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Frontier Communications (FTR) Loss Lower than Expected
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Frontier Communications Corp. reported mixed financial results in the second quarter of 2016. The company’s adjusted net loss was narrower than the Zacks Consensus Estimate but revenues fell short of the same.
On a GAAP basis, net loss in the reported quarter was $80 million or a loss of 7 cents per share compared with a net loss of $28 million or 3 cents per share in the prior-year quarter. However, quarterly adjusted (excluding special items) loss per share was 2 cents, much narrower than the Zacks Consensus Estimate of a loss of 5 cents per share.
Total revenues increased a whopping 90.6% year over year to $2,608 million. The significant jump in revenues was primarily attributable to the recent acquisition of certain wireline assets from Verizon Communications Inc. (VZ - Free Report) . However, the figure lagged the Zacks Consensus Estimate of $2,744 million.
Segment-wise, Customer revenues totaled $2,381 million, up a substantial 103.9% year over year and Switched access and subsidy revenues were $227 million, up 43.7% year over year.
Within the Customer segment, voice services revenues totaled $836 million, up 82.9%, Data and Internet services revenues came in at $1,048 million, up 79.1%, video revenues were $419 million, up an astounding 516.2% and Other revenues totaled $78 million, up 34.5%. Category-wise, Residential revenues were $1,332 million, up 130.1% while Business revenues came in at $1,049 million, up 70.1%.
Operating income in the second quarter increased a substantial 61.1% year over year to $311 million. Quarterly operating expenses were $2,297 million, up 95.5% year over year. Quarterly adjusted EBITDA was $1,032 million, up 84% year over year. Adjusted EBITDA margin was 39.6% versus 41% in the prior-year quarter.
Cash Flow
In the second quarter of 2016, Frontier Communications generated $693 million of cash from operations compared with $367 million in the prior-year quarter. Free cash flow in the reported quarter was $250 million versus $200 million in the year-ago quarter.
Liquidity
Frontier Communications exited the second quarter of 2016 with $683 million of cash and cash equivalents compared with $936 million at 2015 end. Total debt at the end of the reported quarter was $17,966 million compared with $15,892 million at the end of 2015. At second quarter end, the debt-to-capitalization ratio was 0.77 versus 0.73 at the end of 2015.
As of Jun 30, 2016, the number of residential customers increased 65.1% year over year to 5,243,000. The average monthly residential revenue per customer was $83.20, up 29.1%. Residential customer monthly churn was 1.91% compared with 1.78% in the prior-year quarter. Business customers increased 76.6% year over year to 528,000. The average monthly business revenue per customer was $658, down 4.5%. Frontier Communications had 4,570,000 high-speed broadband subscribers and 1,628,000 video customers.
Outlook
For 2016, Frontier Communications expects adjusted free cash flow in the range of $825 million to $900 million. Capital expenditures will be in the $1,275 million to $1,325 million range. For 2017, the company expects adjusted EBITDA to be greater than $4 billion.
Zacks Rank & Stocks to Consider
Frontier Communications currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry are NTT DOCOMO Inc. and Nippon Telegraph and Telephone Corp. . Both stocks currently sport a Zacks Rank #1 (Strong Buy).
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Frontier Communications (FTR) Loss Lower than Expected
Frontier Communications Corp. reported mixed financial results in the second quarter of 2016. The company’s adjusted net loss was narrower than the Zacks Consensus Estimate but revenues fell short of the same.
On a GAAP basis, net loss in the reported quarter was $80 million or a loss of 7 cents per share compared with a net loss of $28 million or 3 cents per share in the prior-year quarter. However, quarterly adjusted (excluding special items) loss per share was 2 cents, much narrower than the Zacks Consensus Estimate of a loss of 5 cents per share.
Total revenues increased a whopping 90.6% year over year to $2,608 million. The significant jump in revenues was primarily attributable to the recent acquisition of certain wireline assets from Verizon Communications Inc. (VZ - Free Report) . However, the figure lagged the Zacks Consensus Estimate of $2,744 million.
Segment-wise, Customer revenues totaled $2,381 million, up a substantial 103.9% year over year and Switched access and subsidy revenues were $227 million, up 43.7% year over year.
Within the Customer segment, voice services revenues totaled $836 million, up 82.9%, Data and Internet services revenues came in at $1,048 million, up 79.1%, video revenues were $419 million, up an astounding 516.2% and Other revenues totaled $78 million, up 34.5%. Category-wise, Residential revenues were $1,332 million, up 130.1% while Business revenues came in at $1,049 million, up 70.1%.
Operating income in the second quarter increased a substantial 61.1% year over year to $311 million. Quarterly operating expenses were $2,297 million, up 95.5% year over year. Quarterly adjusted EBITDA was $1,032 million, up 84% year over year. Adjusted EBITDA margin was 39.6% versus 41% in the prior-year quarter.
Cash Flow
In the second quarter of 2016, Frontier Communications generated $693 million of cash from operations compared with $367 million in the prior-year quarter. Free cash flow in the reported quarter was $250 million versus $200 million in the year-ago quarter.
Liquidity
Frontier Communications exited the second quarter of 2016 with $683 million of cash and cash equivalents compared with $936 million at 2015 end. Total debt at the end of the reported quarter was $17,966 million compared with $15,892 million at the end of 2015. At second quarter end, the debt-to-capitalization ratio was 0.77 versus 0.73 at the end of 2015.
FRONTIER COMMUN Price, Consensus and EPS Surprise
FRONTIER COMMUN Price, Consensus and EPS Surprise | FRONTIER COMMUN Quote
Subscriber Statistics
As of Jun 30, 2016, the number of residential customers increased 65.1% year over year to 5,243,000. The average monthly residential revenue per customer was $83.20, up 29.1%. Residential customer monthly churn was 1.91% compared with 1.78% in the prior-year quarter. Business customers increased 76.6% year over year to 528,000. The average monthly business revenue per customer was $658, down 4.5%. Frontier Communications had 4,570,000 high-speed broadband subscribers and 1,628,000 video customers.
Outlook
For 2016, Frontier Communications expects adjusted free cash flow in the range of $825 million to $900 million. Capital expenditures will be in the $1,275 million to $1,325 million range. For 2017, the company expects adjusted EBITDA to be greater than $4 billion.
Zacks Rank & Stocks to Consider
Frontier Communications currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry are NTT DOCOMO Inc. and Nippon Telegraph and Telephone Corp. . Both stocks currently sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>