Frontier to Boost Network Speed

In an effort to boost its network speed, Frontier Communications Corporation ( FTR - Analyst Report ) , which offers voice and high-speed Internet services to rural areas and small and medium-sized towns and cities has deployed ADSL 2+ Bonding technology across Appalachian Ohio serving 28 communities.

This new technology will offer a speed of 12 MEG download/2 MEG upload for residential customers and 15 MEG download/2 MEG upload for small medium business (SMB) customers.

Deployment of such technology will not only double its earlier network speed but will also enable subscribers to stream HD videos and play online games without any disturbance. Moreover, it also provides lightening speed to the SMB customers to transfer large files and video conferencing facility.

Last month Frontier Communications announced its second-quarter 2012 financial results where its data and Internet services segment experienced a slight drop in business. Moreover, the company’s business segment registered a year-over-year decline of 5.8%.

So, in order to boost its business segment as well as generate higher revenue from its data and Internet services business the company is deploying advance technology to offer faster speed.

Frontier Communications continues to receive funds from Federal Communications Commission’s (FCC) in order to boost broadband infrastructure support in rural areas. Within a span of two years, the company has utilized nearly $1.5 billion of funds it had received from FCC to set up broadband infrastructure across its footprints. Hence, deployment of ADSL 2+ Bonding technology is also a part of that investment programme.

Frontier focuses on generating new revenues through customer retention, customer wins, new product deployments, tiered pricing, broadband expansion, and profitability and cash flow management through reductions in operating expenses and capital expenditures. In addition, the reduction of access line losses would boost Frontier’s profitability and provide cost synergies going forward.

However, intense competition from peers like Windstream Corporation ( WIN - Analyst Report ) , a highly leveraged balance sheet, regulatory pressure as well as integration risks in converting the acquired properties into its own system might limit the earnings potential of the company in the upcoming quarters. We, thus maintain our long-term Neutral recommendation on Frontier Communications.

We are currently Neutral on the stock, backed by a Zacks #3 Rank.