Frontier Communications reported somewhat mixed results in the second quarter of 2017, with stronger-than-expected EBITDA but weaker broadband volumes and revenue.
EBITDA rose 39 percent sequentially to $906 million, beating estimates of $893 million, but total revenue for the quarter dropped nearly 12 percent year over year from $2.6 billion to $2.3 billion. Revenue from data and internet services was down 7.1 percent year over to $974 million, while voice revenues were down 13.4 percent to $724 million. Video revenues plunged 21.5 percent to $329 million, versus $419 million last year. Other revenues remained flat at $79 million.
The company also reports a net loss of $662 million, compared to a $75 million loss last quarter. Frontier says the sharp increase was primarily driven by a $532 million after tax goodwill impairment charge.
While revenue was down in nearly all of Frontier’s consumer segments, it reported improved customer churn of 2.24 percent compared to 2.37 percent for the first quarter of 2017. The decline in churn was driven by its FiOS business in its California, Texas, and Florida market, Frontier says, which was acquired from Verizon last year.
“We were pleased with the progress we made during the second quarter as we executed well on a number of key initiatives stabilizing operations,” Frontier President and CEO Dan McCarthy comments. “In particular, we improved churn in our California, Texas, and Florida (CTF) market, saw progress in our commercial business, and continued to reduce costs which resulted in increased adjusted EBITDA margins.”
“Our commitment to enhancing the customer experience, further reducing churn, generating cash flow, and improving the balance sheet positions the company to further stabilize the business and grow longer-term,” he adds.
Frontier lost 33,000 legacy broadband customers compared to 26,000 net adds in the same quarter last year. Its legacy video losses were 4,000, compared to 7,000 in the first quarter. The company notes that legacy customer trends were impacted in the second quarter by a one-time automation process that increased the deactivations of non-paying customers.
In its CTF market, Frontier lost 54,000 FiOS video subs, compared to 73,000 net video losses in the prior quarter. FiOS Data sub losses also improved sequentially, from 57,000 last quarter, to 44,000 in the most recent period.
Frontier says the sequential improvement in net adds for voice, broadband, and video were primarily due to account cleanup of non-paying customers in the first quarter, and focused retention efforts with FiOS customers.
In a Tuesday earnings call McCarthy notes that going forward the company is focused on getting voluntary churn back to benchmark levels. Frontier also remains on track to roll out its consumer-friendly FiOS self-installation process in the second half of the year. The company anticipates this will improve customer satisfaction by enabling customers to complete FiOS installation on their own schedule, McCarthy adds.
“We expect this process to increase efficiency and improve internal resource utilization by reducing our reliance on contractors,” he comments.
