Frontier Communications Corp.FTR operates as a communications company providing services primarily to rural areas and small and medium-sized towns and cities in the U.S.
Recently, Frontier Communications received a go-ahead from the FCC for its proposed acquisition of leading wireless carrier Verizon’s local wireline operations in California, Florida and Texas. We believe the Verizon deal will drive stronger revenues at Frontier, be accretive to its free cash flow growth and help the company maintain its dividend sustainability as well.
Additionally, Frontier has teamed up with TiVo Inc. to deliver over-the-top (OTT) services as part of its video offering for residential and business customers across multiple markets. Frontier’s customers will gain access to a large array of TV channels via its high speed Internet services. With its primary focus on rural areas where wireless speeds are generally low, we expect this strategy to be a hit.
Nevertheless, Frontier Communications remains significantly challenged by slow economic recovery in its service territories and competes with the loss of legacy fixed telephony business to wireless and other offerings. Approximately 65% of its access lines are exposed to cable voice service offerings. The persistent decline in access lines continues to tighten local service revenues, which accounts for majority of the company’s overall revenues.
Frontier Communications currently carries a Zacks Rank #3 (Hold). The company has generated a negative average earnings surprise of 1.25% in the previous four quarters. We have highlighted some of the key stats from this just-revealed announcement below:
Earnings:Frontier Communications beats third quarter earnings. Our consensus called for a loss per share of a penny, and the company reported adjusted earnings per share of 3 cents.
Revenue:Frontier Communications generated total revenue of $1,424 million, below the Zacks Consensus Estimate of $1,427 million.
Key Stats to Note: As of September 30, 2015, the number of residential customers declined 0.88% to 3,147,000. The average monthly residential revenue per customer was $63.83 against $60.34 in the year-ago quarter. Business subscribers decreased 1.67% year over year to 294,000. The average monthly business revenue per customer was $693.58 against $658.56 in the prior-year quarter.
Stock Price:At the time of writing, the stock price of Frontier Communications was up nearly 1.74% (9 cents) in the per-market trade on NYSE. Clearly the initial reaction to the release is positive. We believe that strong earnings beat is the primary reasons for positive investor’s sentiment.
Check back later for our full write up on this Frontier Communications earnings report later!
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