Dec 4 (Reuters) – Activist investment firm Jana Partners is urging Frontier Communications (FYBR.O) to begin a strategic review, including a possible sale of the telecommunications company, arguing that its shares will continue to lag unless corrective action is taken.

Jana, which in October called on the third-largest U.S. fiber broadband provider to sell itself, is now pressing Frontier’s board to “immediately” start a comprehensive review process, according to a letter to the board seen by Reuters.

Frontier’s board should evaluate a possible sale of the company, a strategic partnership or joint venture, and selling off some non core assets to speed up the company’s transition to a pure-play fiber provider, Jana said in the letter dated December 4.

“We wish for the Board to pursue whatever option generates the greatest risk-adjusted return for shareholders,” Barry Rosenstein and Scott Ostfeld, the firm’s two managing partners wrote. “We believe that a bona fide evaluation of strategic alternatives would lead the Board to conclude that a sale transaction offers the best risk-adjusted outcome for shareholders,” they added.

In the letter, the partners said they have spoken with potential strategic and financial buyers who have “indicated interest in participating in a company-initiated review process.” They did not identify the parties.

Frontier, which is valued at $5.8 billion, is working with Goldman Sachs to help evaluate its options, people familiar with the matter said.

A Jana spokesman declined to comment and a representative for Frontier did not immediately respond to a request for comment.

The company’s depressed valuation and strong position in the fiber broadband sector would make it an attractive asset for wireless carriers and private equity-owned assets in the sector, as well as for infrastructure and private equity funds, Jana said in October when it unveiled the new stake at a conference.

Frontier’s stock price has climbed since Jana publicly began pushing for change, but it remains down 8% for the year to date, trading at $23.24 on Monday.

Wall Street analysts see potential in the company, with the median analyst price target at approximately $33.

Jana is widely seen as one of the industry’s most successful and collaborative activists, preferring to work behind the scenes to push for change.

In the letter Jana said Frontier’s lagging stock price is linked to the fact the company hasn’t been able to attract new investors since exiting bankruptcy in 2021.

Potential new investors are put off by Frontier’s “highly complex and leveraged balance sheet,” its debt-funded fiber build-out strategy, and an uncertain FCC regulatory environment, Jana said.

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