While I believe that bears are severely overstating the risks associated with Frontier's (FTR) debt, they seem to have other valid points. Revenues continue to decline by double-digit rates, a key strategic initiative started barely one year ago, is now declining by 20%. Lastly, even though free cash flow appears to more than cover the dividend, there is barely anything left for deleveraging. This means that the equity will remain under water, which means that there is little to no hope of any capital appreciation.
Frontier Communications is a very interesting investment candidate. As with all turn arounds, there is a lot going on. But the basic premise is as with any turnaround: high reward if the turnaround works. As Warren Buffett famously set: