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Frontier Communications (FTR) Q2 Loss Narrower than Expected

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Frontier Communications Corp. (FTR - Free Report) reported mixed financial results in the second quarter of 2017. The company’s adjusted net loss was narrower than the Zacks Consensus Estimate while revenues lagged the same.   

On a GAAP basis, net loss in the reported quarter was $715 million or $9.21 per share compared with a net loss of $80 million or $1.05 per share in the prior-year quarter. However, quarterly adjusted (excluding special items) loss per share was $1.10, narrower than the Zacks Consensus Estimate of a loss of $1.12.

Total revenue decreased 11.7% year over year to $2,304 million, lagging the Zacks Consensus Estimate of $2308.7 million. Segment-wise, Customer revenues totaled $2,106 million, down 11.5% year over year while Switched access and subsidy revenues were $198 million, down 12.8% year over year.

Within the Customer segment, voice services revenues totaled $724 million, down 13.4%, data and internet services revenues came in at $974 million, down 7.1%, video revenues plunged 21.5% to $329 million and Other revenues totaled $79 million, up 1.3% year over year.

Category-wise, Consumer revenues were $1,124 million, down 15.6%, Commercial revenues came in at $982 million, down 6.4%. Switched access and subsidy revenues were $198 million, down 12.8% year over year.

Operating loss in the second quarter was $394 million against an operating income of $311 million in the prior-year quarter. Quarterly operating expenses were $2,698 million, up 17.5% year over year. Quarterly adjusted EBITDA was $906 million, down 12.2% year over year. Adjusted EBITDA margin was 39.3% compared with 39.6% in the prior-year quarter.

Frontier Communications faces intense competition from large telecom operators like AT&T Inc. (T - Free Report) and Comcast Corp. (CMCSA - Free Report) . Nevertheless, the company improved customer churn in the markets of California, Texas and Florida where it acquired FiOS wireline assets from Verizon Communications Inc. (VZ - Free Report) . Frontier Communications currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cash Flow

In the second quarter of 2017, Frontier Communications generated $529 million of cash from operations compared with $693 million in the prior-year quarter. Free cash flow in the reported quarter was $205 million compared with $250 million in the year-ago quarter.

Liquidity

Frontier Communications exited the second quarter of 2017 with $387 million of cash and cash equivalents compared with $522 million at 2016-end. Total debt at the end of the reported quarter was $17,846 million compared with $17,923 million at the end of 2016. At the end of second-quarter 2017, the debt-to-capitalization ratio was 0.83 compared with 0.79 at the end of 2016.

Frontier Communications Corporation Price, Consensus and EPS Surprise

 

Frontier Communications Corporation Price, Consensus and EPS Surprise | Frontier Communications Corporation Quote

Subscriber Statistics

As of Jun 30, 2017, the number of consumer segment customers decreased 11.6% year-over-year to 4,585,000. The average monthly consumer revenue per customer was $80.38, up 0.2% sequentially. Consumer segment customer monthly churn was 2.24% compared with 1.91% in the year-ago quarter. Commercial segment customers decreased 10.4%, year-over-year to 473,000. Frontier Communications had 4,063,000 high-speed broadband subscribers, down 8.9% and 1,007,000 video customers, down 22.8% year over year.

Outlook

For 2017, Frontier Communications expects adjusted free cash flow in the range of $800–$900 million. Capital expenditures will be in the $1,100–$1,200 million range.

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