Frontier Communications Corporation (FTR): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Frontier Communications reported second-quarter 2014 results wherein the bottom line was on par with the Zacks Consensus Estimate while the top line surpassed the same. The poor show can be attributed to lower residential customers along with increased churn. We believe that the backhaul revenue pressure, integration costs as well as higher financial leverage will continue to weigh on the company s earnings. However, product introductions, broadband expansion and cash flow management by operating expense reduction should prove accretive. Additionally, changes in the channel distribution structure and Frontier's relentless focus on infrastructural development, enhancement of network speed and shareholders' return bode well for long-term growth. We are maintaining our Neutral recommendation on Frontier Communications.

Overview:

Based in Stamford, CT, Frontier Communications Corporation is a communications company providing services to rural areas and small and medium-sized towns and cities. Frontier offers voice, high-speed Internet, satellite video, wireless Internet data access, data security solutions, bundled offerings, specialized bundles for small businesses and home offices, and advanced business communications access solutions for medium and large businesses. It operates across 27 states with approximately 14,017 employees. The company also provides television services, which allows access to various digital television channels featuring movies, sports, news, music, and high-definition TV programming and wireless data services. Formerly known as Citizens Communications Company, Frontier Communications Corporation changed its name to the present form in Jul 2008.

The company's customers include both residential and business. Its services include access services local services long distance services data and Internet services directory services television and wireless services. Residential and business customers accounted for approximately 42% and 46%, respectively, of the total revenue in 2013. Regulatory services accounted for 12% of the total 2013 revenue.

In Jul 2010, Frontier Communications had acquired Verizon Communications Inc.'s local wireline operations in 14 states. With this acquisition, Frontier has taken control of over 4.8 million Verizon phone lines, trebling its size to become the largest rural-only service provider in the United States.

In Apr 2012, Frontier announced the disposition of its one-third stake in regional telecom carrier Mohave Wireless to Verizon Wireless.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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