Regional wireline service provider Frontier Communications Corp. (FTR - Free Report) has sought permission from U.S. telecom regulator, the Federal Communications Commission (FCC), to retire copper networks in a portion of its Spencerport, New York, central office service area. The company wants to migrate its customer base in these regions to high-speed fiber-optic networks. All customers will be shifted to the FTTH (fiber-to-the-home) network architecture.
Frontier Communications is leaving no stones unturned to derive benefits from the growing Business Service Segment. Particularly, the company has been targeting Small and Medium Businesses (SMBs). It has been enhancing its Ethernet capabilities lately and eyeing the retention of SMB customers with attractive plans. While the major thrust remains on increasing the uptake of its services by SMB customers, Frontier Communications is expanding its Fiber-based broadband footprint to cater to the needs of bigger customers.
Besides Frontier Communications, other major wireline operators, such as AT&T Inc. (T - Free Report) , Verizon Communications Inc. (VZ - Free Report) and CenturyLink Inc. (CTL - Free Report) have also decided to migrate to fiber-based network from copper.
It must be mentioned here that Frontier Communications has completed the purchase of Verizon’s wireline assets worth $10.5 billion in California, Florida and Texas. Currently, Frontier Communications operates landline business and provides broadband, video, voice and FiOS services in all the three states.
Notably, half of the network runs on high-quality FTTH technology. Frontier Communications will be able to use them as part of its service expansion drive and leverage the same to provide off-net capabilities to its customers. We believe the Verizon deal will drive free cash flow and revenues at Frontier Communications and also help the company retain its dividend sustainability.
Price Performance of Frontier Communications
Frontier Communications’ shares have decreased a whopping 28.15%, underperforming the industry’s gain of 4.51% over the past 90 days. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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