7
%


	As of or for the three months ended
	March 31, 2018			December 31, 2017		% Increase (Decrease)		March 31, 2017			% Increase (Decrease)

Customers (in thousands)		4,765			4,850	(2)	%		5,220		(9)	%

Consumer customer metrics
Customers (in thousands)		4,324			4,397	(2)	%		4,736		(9)	%
Net customer additions/(losses)		(74)			(89)	(17)	%		(155)		(52)	%
Average monthly consumer
revenue per customer	$	83.26	(2)	$	81.61	2	%	$	80.62		3	%
Customer monthly churn		1.94%			1.98%	(2)	%		2.37%		(18)	%

Commercial customer metrics
Customers (in thousands)		441			453	(3)	%		484		(9)	%

Broadband subscriber metrics
(in thousands)
Broadband subscribers		3,895			3,938	(1)	%		4,164		(6)	%
Net subscriber additions/(losses)		(43)			(63)	(32)	%		(107)		(60)	%

Video (excl. DISH) subscriber metrics
(in thousands)
Video subscribers (in thousands)		934			961	(3)	%		1,065		(12)	%
Net subscriber additions/(losses)		(28)			(20)	40	%		(80)		(65)	%

DISH subscriber metrics
(in thousands)
DISH subscribers (in thousands)		227			235	(3)	%		266		(15)	%
Net subscriber additions/(losses)		(8)			(9)	(11)	%		(8)		-	%

Employees		22,081			22,736	(3)	%		26,878	(1)	(18)	%

⁽¹⁾

At March 31, 2017, we had approximately 1,900 employees in our Frontier Secure Strategic Partnerships business, which was sold in May 2017.

⁽²⁾

The Consumer ARPC included in the table above represents our Consumer ARPC under ASC 605. ARPC after implementing the changes for ASC 606 is $86.21.

~~(1)~~ ~~Includes revenue from Frontier Secure Strategic Partnerships business, which~~Customer Trends and Revenue Performance

We provide service and product options in our consumer and commercial offerings in each of our markets. As of March 31, 2018, 65% of our consumer broadband customers were subscribed to at least one other service offering.

We had approximately 4.3 million and 4.7 million total consumer customers as of March 31, 2018 and 2017, respectively. Our consumer customer churn was ~~sold in May of 2017, of $22 million~~1.94% for the three months ended ~~September 30, 2016 and $40 million and $62 million~~March 31, 2018 compared to 2.37% for the ~~nine months ended September 30,~~first quarter of 2017 and ~~2016,~~1.98% for the fourth quarter of 2017, respectively.

The consolidated average monthly consumer revenue per customer (consumer ARPC) increased by $2.64, or 3%, to $83.26 during the first quarter of 2018 compared to the prior year period. The overall increase in consumer ARPC is a result of residential and broadband initiatives that were implemented during the fourth quarter of 2017.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

We had approximately 441,000 and 484,000 total commercial customers as of March 31, 2018 and 2017, respectively. We lost approximately 12,000 commercial customers during the three months ended March 31, 2018 compared to a loss of 18,000 customers for the three months ended March 31, 2017 and a loss of 10,000 customers for the three months ended December 31, 2017. Frontier expects the declines in voice services revenue and wireless backhaul revenues from commercial customers to continue for the remainder of 2018. Our Ethernet product revenues from our SME (small business, medium business and larger enterprise customers) and carrier customers have grown by 12% during the first quarter of 2018, compared to the prior year period, and grown by 1% compared to the fourth quarter of 2017.

We had approximately 3,895,000 and 4,164,000 broadband subscribers as of March 31, 2018 and 2017, respectively. During the three months ended March 31, 2018, we lost approximately 43,000 net broadband subscribers compared to a loss of 63,000 and a loss of 107,000 for the three months ended December 31, 2017 and March 31, 2017, respectively.

We offer video services under the FiOS® brand in portions of California, Texas, Florida, Indiana, Oregon and Washington, and the VantageTM brand in portions of Connecticut, North Carolina, South Carolina, Minnesota, Illinois, New York, and Ohio. We also offer satellite TV video service to our customers under an agency relationship with DISH® in all our markets. For the three months ended March 31, 2018, we lost approximately 36,000 net video subscribers across all markets. At March 31, 2018, we had 934,000 linear video subscribers that are served with FiOS® or Vantage video service. In addition to our linear video subscribers, we have approximately 227,000 DISH® satellite video customers.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

REVENUE



	For the three months ended March 31,
	2018
						Amounts
		As reported		Impact of		Excluding
		under		Adoption		Adoption of				$ Increase		% Increase
($ in millions)		ASC606		of 606		ASC 606		2017		(Decrease)		(Decrease)

Data and Internet services	$	985	$	(43)	$	942	$	993	(1)	$	(51)	(5)	%
Voice services		702		(32)		670		751			(81)	(11)	%
Video services		280		29		309		347			(38)	(11)	%
Other		135		(50)		85		68			17	25	%
Revenue from contracts
with customers		2,102		(96)		2,006		2,159	(1)		(153)	(7)	%
Subsidy and other
regulatory revenue		97		90		187		197			(10)	(5)	%
Total revenue	$	2,199	$	(6)	$	2,193	$	2,356	(1)	$	(163)	(7)	%

	For the three months ended March 31,
										$ Increase		% Increase
	2018							2017		(Decrease)		(Decrease)

Consumer	$	1,128	$	(39)	$	1,089	$	1,164		$	(75)	(6)	%
Commercial		974		(57)		917		995	(1)		(78)	(8)	%
Revenue from contracts
with customers		2,102		(96)		2,006		2,159	(1)		(153)	(7)	%
Subsidy and other
regulatory revenue		97		90		187		197			(10)	(5)	%
Total revenue	$	2,199	$	(6)	$	2,193	$	2,356	(1)	$	(163)	(7)	%

⁽¹⁾

Includes revenue from Frontier Secure Strategic Partnerships business, which was sold in May of 2017, of $25 million for the three months ended March 31, 2017.

Revenue

We generate revenues primarily through either a monthly recurring fee or a fee based on usage, and revenue recognition is not dependent upon significant judgments by management, with the exception of a determination of the provision for uncollectible amounts.

~~Consolidated~~The decrease of $163 million in consolidated total revenue ~~for the nine months ended September 30, 2017 increased $424 million~~was primarily due to ~~$6,911 million as compared to the prior year period. Excluding additional revenue from the CTF Operations for the first quarter of 2017, our revenue for the first nine months of 2017~~ decreased ~~$663 million, or 10%, as compared to the prior year period. This~~voice and data and Internet services revenues driven by a decline in ~~2017 is~~customers.

The decrease in consolidated customer revenue of $153 million consisted of decreases of $75 million and $78 million of consumer customer revenue and commercial customer revenue, respectively. The decrease in consumer customer revenue was primarily ~~the result of~~due to decreases in voice, ~~services revenues, lower switched~~data and ~~nonswitched access revenue,~~internet, and video ~~and data services revenue, each as described in more detail below.~~

Customer revenue for the nine months ended September 30, 2017 increased $436 million to $6,325 million as compared to the prior year period. Excluding additional revenue from the CTF Operations for the first quarter of 2017, our customer revenue for the first nine months of 2017 decreased $599 million, or 10%, as compared to the prior year period.

Consolidated consumer customer revenue for the nine months ended September 30, 2017 increased $203 million, or 6%, as compared to the prior year period. Excluding additional consumer customer revenue from the CTF Operations for the first quarter of 2017, revenues for the first nine months of 2017 decreased $411 million, or 13%, compared to the prior year period, primarily as a result of decreases in voice, video and data services revenue. ~~Similar to other wireline providers, we~~We have experienced declines in the number of traditional voice customers and switched access minutes of use as a result of competition and the availability of substitutes, a trend we expect to continue.

~~Consolidated~~ The decrease in consolidated commercial customer revenue for the nine months ended September 30, 2017 increased $233 million, or 9%, as compared to the prior year period. Excluding additional commercial customer revenue from the CTF Operations for the first quarter of 2017, revenues for 2017 declined $188 million, or 7%, as compared to the prior year period, principally as a result ofwas primarily driven by decreases in our voice services revenue and nonswitched revenue, including wireless backhaul ~~revenue.~~revenue and a decrease in revenue from our Frontier Secure Strategic Partnerships business.

~~Consolidated switched access~~

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

The decrease in Subsidy and ~~subsidy~~other regulatory revenue of ~~$586~~$10 million ~~represented 8% of our revenues for the nine months ended September 30, 2017. Switched access revenue~~ was ~~$129 million for both the first nine months of 2017 and 2016, or 2% of our revenues for each period. The Report and Order released~~primarily driven by ~~the FCC on November 18, 2011 (the 2011 Order) provided for the gradual elimination of terminating traffic charges by 2017 with~~ a related decline in operating expenses. Switched access revenue declined sequentially in the third quarter of 2017, reflecting the rate reductions mandated by the 2011 Order, and we anticipate that we have experienced nearly all of the rate decline related to the 2011 Order. We have been able to recover a significant portion of these lost revenues through end user rates and other replacement support mechanisms, a trend we expect will continue throughout 2017. We expect declining revenue trends due to reduced volumedecrease in switched access ~~revenue to continue in the fourth quarter~~minutes of 2017 in our legacy operations. Subsidy revenue, including CAF Phase II subsidies, was $457 million for the nine months ended September 30, 2017, or 7% of our revenues, which decreased from $468 million, or 7% of our revenues, in the prior year period. use.

We categorize our products, services, and other revenues into the following five categories:

Data and Internet Services

Data and internet services include broadband services for ~~consumer~~residential and ~~commercial~~business customers. We provide data transmission services to high volume ~~commercial~~business customers and other carriers with dedicated high capacity circuits (“nonswitched access”) including services to wireless providers (“wireless backhaul”).

The decrease in Consolidated Data and ~~Internet~~internet services revenue consisted of decreases of $32 million and $19 million for ~~the three months ended September 30, 2017 decreased $89 million as compared with 2016. Data~~consolidated data services ~~revenue for the three months ended September 30, 2017 decreased $65 million, or 11%, to $548 million, primarily due to an 8%~~and consolidated nonswitched access services, respectively. The decrease in ~~the total number of broadband subscribers since September 30, 2016, and~~consolidated data revenue was primarily driven by a ~~decline~~decrease in revenue ~~of approximately $22 million due to~~from the ~~sale of our~~ Frontier Secure Strategic Partnerships business. ~~Nonswitched~~The decrease in consolidated nonswitched access revenues ~~for the three months ended September 30, 2017~~

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~decreased $25 million, or 6%, to $408 million,~~was primarily ~~due to lower monthly recurring revenues for wireless backhaul and other carrier services.~~

Consolidated data and Internet services revenue for the nine months ended September 30, 2017 increased $243 million as compared with 2016. Consolidated data services revenue for the nine months ended September 30, 2017 increased $128 million, or 8%, to $1,696 million as compared with 2016. Excluding additional data service revenue from the CTF Operations for the first quarter of 2017, revenue for the first nine months decreased $111 million, or 7%, driven by a ~~reduction~~decrease in ~~revenue of $22 million~~billing related to wireless backhaul as well as a ~~result of the sale of the Frontier Secure Strategic Partnerships business in May of 2017 and a~~ decrease ~~in the total number of broadband subscribers.~~

~~Consolidated nonswitched access revenues for the nine months ended September 30, 2017 increased $115 million or 10%~~ to ~~$1,277 million as compared~~churn along with 2016. Excluding additional nonswitched access revenue from the CTF Operations for the first quarter of 2017, revenue decreased $67 million, or 6%, due to lower monthly recurring revenue for wireless backhaul and other carrier services. We expect wireless data usage to continue to increase, which may drive the need for additional wireless backhaul capacity. Despite the need for additional capacity, in the near term, we anticipate that our overall wireless backhaul revenues (which comprise approximately 2.9% of consolidated total revenues) will continue to decline in 2017, as our carrier customers ~~migrate~~moving to ~~Ethernet solutions at~~the lower ~~price points or migrate to our competitors.~~priced Ethernet.

Voice Services

Voice services include traditional local and long distance wireline services, data-based Voice over Internet Protocol (VoIP) services, as well as voice messaging services offered to our consumer and commercial customers. Voice services also include the long distance voice origination and termination services that we provide to our commercial customers and other carriers.

~~Voice~~The decrease in voice services revenue ~~for the three months ended September 30, 2017 decreased $107 million, or 13%, to $702 million as compared with 2016,~~was primarily ~~due to~~driven by the continued loss of voice customers and decreases in ~~long distance~~long-distance revenue among those customers that do not have a bundled ~~long distance~~long-distance plan.

Voice services revenue for the nine months ended September 30, 2017 increased $65 million, or 3%, to $2,177 million as compared with 2016. Excluding additional voice services revenue from the CTF Operations for the first quarter of 2017, revenues decreased $262 million, or 12%, due to the continued loss of voice customers and decreases in long distance revenue.

Video Services

Video services include revenues generated from services provided directly to consumer customers through the FiOS® video and Vantage video brands, and through DISH® satellite TV services.

~~Video~~The decrease in video services revenue ~~for the three months ended September 30, 2017 decreased $74 million, or 19%, to $318 million as compared with 2016 due to~~was primarily driven by a decrease in the total number of video subscribers.

Video services revenue for the nine months ended September 30, 2017 increased $115 million, or 13%, to $994 million compared with 2016. Excluding additional video services revenue from the CTF Operations for the first quarter of 2017, revenues decreased $166 million, or 19%, due to a decrease in the total number of video subscribers.

Other

Other customer revenue includes switched access revenue and sales of customer premise equipment to our ~~commercial~~business customers and directory ~~services, less our provision for bad debts.~~

Other revenue for the three months ended September 30, 2017 increased $11 million, or 15%, as compared with 2016 primarily due to a decrease in uncollectibles, partially offset by a decrease in customer premise equipment sales during the third quarter of 2017. Other revenue for the nine months ended September 30, 2017 increased $13 million, or 6%. Excluding additional other revenue from the CTF Operations for the first quarter of 2017, revenues increased $8 million due to a decrease in uncollectibles, partially offset by a decrease in maintenance contracts.

~~PART I. FINANCIAL INFORMATION (Continued)~~

~~FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES~~

~~Switched Access and Subsidy~~

services. Switched access ~~and subsidy revenues include~~revenue includes revenues derived from allowing other carriers to use our network to originate and/or terminate their local and long distance voice traffic (“switched access”). These services are primarily billed on a minutes-of-use basis applying tariffed rates filed with the FCC or state agencies. ~~We also receive~~

As noted above, as part of our adoption of ASC 606, switched access was reclassified from switched access and subsidy revenue to other customer revenue on our consolidated statement of operations. Prior period results have not been adjusted to reflect this change.

The increase in other revenue was primarily driven by a decrease in uncollectible revenue and an increase in sales of customer premise equipment, slightly offset by a decrease in directory services.

Subsidy and other regulatory

Subsidy and other regulatory revenue includes revenues generated from cost subsidies from state and federal authorities, including the Connect America ~~Fund.~~Fund Phase II.

~~Switched~~As noted above, as part of our adoption of ASC 606, switched access was reclassified from switched access and subsidy revenue ~~for the three months ended September 30, 2017 decreased $14 million, or 7%, as compared with 2016. Switched access~~to other customer revenue ~~decreased $4 million for the three months ended September 30, 2017, primarily due~~on our consolidated statement of operations. Prior period results have not been adjusted to ~~the impact of the decline~~reflect this change.

PART I. FINANCIAL INFORMATION (Continued)

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES

The decrease in ~~minutes of use related to access line losses and the displacement of minutes of use by wireless~~Subsidy and other ~~communications services, combined with the lower rates required~~regulatory revenue was driven by ~~the FCC’s 2011 Order on intercarrier compensation reform. Subsidy revenues~~ decreased $10 million for the three months ended September 30, 2017, primarily due to one-time true-up payments and phasedown support recognized in the second quarter of 2016 in connection with the CAF Phase II program.

Switched access and subsidy revenue for the nine months ended September 30, 2017 decreased $12 million, or 2%, as compared with 2016. Switched access revenue decreased $1 million for the nine months ended September 30, 2017, primarily due to the impact of the decline in minutes of use related to access line losses and the displacement of minutes of use by wireless and other communications service, combined with the lower rates required by the FCC’s 2011 Order on intercarrier compensation refund. Excluding additional switched access revenue ~~from~~due to reduced rates mandated by the CTF Operations for the first quarter of 2017, revenue decreased $15 million, or 11%. Subsidy revenues for the nine months ended September 30, 2017 decreased $11 million. Excluding additional subsidy revenue from the CTF Operations for the first quarter of 2017, revenue decreased $46 million, or 10%. We expect that switched access revenue will continue toUniversal Service Fund/Intercarrier Compensation Report and Order with a related decline in ~~the fourth quarter of 2017~~.operating expenses.

OPERATING EXPENSES

NETWORK ACCESS EXPENSES


										For the three months ended March 31,
	For the three months ended September 30,				$ Increase		% Increase
($ in millions)	2017		2016		(Decrease)		(Decrease)

Network access expenses	$	390	$	440	$	(50)	(11)	%
										2018
														Amounts
										As reported		Impact of		Excluding
	For the nine months ended September 30,				$ Increase		% Increase			under		Adoption		Adoption of			$ Increase		% Increase
($ in millions)	2017		2016		(Decrease)		(Decrease)			ASC606		of 606		ASC 606	2017		(Decrease)		(Decrease)

Network access expenses	$	1,209	$	1,053	$	156	15	%	$	372	$	(3)	$	369	$	411	$	(42)	(10)	%

Network access expenses include access charges and other third-party costs directly attributable to connecting customer locations to our network, and video content costs. Such access charges and other third-party costs exclude network related expenses, depreciation and amortization, and employee related expenses.

~~Network~~The decrease in network access expenses ~~for the three months ended September 30, 2017 decreased $50 million, or 11%,~~was primarily ~~due to~~driven by lower video content costs as a result of a decline in video customers, ~~partially offset by higher promotional~~combined with lower Customer Premise Equipment (CPE) costs.

Network access expenses for the nine months ended September 30, 2017 increased $156 million, or 15%. Excluding additional expenses from the CTF Operations for the first quarter of 2017, network access expenses for the nine months ended September 30, 2017 decreased $105 million, or 10%, primarily due to lower video content and long distance costs as a result of a decline in customers.

Network related expenses include expenses associated with the delivery of services to customers and the operation and maintenance of our network, such as facility rent, utilities, maintenance and other costs, as well as salaries, wages and related benefits associated with personnel who are responsible for the delivery of services, and the operation and maintenance of our network.

~~Network~~The decrease in network related expenses ~~for the three months ended September 30, 2017~~was primarily driven by decreased ~~$30 million, or 6%, as compared with 2016, primarily due to a decrease in~~ compensation costs related to lower employee headcount and certain benefits, including incentive compensation, pension and OPEB expense (as discussed below). There was also a reduction in rental costs for vehicles previously under operating leases that were modified during late 2016, resulting in the classification as capital leases, which were partially, offset by an increase in outside services ~~primarily related to storm-related costs.~~

Network related expenses for the nine months ended September 30, 2017 increased $69 million, or 5%, as compared with 2016. Excluding additional expenses from the CTF Operations for the first quarter of 2017, network related expenses for the nine months ended September 30, 2017 decreased $128 million, or 9%, primarily due to a West Virginia work stoppage and a decrease in ~~compensation costs related to lower employee headcount and a reduction in rental costs for vehicles.~~capitalized expense.

Selling, general and administrative expenses (SG&A expenses) include the salaries, wages and related benefits and the related costs of corporate and sales personnel, travel, insurance, non-network related rent, advertising, bad debt expense, and other administrative expenses.

The decrease in SG&A expenses ~~for the three months ended September 30, 2017 decreased $96 million, or 16%, due to lower costs for compensation,~~ primarily related to decreased employee headcount, lower incentive compensation costs, certain benefits decreasing, including pension and OPEB expense (as discussed below), reduced marketing costs, and lower information technology and other outside services costs. ~~There were approximately $23 million of additional SG&A~~

~~expense during the third quarter of 2016 related to the Frontier Secure Strategic Partnerships business, which was sold in May of 2017.~~

SG&A expenses for the nine months ended September 30, 2017 increased $26 million, or 2%, as compared with 2016. Excluding additional expenses from the CTF Operations for the first quarter of 2017, SG&A expenses for the nine months ended September 30, 2017 decreased $200 million, or 13%, primarily due to lower compensation and other employee related costs and reduced costs for outside services and marketing. There were approximately $28 million of additional SG&A expense during the nine months ended September 30, 2016 related to the Frontier Secure Strategic Partnerships business, which was sold in May of 2017.

Frontier allocates pension/OPEB expense to network related expenses and SG&A expenses. Total consolidated pension and OPEB costs, excluding pension settlement costs, for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ were as follows:

The fair value estimates related to the allocation of the purchase price of the CTF Operations to Other intangibles were revised and finalized during the first quarter of 2017 from the previous estimates as of December 31, 2016. The allocation that was reported as of December 31, 2016 for Other intangibles increased $100 million, from $2,162 million to $2,262 million. These adjustments resulted in higher amortization expense during the nine months ended September 30, 2017 ($20 million of which is attributable to 2016).

Depreciation and amortization expense for the three and nine months ended September 30, 2017 decreased $39 million, or 7%, and increased $201 million, or 14%, respectively. Depreciation expense for the three months ended September 30, 2017 increased $53 million, or 16%. The increase was primarily driven by the changes in the remaining lives of certain plant assets. Excluding additional expense from the CTF Operations for the first quarter of 2017, depreciation expense decreased $17 million, or 2%, for the nine months ended September 30, 2017 as compared to the prior year period due to lower net asset bases as compared to 2016.

The decrease in depreciation expense ~~for~~was primarily driven by the ~~three months ended September 30, 2017 decreased $92 million, or 36% as compared with 2016.~~ changes in the remaining lives of certain plant assets and lower net asset bases.

The decrease in amortization expense was primarily driven by the accelerated method of amortization related to customer bases acquired in 2010, 2014, and 2014, offset by an increase in the value of the acquired CTF customer base as a result of final purchase accounting adjustments in 2017. Excluding additional expense from the CTF Operations for the first quarter of 2017, amortization expense decreased $62 million, or 13%, for the nine months ended September 30, 2017 as compared to the prior year period due to an increase in the value of the acquired CTF customer base subsequent to the second quarter of 2016, offset by the accelerated method of amortization related to customer bases acquired in 2010 and 2014.

As a result of the continued decline in the share price of our common stock in each of the three quarters in 2017, we tested goodwill for impairment. The results of our quantitative goodwill impairment test resulted in a $670 million goodwill impairment in the second quarter of 2017, principally due to the decline in our profitability during the period (See Note 6). Results from our first and third quarter quantitative assessments did not result in additional goodwill impairment charges. Further declines in our profitability or share price could result in additional impairment in the future.2016.

Acquisition costs include financial advisory, accounting, regulatory, legal and other related costs. Integration costs include expenses that are incremental and directly related to the acquisition, which were incurred to integrate the network and information technology platforms. Integration costs also include costs to achieve synergies and operational efficiencies directly associated with the acquisition.

We invested ~~$19 million and $99~~$1 million in capital expenditures related to the ~~CTF Acquisition~~2016 acquisition of properties in California, Texas, and Florida with Verizon (CTF Acquisition) during the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~

to terminated or retired individuals amounted to $87 million and $449 million, which exceeded the settlement threshold of $224 million, and as a result, Frontier recognized non-cash settlement charges totaling $77 million duringMarch 31, 2017. The non-cash charge accelerated the recognition of a portion of the previously unrecognized actuarial losses in the Pension Plan. Additional pension settlement charges will be required in the fourth quarter of 2017, the amount of which will be dependent on the lump sum benefit payments made during the fourth quarter.

Restructuring costs and other charges consist of expenses related to changes in the composition of our business, including workforce reductions, the sale of business lines or divisions, and corresponding changes to our retirement plans.

Restructuring costs and other charges ~~increased~~decreased in the ~~third~~first quarter of ~~2017~~2018 compared to the ~~third~~first quarter of ~~2016~~2017 primarily due to a reduction in the ~~workforce~~number of ~~approximately 300~~severed employees induring the ~~third~~period.

Investment and other income, net for the three months ended March 31, 2018 included interest income of $2 million and non-operating pension and OPEB income of $5 million.

Frontier recognized a non-cash settlement charge of $43 million during the first quarter of 2017. The non-cash charge accelerated the recognition of a portion of the previously unrecognized actuarial losses in the Pension Plan. No charge was recognized during the first quarter of 2018.

During the three months ended March 31, 2018, Frontier recorded a gain on early extinguishment of debt of $33 million, driven by discounts received on the retirement of certain notes, slightly offset by premiums paid to retire certain notes and ~~other charges increased~~unamortized original issuance costs.

Interest expense for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 decreased $14 million, or 4%, as compared to the ~~nine~~three months ended ~~September 30, 2016 primarily~~March 31, 2017. Our composite average borrowing rate as of March 31, 2018 and 2017 was 8.57% and 8.62%, respectively.

Income tax expense (benefit) for the three months ended March 31, 2018 reversed from a benefit in the first quarter of 2017 to expense in the first quarter of 2018 due to a ~~reduction~~net loss recognized in the ~~workforce~~first quarter of ~~approximately 850 employees~~2017 versus a net income recognized in the first quarter of 2018. The effective tax rate on our pretax income for the three months ended March 31, 2018 was 41.1% as compared with 34.2% for the pretax loss for the three months ended March 31, 2017.

Net loss attributable to Frontier common shareholders for the first quarter of 2018 was $33 million, or $(0.44) per share, as compared to a net loss of $129 million, or $(1.67) per share, in the first quarter of 2017. For 2018, the decrease in net loss was primarily driven by decreased operating expenses and ~~the loss on the sale of the Frontier Secure Strategic Partnerships business.~~

Investment and other income, net for the nine months ended September 30, 2016 included interest income of $12 million, primarily due to interest earned on restricted cash. The decrease of $9 million was driven by less restricted cash on hand in 2017.

During the nine months ended September 30, 2017, Frontier recorded a loss on early extinguishment of debt of $89 million, primarily driven by a loss of $90 million resulting from debt buy backs during the second quarter, and slightly offset by a gain of $1 million resulting from buy backs in the third quarter.

~~During the nine months ended September 30, 2016, Frontier recorded a loss of $7 million resulting from the exchange of senior notes during the third quarter of 2016.~~

Interest expense for the three and nine months ended September 30, 2017 increased $5 million, or 1%, and $12 million, or 1%, as compared to the three and nine months ended September 30, 2016. We incurred additional interest of $19 million in 2017 on the $1,625 million term loan facility related to the CTF Acquisition. Our composite average borrowing rate as of September 30, 2017 and 2016 was 8.36% and 8.55%, respectively.

Income tax benefit for the three and nine months ended September 30, 2017 decreased $15 million and increased $68 million, as compared to the three and nine months ended September 30, 2016. The effective tax rate on our pretax loss for the nine months ended September 30, 2017 was 26.5% as compared with 42.0% for the nine months ended September 30, 2016. The increase in income tax benefit was primarily due to the impact of the goodwill impairment incurred during the second quarter of 2017.

Net loss attributable to Frontier common shareholders for the third quarter of 2017 was $92 million, or ($1.19) per share, as compared to a net loss of $134 million, or ($1.73) per share, in the third quarter of 2016, and net loss for the first nine months of 2017 of $936 million, or ($12.06) per share, as compared to a net loss of $454 million, or ($5.87) per share for the first nine months of 2016. For the first nine months of 2017, the increase in net loss was primarily driven by the $532 million (after-tax) goodwill impairment charge incurred during the second quarter of 2017.

Diluted net loss attributable to Frontier common shareholders for the third quarter of 2017 was $92 million, or ($1.19) per share, as compared to a net loss of $135 million, or ($1.73) per share, in the third quarter of 2016, and net loss for the first nine months of 2017 of $940 million, or ($12.07) per share, as compared to a net loss of $457 million, or ($5.87) per share for the first nine months of 2016. For the first nine months of 2017, the increase in net loss was primarily driven by the $532 million (after-tax) goodwill impairment charge incurred during the second quarter of 2017.

As of ~~September 30, 2017,~~March 31, 2018, we had cash and cash equivalents aggregating ~~$286~~$201 million. Our primary source of funds during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 was cash on hand, cash generated from operations, and cash received from issuance of our ~~Term Loan B.~~Second Lien Notes. For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, we used cash flow from operations, cash on hand, and borrowings to principally fund all of our cash investing and financing activities, which were primarily capital expenditures, dividends and debt repayments.

At ~~September 30, 2017,~~March 31, 2018, we had a working capital deficit of ~~$531~~$1,457 million, including ~~$166~~$1,060 million of long-term debt due within one year, as compared to a working capital deficit of ~~$788~~$1,185 million at December 31, ~~2016.~~2017. The ~~decrease~~increase in the working capital deficit is primarily due to ~~a decrease~~an increase in ~~current liabilities~~long term debt due within one year of ~~$651~~$404 million, partially offset by a reduction in ~~accounts receivable~~accrued interest of ~~$158~~$234 million.

Cash flows provided by operating activities ~~increased $223~~decreased $49 million to ~~$1,185~~$251 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 as compared with the prior year period. The ~~increase~~decrease was primarily the result of a decrease in depreciation expense from the ~~addition of our CTF Operations,~~prior year, partially offset by ~~unfavorable~~favorable changes in working ~~capital, along with higher interest expense.~~capital.

We received ~~$4 million and $35~~$3 million in cash tax refunds during the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~

In connection with the CTF Acquisition, Frontier recognized acquisition and integration costs of $15 million during the first nine months of 2017 compared to $387 million during the first nine months of 2016. Interest expense of $581 million was incurred during the first nine months of 2017 related to the September 2015 debt offering and the term loan credit agreement, dated as of August 12, 2015, with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto, compared to $559 million in interest expense during the first nine months of 2016. Additionally, Frontier incurred $10 million of interest expense related to the Verizon Bridge Facility (as defined below) during the first nine months of 2016.March 31, 2017.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ our capital expenditures were ~~$865~~$297 million and ~~$1,059~~$316 million, ~~respectively, including $19 million and $99 million, respectively, of integration related capital expenditures associated with the CTF Acquisition.~~respectively. Capital expenditures related to CAF Phase II are included in our reported amounts for capital expenditures. ~~We anticipate capital expenditures for business operations to be approximately $1.15 billion to $1.2 billion in 2017, as compared to $1.26 billion in 2016.~~

On March 19, 2018, Frontier completed a private offering of $1,600 million aggregate principal amount of 8.500% Second Lien Secured Notes due 2026 (the “Second Lien Notes”). For additional information on the Second Lien Notes, see Note 8 to the Consolidated Financial Statements included in Part I of this report. For information on the use of proceeds from ~~Financing Activities~~the offering of the Second Lien Notes, see “Debt Reduction” below.

During the ~~first nine~~three months ~~of 2017,~~ended March 31, 2018, Frontier used cash on hand for the scheduled retirement of ~~$328~~$41 million ~~of debt, including $210 million of unsecured 8.25% senior notes at maturity, and~~ contractual payments of principal ~~for debt of $118 million.~~indebtedness. Additionally, Frontier used cash proceeds from the ~~Term Loan B~~$1,600 million Second Lien Notes offering and cash on hand to retire ~~$1,335~~an aggregate principal amount of $1,651 million ofsenior unsecured ~~senior~~ notes prior to maturity, consisting of ~~$763 million of 8.875% Notes due 2020, $551~~$447 million of 8.500% ~~Notes~~senior notes due 2020, ~~$10~~$249 million 8.875% senior notes due 2020, $555 million of 6.250% due 2021, and $400 million of 9.250% ~~Notes~~senior notes due ~~2021, $6 million of 7.125% Notes due 2019, and $5 million of 8.125% Notes due 2018.~~2021. During the first ~~nine~~three months of ~~2017,~~2018, Frontier recorded a ~~loss~~gain on early extinguishment of debt of ~~$89~~$33 million driven primarily by discounts received on the retirement of certain notes, slightly offset by premiums paid to retire certain notes and unamortized original issuance ~~costs, slightly offset by discounts received on the retirement of certain notes.~~

During the first nine months of 2016, Frontier used cash on hand to retire an aggregate principal amount of $280 million of debt, $189 million of which was senior unsecured debt and $91 million of which was secured debt.costs.

Subject to limitations contained in our indentures and credit facilities, we may from time to time make repurchases of our debt in the open market, through tender offers, by exercising rights to call or in privately negotiated transactions. We may also refinance existing debt or exchange existing debt for newly issued debt obligations.

Our primary source of cash is cash flows from operations. We believe our operating cash flows, existing cash balances, existing revolving credit facility and access to the capital markets, as necessary, will be adequate to finance our working capital requirements, fund capital expenditures, make required debt interest and principal payments, pay taxes, pay dividends to our ~~stockholders,~~preferred shareholders, and support our short-term and long-term operating strategies for the next twelve months. A number of factors, including but not limited to, losses of customers,

pricing pressure from increased competition, lower subsidy and switched access revenues, and the impact of economic conditions may negatively affect our cash generated from operations. As of ~~September 30, 2017,~~March 31, 2018, we had ~~$42~~$614 million of debt maturing during the last ~~three~~nine months of ~~2017; $743~~2018; $804 million and ~~$828~~$436 million of debt will mature in ~~2018~~2019 and ~~2019,~~2020, respectively.

~~On February 27,~~In 2017, Frontier entered into a first amended and restated credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto, pursuant to which Frontier combined its revolving credit agreement, dated as of June 2, 2014, and its term loan credit agreement, dated as of August 12, 2015. Under the JPM Credit Agreement, as further amended on June 15, 2017 by Increase Joinder No.1 (as so amended, the JPM Credit Agreement), Frontier has a $1,625 million senior secured term loan A facility (the Term Loan A) maturing on March 31, 2021, an $850 million undrawn secured revolving credit facility maturing on February 27, 2022 (the Revolver), and $1,500 million senior secured term loan B facility (the Term Loan B) maturing on June 15, 2024. The maturities of the Term Loan A, the Revolver, and the Term Loan B, in each case if still outstanding, will be accelerated in the following circumstances: (i) if, 91 days before the maturity date of any series of Senior Notes maturing in 2020, 2023 and 2024, more than $500 million in principal amount remains outstanding on such series; or (ii) if, 91 days before the maturity date of the first series of Senior Notes maturing in 2021 or 2022, more than $500 million in principal amount remains outstanding, in the aggregate, on the two series of Senior Notes maturing in such year. The determination of interest rates for each of the facilities under the JPM Credit Agreement is based on margins over the Base Rate (as defined in the JPM Credit Agreement) or over LIBOR, at the election of Frontier. Interest rate margins on the Term Loan A and Revolver (ranging from 0.75% to 1.75% for Base Rate borrowings and 1.75% to 2.75% for LIBOR borrowings) are subject to adjustment based on Frontier’s Total Leverage Ratio (as defined in the JPM Credit Agreement). Interest rate margins on the Term Loan B (2.75% for Base Rate borrowings and 3.75% for LIBOR borrowings) are not subject to adjustment. The security package under the JPM Credit Agreement includes pledges of the equity interests in certain Frontier subsidiaries and guaranties by certain Frontier subsidiaries. As of ~~September 30, 2017,~~March 31, 2018, the ~~revolving credit facility was fully available and~~company had no borrowings ~~had been made thereunder. The revolving~~outstanding under the revolver (with letters of credit ~~facility is available for general corporate purposes but may not be used to fund dividend payments.~~issued under the revolver totaling $62 million).

facility drawn in October 2016 (the 2016 CoBank Credit Agreement), matures on October 12, 2021. We refer to the 2014 CoBank Credit Agreement and the 2016 CoBank Credit Agreement collectively as the CoBank Credit Agreements.

~~On March 29,~~In 2017, Frontier amended the 2014 and 2016 CoBank Credit Agreements. The amendments provide that interest rate margins under each of these facilities will range from 0.875% to 3.875% for Base Rate borrowings and 1.875% to 4.875% for LIBOR borrowings, subject to adjustment based on our Total Leverage Ratio, as defined in each credit agreement. The interest rate on each of the facilities as of ~~September 30, 2017~~March 31, 2018 was LIBOR plus ~~3.875%~~4.375%. In addition, the amendments provide for increases in the maximum Leverage Ratio and expansion of the security package identical to those contained in the February 2017 amendment and restatement of the August 2015 JPM credit agreement.

In January 2018, Frontier further amended its credit agreements with JP Morgan Chase and CoBank. The amendments, among other things, expanded the security package to include the interests of certain subsidiaries previously not pledged and replaced the net leverage ratio maintenance test with a first lien net leverage ratio maintenance test.

Frontier has a Continuing Agreement for Standby Letters of Credit with Deutsche Bank AG New York Branch and Bank of Tokyo – Mitsubishi UFJ, LTD. (the LC Agreements). Frontier can also issue letters of credit under the revolver up to a maximum of $134 million. As of ~~September 30, 2017, $129~~March 31, 2018, $74 million and $62 million of undrawn Standby Letters of Credit had been issued under the LC ~~Agreements.~~Agreements and revolver respectively. Borrowings under the LC ~~Agreement~~Agreements are secured by a ~~pledge of~~security package identical to those contained in the ~~stock of certain Frontier subsidiaries and guaranties by certain Frontier subsidiaries.~~JPM Credit Amendment.

The terms and conditions contained in ~~one or more of~~ our indentures, the CoBank Credit Agreements, and the JPM Credit Agreement include ~~covenants that, among other things, place~~the timely payment of principal and interest when due, the maintenance of our corporate existence, keeping proper books and records in accordance with GAAP, restrictions on ~~the following:~~ the incurrence of liens on our assets securing indebtedness and our subsidiaries’ assets, ~~securing indebtedness;~~restrictions on the incurrence of indebtedness by usour subsidiaries, restrictions on asset sales and ~~our subsidiaries; the payment of dividends~~transfers, mergers and ~~other restricted payments; selling or transferring assets; the maximum levels of our leverage and secured leverage ratios; and the entry into mergers or~~ other changes in corporate ~~control. All of the above~~control and restrictions ~~are~~on dividends and distributions, each subject to important ~~detailed~~ qualifications and exceptions that are included in the JPM Credit Agreement, filed as an exhibit to our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017 and in the CoBank Credit Agreements and our indentures, filed as exhibits to our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. In addition, under the Certificate of Designations of our 11.125% Mandatory Convertible Preferred Stock, Series A, we would be restricted from paying dividends on our common stock if we failed to declare and pay dividends on our Series A Preferred Stock.exceptions.

As of ~~September 30, 2017,~~March 31, 2018, we were in compliance with all of our indenture and credit facility covenants.

We intend to continue to pay regular quarterly dividends on our common and preferred stock. Our ability to fund a regular quarterly dividend will be impacted by our ability to generate cash from operations. Holders of ~~the~~our Series A Preferred Stock are entitled to receive cumulative dividends at an annual rate of 11.125% of the initial liquidation preference of $100 per share, or $11.125 per year per share. Series A Preferred Stock dividends of ~~$161~~$53 million were paid during the ~~nine month periods~~three months ended ~~September 30, 2017 and 2016.~~

~~On July 26, 2017, we announced that our Board of Directors declared a~~March 31, 2018. We intend to pay regular quarterly ~~cash dividend of $0.60 per~~dividends on our preferred stock until their automatic conversion date. Each share of common stock, payable on September 29, 2017 to holders of record at the close of business on September 15, 2017. The Board of Directors also declared a regular quarterly cash dividend on Frontier’s 11.125% Series A Preferred Stock ~~of $2.78125 per share, payable on September 29, 2017 to holders of record at the close of business on September 15, 2017.~~

~~On October 31, 2017, we announced that our Board of Directors declared a regular quarterly cash dividend of $0.60 per share of~~will automatically convert into common stock ~~payable~~ on ~~December~~June 29, ~~2017 to holders of record at the close of business on December 15, 2017. The Board of Directors also declared a regular quarterly cash dividend on Frontier’s 11.125%~~

~~Mandatory Convertible Preferred Stock, Series A, of $2.78125 per share, payable on December 29, 2017 to holders of record at the close of business on December 15, 2017.~~

The declaration and payment of future dividends on our common stock is at the discretion of our Board of Directors, and will depend upon many factors, including our financial condition, results of operations, growth prospects, funding requirements, payment of cumulative dividends on Series A Preferred Stock, applicable law, restrictions in agreements governing our indebtedness and other factors our Board of Directors deems relevant.2018, unless converted earlier.

We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial statements.

OnIn April ~~29,~~ 2015, the FCC released its right of first refusal offer of support to price cap carriers under the CAF Phase II program, which is intended to provide long-term support for broadband in high cost unserved or underserved areas. In June 2015, Frontier accepted the CAF Phase II offer, which provides for $332 million in annual support through 2020, including $49 million in annual support related to the properties acquired in the CTF Acquisition, to make available 10 Mbps downstream/1 Mbps upstream broadband service to approximately 774,000 households across some of the 29 states where we operate.

To the extent we do not enable the required number of households with 10 Mbps downstream/1 Mbps upstream broadband service by the end of the CAF Phase II term, we would be required to return a portion of the funds previously received.

The preparation of our financial statements requires management to make estimates and assumptions. There are inherent uncertainties with respect to such estimates and assumptions; accordingly, it is possible that actual results could differ from those estimates and changes to estimates could occur in the near term.

These critical accounting estimates have been reviewed with the Audit Committee of our Board of Directors.

~~Other than the updated indefinite-lived intangibles discussion below, there~~There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7. “Management Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

Our indefinite-lived intangibles consist of goodwill and trade name, which were generated as a result of business combinations. We test for impairment of these assets annually as of December 31 or more frequently, whenever events occur or facts and circumstances change that make it more likely than not that the fair value of a reporting unit has been reduced below its carrying amount. Events that might indicate impairment include, but are not limited to, strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on our customer base, material negative changes in relationships with significant customers, and/or a significant decline in our stock price for a sustained period.

~~We early adopted ASU~~ 2017-04 “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”) during the second quarter of 2017. In accordance with ASU 2017-04, our annual goodwill impairment test (and interim test if determined to be necessary) will consist of comparing the fair value of our reporting unit to its carrying value. To the extent that the carrying value exceeds fair value, an impairment will be recognized.

For the purpose of our goodwill impairment test, we first assess qualitative factors to determine if it is more likely than not that fair value of the reporting unit is less than the carrying amount. If it is less, an additional quantitative evaluation must be performed. Our quantitative assessment consists of using a market multiples approach to determine fair value. Marketplace company comparisons and analyst reports within the telecommunications industry have historically supported a range of fair values of multiples between 5.0x and 7.9x annualized EBITDA (defined as operating income,

net of acquisition and integration costs, pension/ OPEB expense, pension settlement costs, stock-based compensation expense, goodwill impairment, storm-related costs, and restructuring costs and other charges, as well as depreciation and amortization).

During 2017, our common stock has declined and traded at historically low prices. As a result, we tested goodwill for impairment in each of the three quarters in 2017. The second quarter quantitative assessment, as described above, resulted in a conclusion that the estimated enterprise fair value was lower than its carrying value, principally due to the decline in our profitability during the period. Accordingly, we recorded a goodwill impairment of $670 million in the second quarter of 2017. The first and third quarter quantitative assessments, did not result in goodwill impairment charges. In estimating the enterprise fair value we used 5.8x as the multiple in each of the three quarters in 2017.

The market multiples approach that we use incorporates significant estimates and assumptions related to the forecasted results for the remainder of the year, including revenues, expenses, and the achievement of other cost synergies. Our assessment includes many qualitative factors that require significant judgment. Alternative interpretations of these factors could have resulted in different conclusions regarding the need for, or size of, an impairment. Continued declines in our profitability or cash flows or in sustained low trading prices of our common stock may result in further impairment.

The enterprise fair value is sensitive to the amount of EBITDA generated by Frontier and the EBITDA multiple used in the calculation. Significant changes in the assumptions or estimates used in our impairment analyses, such as a reduction in profitability and/or cash flows, could result in a non-cash goodwill and indefinite-lived intangible asset impairment charge and materially affect our operating results. The market multiples approach is sensitive to changes in the estimated annual EBITDA, with each $100 million change equating to approximately $580 million of estimated enterprise value. Similarly, a 1% change in the multiple used would affect the estimated enterprise value by approximately $200 million. Sustained low trading prices for our common stock could also affect the reconciliation of our market capitalization and indicate further impairment.

We also considered whether the carrying values of finite-lived intangible assets and property plant and equipment may not be recoverable or whether the carrying value of certain finite-lived intangible assets were impaired, noting no additional impairment was present as of September 30, 2017.

See Note 2 of the Notes to Consolidated Financial Statements included in Part I of this report for additional information related to recent accounting literature.

On April 29, 2015, the FCC released offers of support to price cap carriers under the CAF Phase II program. The intent of these offers is to provide long-term support for carriers for establishing and providing broadband service with at least 10 Mbps downstream/1 Mbps upstream speeds in high-cost unserved or underserved areas. Frontier accepted the CAF Phase II offer in 29 states, ~~including our CTF properties,~~ which provides for $332 million in annual support through 2020 and a commitment to make broadband available to approximately 774,000 households. CAF Phase II support is a successor to the approximately ~~$156~~$198 million in annual USF frozen high-cost support that Frontier ~~had been receiving prior to the CTF acquisition, and the $42 million in annual transitional USF frozen high-cost support that Verizon had been receiving in California and Texas.~~has received. In addition to the annual support levels, these amounts also include frozen support phasedown amounts in states where the annual CAF II funding is less than the prior annual frozen high-cost support funding. ~~The~~Frontier’s frozen ~~support~~high-cost phasedown support ~~was $35 million in 2015 and $27 million in 2016, and~~ is expected to be ~~$17 million in 2017 and~~ $6 million in 2018.

InOn February ~~2017,~~1, 2018, the FCC adopted an Order further explaining its competitive bidding process to continue to distribute CAF Phase II funding in those high-cost areas where price cap carriers declined the FCC’s offer of support. This auction could present a new support and deployment opportunity.

~~On August 4, 2017, the FCC adopted~~issued a Public Notice ~~initiating~~establishing the ~~pre-auction~~ process for the Connect America Fund Phase II auction. The Phase II auction will award up to $198 million annually for 10 years to service providers that commit to offer voice and broadband services to fixed locations in unserved high-cost areas; the auction will also account for other service elements such as the minimum data speed provided and data usage allowances. The

auction ~~is likely to~~will begin in 2018 though the exact timeframe is unknown. Frontier has not yet determined whether it will participate in any competitive bid process at this time, and because Frontier accepted virtually all of its available CAF II support up front, we expect the funding available within our footprint to be limited. July 2018.

On April 20, 2017, the FCC issued an Order that ~~will~~ significantly ~~alter~~altered how Commercial Data Services are ~~regulated once the rules go into effect.~~regulated. Specifically, the Order adopted a test to determine, on a county-by-county basis, whether price cap ILECs, like Frontier’s DS1 and DS3 services, will continue to be regulated. The test ~~is likely to result~~resulted in deregulation in a substantial number of our ~~markets. Once implemented, the deregulation will allow~~markets and is allowing Frontier to offer its DS1 and DS3 services in a manner that better responds to the competitive marketplace and allows for commercial negotiation. The areas that remain regulated may be subject to price fluctuations depending upon the price cap formula that year. Multiple parties have appealed ~~and requested a stay of this Order.~~the Order, which is pending in the 8th Circuit. Frontier cannot predict the extent to which these regulatory changes will affect revenues at this time.

We are exposed to market risk in the normal course of our business operations due to ongoing investing and funding activities, including those associated with our pension plan assets. Market risk refers to the potential change in fair value of a financial instrument as a result of fluctuations in interest rates and equity prices. We do not hold or issue derivative instruments, derivative commodity instruments or other financial instruments for trading purposes. As a result, we do not undertake any specific actions to cover our exposure to market risks, and we are not party to any market risk management agreements other than in the normal course of business. Our primary market risk exposures from interest rate risk and equity price risk are as follows:

Our exposure to market risk for changes in interest rates relates primarily to the interest-bearing portion of our pension investment portfolio and the related actuarial liability for pension obligations, as well as our floating rate indebtedness. As of ~~September 30, 2017, 80%~~March 31, 2018, 81% of our total debt had fixed interest rates. We had no interest rate swap agreements in effect at ~~September 30, 2017.~~March 31, 2018. We believe that our currently outstanding obligation exposure to interest rate changes is minimal. Our objectives in managing our interest rate risk are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, only ~~$3,537~~$3,456 million of our outstanding borrowings at ~~September 30, 2017~~March 31, 2018 have floating interest rates. Our undrawn $850 million revolving credit facility has interest rates that float with the LIBO Rate, as defined. Consequently, we have limited material future earnings or cash flow exposures from changes in interest rates on our debt. An adverse change in interest rates would increase the amount that we pay on our variable rate obligations and could result in fluctuations in the fair value of our fixed rate obligations. Based upon our overall interest rate exposure, a near-term change in interest rates would not materially affect our consolidated financial position, results of operations or cash flows.

At ~~September 30, 2017,~~March 31, 2018, the fair value of our long-term debt was estimated to be approximately ~~$15.5~~$13.5 billion, based on quoted market prices, our overall weighted average borrowing rate was ~~8.36%~~8.57% and our overall weighted average maturity was approximately six years. As of ~~September 30, 2017,~~March 31, 2018, there has been no significant change in the weighted average maturity applicable to our obligations since December 31, ~~2016.~~2017.

Our exposure to market risks for changes in equity security prices as of ~~September 30, 2017~~March 31, 2018 is limited to our pension plan assets. We have no other security investments of any significant amount.

Our Pension Plan assets decreased from ~~$2,766~~$2,674 million at December 31, ~~2016~~2017 to ~~$2,604~~$2,558 million at ~~September 30, 2017,~~March 31, 2018, a decrease of ~~$162~~$116 million, or 6%4%. This decrease was a result of benefit payments of ~~$492~~$102 million ~~partially offset by positive~~and negative investment returns of ~~$270~~$45 million, net of investment management and administrative fees, ~~and~~partially offset by contributions ~~in excess~~ of ~~the Differential (as defined below) of $60 million, during the first nine months of 2017.~~$31 million.

~~Pension Plan as of September 30, 2017. As the Differential was reflected as a receivable of the Pension Plan at December 31, 2016, the cash funding had no impact to plan assets.~~

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, regarding the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon this evaluation, our principal executive officer and principal financial officer concluded, as of the end of the period covered by this report, ~~September 30, 2017,~~March 31, 2018, that our disclosure controls and procedures were effective.

~~We reviewed~~Effective January 1, 2018, we adopted the new revenue guidance under ASC Topic 606, Revenue from Contracts with Customers. The adoption of this guidance requires the implementation of new accounting policies and processes, including enhancements to our information systems, which changed the Company’s internal ~~control~~controls over financial reporting ~~at September 30, 2017. There~~for revenue recognition and related disclosures. Other than the above noted change, there have been no changes in our internal control over financial reporting identified in an evaluation thereof that occurred during the ~~third~~first fiscal quarter of ~~2017~~2018 that materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting~~.reporting.


Delaware		06-0619596
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

401 Merritt 7
Norwalk, Connecticut		06851
(Address of principal executive offices)		(Zip Code)


	Page ~~No.~~
Part I. Financial Information (Unaudited)

Item 1. Financial Statements

Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017	2

Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	3

Consolidated Statements of Comprehensive ~~Loss~~Income (Loss) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	4

Consolidated Statement of Equity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018	5

Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	6

Notes to Consolidated Financial Statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3. Quantitative and Qualitative Disclosures about Market Risk	50

Item 4. Controls and Procedures	51

Part II. Other Information

Item 1. Legal Proceedings	52

Item 1A. Risk Factors	52

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53

Item ~~4. Mine Safety Disclosure~~	53

~~Item~~ 6. Exhibits	54

Signature	55



	(Unaudited)				(Unaudited)
	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	286	$	522	$	201	$	362
Accounts receivable, less allowances of $69 and $131, respectively		780		938
Accounts receivable, less allowances of $99 and $69, respectively						778		819
Contract acquisition costs						91		-
Prepaid expenses		98		88		78		78
Income taxes and other current assets		98		108		54		64
Total current assets		1,262		1,656		1,202		1,323

Property, plant and equipment, net		14,375		14,902		14,321		14,377
Goodwill		9,102		9,674		7,024		7,024
Other intangibles, net		2,223		2,662		1,903		2,063
Other assets		114		119		228		97
Total assets	$	27,076	$	29,013	$	24,678	$	24,884

LIABILITIES AND EQUITY
Current liabilities:
Long-term debt due within one year	$	166	$	363	$	1,060	$	656
Accounts payable		509		698		537		564
Advanced billings		277		301		271		270
Accrued content costs		130		164		105		102
Accrued other taxes		177		134		156		156
Accrued interest		205		437		167		401
Pension and other postretirement benefits		23		23		29		29
Other current liabilities		306		324		334		330
Total current liabilities		1,793		2,444		2,659		2,508

Deferred income taxes		2,253		2,516		1,217		1,139
Pension and other postretirement benefits		1,647		1,602		1,656		1,676
Other liabilities		369		372		280		317
Long-term debt		17,604		17,560		16,470		16,970

Equity:
Preferred stock, $0.01 par value (50,000 authorized shares,
11.125%, Series A, 19,250 shares issued and outstanding)		-		-		-		-
Common stock, $0.25 par value (175,000 authorized shares,
79,532 issued and 78,462 and 78,170 outstanding,
at September 30, 2017 and December 31, 2016, respectively)		20		20
80,367 and 79,532 issued and 80,251 and 78,441 outstanding,
at March 31, 2018 and December 31, 2017, respectively)						20		20
Additional paid-in capital		5,124		5,561		4,847		5,034
Accumulated deficit		(1,234)		(460)		(2,089)		(2,263)
Accumulated other comprehensive loss, net of tax		(349)		(387)		(367)		(366)
Treasury common stock		(151)		(215)		(15)		(151)
Total equity		3,410		4,519		2,396		2,274
Total liabilities and equity	$	27,076	$	29,013	$	24,678	$	24,884



	For the nine months ended September 30, 2017
											Accumulated
							Additional				Other		Treasury
	Preferred Stock			Common Stock			Paid-In		Accumulated		Comprehensive		Common Stock			Total
	Shares	Amount		Shares	Amount		Capital		Deficit		Loss		Shares	Amount		Equity

Balance January 1, 2017 (See Note 1)	19,250	$	-	79,532	$	20	$	5,561	$	(460)	$	(387)	(1,362)	$	(215)	$	4,519
Cumulative-effect adjustment from adoption of ASU 2016-09	-		-	-		-		-		1		-	-		-		1
Stock plans	-		-	-		-		(57)		-		-	292		64		7
Dividends on common stock	-		-	-		-		(219)		-		-	-		-		(219)
Dividends on preferred stock	-		-	-		-		(161)		-		-	-		-		(161)
Net loss	-		-	-		-		-		(775)		-	-		-		(775)
Pension settlement costs, net of tax	-		-	-		-		-		-		48	-		-		48
Other comprehensive income, net of tax	-		-	-		-		-		-		(10)	-		-		(10)
Balance September 30, 2017	19,250	$	-	79,532	$	20	$	5,124	$	(1,234)	$	(349)	(1,070)	$	(151)	$	3,410



					For the three months ended March 31,
	2017		2016		2018		2017

Cash flows provided from (used by) operating activities:
Net loss	$	(775)	$	(293)
Adjustments to reconcile net loss to net cash provided from (used by)
Net income (loss)					$	20	$	(75)
Adjustments to reconcile net income (loss) to net cash provided from (used by)
operating activities:
Depreciation and amortization		1,670		1,469		505		579
Loss on extinguishment of debt and debt exchanges		89		7
Gain on extinguishment of debt						(33)		-
Pension settlement costs		77		-		-		43
Pension/OPEB costs		22		59
Stock-based compensation expense		10		21		4		3
Amortization of deferred financing costs		26		38		9		9
Other adjustments		(11)		-		(9)		-
Deferred income taxes		(286)		(163)		12		(41)
Goodwill impairment		670		-
Change in accounts receivable		161		(56)		9		105
Change in accounts payable and other liabilities		(471)		(108)		(261)		(312)
Change in prepaid expenses, income taxes and other current assets		3		(12)		(5)		(11)
Net cash provided from operating activities		1,185		962		251		300

Cash flows provided from (used by) investing activities:
Capital expenditures - Business operations		(846)		(960)		(297)		(315)
Capital expenditures - Integration activities		(19)		(99)		-		(1)
Cash paid for the CTF Acquisition		-		(9,886)
Proceeds on sale of assets		109		-		10		70
Other		6		-		(2)		3
Net cash used by investing activities		(750)		(10,945)		(289)		(243)

Cash flows provided from (used by) financing activities:
Proceeds from long-term debt borrowings		1,500		1,625		1,600		-
Long - term debt payments		(1,662)		(113)		(1,627)		(38)
Financing costs paid		(15)		(38)		(26)		(6)
Premium paid to retire debt		(80)		-		(16)		-
Dividends paid on common stock		(219)		(370)		-		(124)
Dividends paid on preferred stock		(161)		(161)		(53)		(54)
Capital lease obligation payments		(30)		(8)		(10)		(10)
Taxes paid on behalf of employees for shares withheld		(5)		(10)
Other		1		9		(5)		(6)
Net cash provided from (used by) financing activities		(671)		934
Net cash used by financing activities						(137)		(238)

Decrease in cash, cash equivalents, and restricted cash		(236)		(9,049)		(175)		(181)
Cash, cash equivalents, and restricted cash at January 1,		522		9,380		376		522

Cash, cash equivalents, and restricted cash at September 30,	$	286	$	331
Cash, cash equivalents, and restricted cash at March 31,					$	201	$	341

Supplemental cash flow information:
Cash paid (received) during the period for:
Interest	$	1,373	$	1,277	$	593	$	577
Income tax refunds, net	$	(4)	$	(35)	$	-	$	(3)



	For the three months ended				For the nine months ended				For the three months ended
	September 30,				September 30,				March 31,

	2017		2016		2017		2016		2018		2017

Revenue	$	2,251	$	2,524	$	6,911	$	6,487	$	2,199	$	2,356

Operating expenses:
Network access expenses		390		440		1,209		1,053		372		411
Network related expenses		497		527		1,468		1,399		483		493
Selling, general and administrative expenses		486		582		1,561		1,535		469		542
Depreciation and amortization		539		578		1,670		1,469		505		579
Goodwill impairment		-		-		670		-
Acquisition and integration costs		1		122		15		387		-		2
Pension settlement costs		15		-		77		-
Restructuring costs and other charges		14		11		55		11		4		12
Total operating expenses		1,942		2,260		6,725		5,854		1,833		2,039

Operating income		309		264		186		633		366		317

Investment and other income, net		2		3		5		14		8		-
Loss (gain) on extinguishment of debt and debt exchanges		(1)		7		89		7
Pension settlement costs										-		43
Gain on extinguishment of debt										33		-
Interest expense		381		386		1,157		1,145		374		388

Loss before income taxes		(69)		(126)		(1,055)		(505)
Income tax benefit		(31)		(46)		(280)		(212)
Income (loss) before income taxes										33		(114)
Income tax expense (benefit)										13		(39)

Net loss		(38)		(80)		(775)		(293)
Net income (loss)										20		(75)
Less: Dividends on preferred stock		54		54		161		161		53		54
Net loss attributable to
Frontier common shareholders	$	(92)	$	(134)	$	(936)	$	(454)	$	(33)	$	(129)

Basic net loss per share
Basic and diluted net loss per share
attributable to Frontier common shareholders	$	(1.19)	$	(1.73)	$	(12.06)	$	(5.87)	$	(0.44)	$	(1.67)

Diluted net loss per share
attributable to Frontier common shareholders	$	(1.19)	$	(1.73)	$	(12.07)	$	(5.87)
Total weighted average shares outstanding - basic and diluted										77,416		77,591

Total weighted average shares outstanding - basic		77,797		77,612		77,714		77,608

Total weighted average shares outstanding - diluted		77,797		77,612		77,875		77,608



~~($ in millions)~~

~~Balance at January 1, 2017~~	$	~~9,674~~
~~CTF Acquisition adjustments~~		98
~~Impairment~~		~~(670)~~
~~Balance at September 30, 2017~~	$	~~9,102~~



($ in millions)	Revenue from contracts with customers
2018 (remaining nine months)	$	3,276
2019		2,202
2020		669
2021		316
2022		196
Thereafter		256
Total	$	6,915




			Nine months ended September 30, 2017

($ in millions)	January 1, 2017		Payments and Retirements		New Borrowings		September 30, 2017		Interest Rate at September 30, 2017*

Senior and Subsidiary Unsecured Debt	$	15,900	$	(1,544)	$	-	$	14,356	9.22%
Senior Secured Debt		2,151		(114)		1,500		3,537	4.90%
Secured Subsidiary Debt		100		-		-		100	8.50%
Other Secured Debt		19		(3)		-		16	5.25%
Rural Utilities Service Loan Contracts		8		(1)		-		7	6.15%
Total Long-Term Debt	$	18,178	$	(1,662)	$	1,500	$	18,016	8.36%

Less: Debt Issuance Costs		(209)						(190)
Less: Debt Premium/(Discount)		(46)						(56)
Less: Current Portion		(363)						(166)
	$	17,560					$	17,604




			Three months ended March 31, 2018

($ in millions)	January 1, 2018		Payments and Retirements		New Borrowings		March 31, 2018		Interest Rate at March 31, 2018*

Secured debt issued by Frontier	$	3,511	$	(41)	$	1,600	$	5,070	6.64%
Unsecured debt issued by Frontier		13,495		(1,651)		-		11,844	9.51%
Secured debt issued by subsidiaries		107		-		-		107	8.35%
Unsecured debt issued by subsidiaries		750		-		-		750	6.90%
Total debt	$	17,863	$	(1,692)	$	1,600	$	17,771	8.57%

Less: Debt Issuance Costs		(183)						(188)
Less: Debt Premium/(Discount)		(54)						(53)
Less: Current Portion		(656)						(1,060)
	$	16,970					$	16,470



	September 30, 2017			December 31, 2016

	Principal		Interest	Principal		Interest
($ in millions)	Outstanding		Rate	Outstanding		Rate

Senior Unsecured Debt Due:
4/15/2017	$	-	8.250%	$	210	8.250%
10/1/2018		578	8.125%		583	8.125%
3/15/2019		428	7.125%		434	7.125%
4/15/2020		619	8.500%		1,169	8.500%
9/15/2020		303	8.875%		1,066	8.875%
7/1/2021		490	9.250%		500	9.250%
9/15/2021		775	6.250%		775	6.250%
4/15/2022		500	8.750%		500	8.750%
9/15/2022		2,188	10.500%		2,188	10.500%
1/15/2023		850	7.125%		850	7.125%
4/15/2024		750	7.625%		750	7.625%
1/15/2025		775	6.875%		775	6.875%
9/15/2025		3,600	11.000%		3,600	11.000%
11/1/2025		138	7.000%		138	7.000%
8/15/2026		2	6.800%		2	6.800%
1/15/2027		346	7.875%		346	7.875%
8/15/2031		945	9.000%		945	9.000%
10/1/2034		1	7.680%		1	7.680%
7/1/2035		125	7.450%		125	7.450%
10/1/2046		193	7.050%		193	7.050%
		13,606			15,150
Senior Secured Debt Due:
10/24/2019 (1)		254	5.115% (Variable)		280	4.145% (Variable)
3/31/2021 (2)		1,503	3.990% (Variable)		1,564	3.270% (Variable)
10/12/2021 (3)		284	5.115% (Variable)		307	4.145% (Variable)
6/15/2024 (4)		1,496	4.990% (Variable)		-
		3,537			2,151

Subsidiary Debt Due:
05/15/2027		200	6.750%		200	6.750%
02/01/2028		300	6.860%		300	6.860%
2/15/2028		200	6.730%		200	6.730%
10/15/2029		50	8.400%		50	8.400%
11/15/2031		100	8.500%		100	8.500%
		850			850

Total	$	17,993	8.1% (5)	$	18,151	8.3% (5)



($ in millions)

Balance, January 1, ~~2017~~2018	$	4725
Severance costs		464
Cash payments during the period		~~(81)~~(20)
Balance, ~~September 30, 2017~~March 31, 2018	$	129



		Number of
		Shares
		(in thousands)
Balance at January 1, ~~2017~~2018		~~190~~306
LTIP target performance shares granted, net		~~211~~284
LTIP target performance shares earned		~~(41)~~(18)
LTIP target performance shares forfeited		~~(51)~~(8)
Balance at ~~September 30, 2017~~March 31, 2018		~~309~~564



		Weighted					Weighted
		Average					Average
	Number of	Grant Date		Aggregate		Number of	Grant Date		Aggregate
	Shares	Fair Value		Fair Value		Shares	Fair Value		Fair Value
	(in thousands)	(per share)		(in millions)		(in thousands)	(per share)		(in millions)
Balance at January 1, 2017	549	$	78.00	$	28
Balance at January 1, 2018						633	$	58.63	$	4
Restricted stock granted	454	$	47.77	$	5	1,897	$	8.23	$	14
Restricted stock vested	(220)	$	79.78	$	(3)	(219)	$	66.41	$	(2)
Restricted stock forfeited	(119)	$	61.21			(39)	$	57.87
Balance at September 30, 2017	664	$	59.64	$	8
Balance at March 31, 2018						2,272	$	15.80	$	17



($ in millions)	Pension Costs		OPEB Costs		Deferred Taxes on Pension and OPEB Costs		Total		Pension Costs		OPEB Costs		Total

Balance at January 1, 2017	$	(647)	$	29	$	231	$	(387)
Balance at January 1, 2018 (a)									$	(345)	$	(21)	$	(366)
Other comprehensive income (loss) before reclassifications		(34)		1		12		(21)		(4)		-		(4)
Amounts reclassified from accumulated other comprehensive loss to net loss		23		(7)		(5)		11		4		(1)		3
Recognition of net actuarial loss for pension settlement costs in net loss		77		-		(29)		48
Net current-period other comprehensive income (loss)		66		(6)		(22)		38		-		(1)		(1)
Balance at September 30, 2017	$	(581)	$	23	$	209	$	(349)
Balance at March 31, 2018 (a)									$	(345)	$	(22)	$	(367)



	Amount Reclassified from									Amount Reclassified from Accumulated Other Comprehensive Loss (a)
($ in millions)	Accumulated Other Comprehensive Loss (a)


Details about Accumulated Other Comprehensive Loss Components	For the three months ended September 30,				For the nine months ended September 30,				Affected Line Item in the Statement Where Net Income (Loss) is Presented
	2017		2016		2017		2016
Details about Accumulated Other										For the three months ended March 31,				Affected Line Item in the Statement Where
Comprehensive Loss Components										2018		2017		Net Income (Loss) is Presented
Amortization of Pension Cost Items (b)
Actuarial gains (losses)	$	(6)	$	(9)	$	(23)	$	(30)		$	(7)	$	(8)
Pension settlement costs		(15)		-		(77)		-			-		(43)
		(21)		(9)		(100)		(30)	Income (loss) before income taxes		(7)		(51)	Income (loss) before income taxes
Tax impact		8		3		37		11	Income tax (expense) benefit		3		19	Income tax (expense) benefit
	$	(13)	$	(6)	$	(63)	$	(19)	Net income (loss)	$	(4)	$	(32)	Net income (loss)

Amortization of OPEB Cost Items (b)
Prior-service costs	$	2	$	2	$	7	$	7		$	2	$	2
Actuarial gains (losses)		1		-		-		(1)			(1)		-
		3		2		7		6	Income (loss) before income taxes		1		2	Income (loss) before income taxes
Tax impact		(2)		-		(3)		(2)	Income tax (expense) benefit		-		(1)	Income tax (expense) benefit
	$	1	$	2	$	4	$	4	Net income (loss)	$	1	$	1	Net income (loss)



	Pension Benefits
	For the three months ended				For the nine months ended
	September 30,				September 30,

($ in millions)	2017		2016		2017		2016

Components of total pension benefit cost
Service cost	$	26	$	16	$	76	$	63
Interest cost on projected benefit obligation		27		24		94		89
Expected return on plan assets		(43)		(30)		(139)		(122)
Amortization of unrecognized loss		6		9		23		30
Net periodic pension benefit cost	$	16	$	19	$	54	$	60
Pension settlement costs		15		-		77		-
Total pension benefit cost	$	31	$	19	$	131	$	60



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased	Average Price Paid per Share

July 1, 2017 to July 31, 2017
January 1, 2018 to January 31, 2018
Employee Transactions (1)	625	$	15.83	146	$	7.11

August 1, 2017 to August 31, 2017
February 1, 2018 to February 28, 2018
Employee Transactions (1)	222	$	14.68	85,749	$	8.30

September 1, 2017 to September 30, 2017
March 1, 2018 to March 31, 2018
Employee Transactions (1)	68	$	13.54	24	$	7.48


Totals July 1, 2017 to September 30, 2017
Totals January 1, 2018 to March 31, 2018
Employee Transactions (1)	915	$	15.38	85,919	$	8.30


(a)	Exhibits:
	4.1	Indenture, dated as of March 19, 2018, by and among, Frontier Communications Corporation, the guarantors party thereto and The Bank of New York Mellon, as trustee and collateral agent, with respect to the 8.500% Second Lien Secured Notes due 2026.
	4.2	Form of 8.500% Second Lien Secured Note due 2026 (included in Exhibit 4.1).
	4.3	Fourth Supplemental Indenture, dated as of March 20, 2018, to the Base Indenture, dated as of September 25, 2015, between Frontier Communications Corporation and The Bank of New York Mellon, as trustee, with respect to the 8.875% Senior Notes due 2020 (filed as Exhibit 4.3 to Frontier’s Current Report on Form 8-K filed on March 21, 2018).*
	10.1	Amendment No. 2, dated as of January 25, 2018, to the First Amended and Restated Credit Agreement, dated as of February 27, 2017, among Frontier Communications Corporation, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto (filed as Exhibit 10.1 to Frontier’s Current Report on Form 8-K filed on January 25, 2018).*
	10.2	Fifth Amendment, dated as of January 25, 2018, to the Credit Agreement, dated as of June 2, 2014, among Frontier Communications Corporation, CoBank, ACB, as administrative agent, and the lenders from time to time party thereto (filed as Exhibit 10.2 to Frontier’s Current Report on Form 8-K filed on January 25, 2018).*
	10.3	Second Amendment, dated as of January 25, 2018, to the Credit Agreement, dated as of October 12, 2016, among Frontier Communications Corporation, CoBank, ACB, as administrative agent, and the lenders from time to time party thereto (filed as Exhibit 10.3 to Frontier’s Current Report on Form 8-K filed on January 25, 2018).*
	31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
	31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
	32	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101.INS	XBRL Instance Document.
	101.SCH	XBRL Taxonomy Extension Schema Document.
	101.PRE	XBRL Taxonomy Presentation Linkbase Document.
	101.CAL	XBRL Taxonomy Calculation Linkbase Document.
	101.LAB	XBRL Taxonomy Label Linkbase Document.
	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.


	FRONTIER COMMUNICATIONS CORPORATION
	~~(Registrant)~~


	By: /s/ Donald Daniels
	Donald Daniels
	Senior Vice President and Controller
	(Principal Accounting Officer)

Date: ~~November 2, 2017~~May 3, 2018