Frontier Communications Corporation
) reported adjusted earnings per share of 6 cents in
third-quarter 2013, in line with the Zacks Consensus Estimate.
The earnings of this provider of telecommunication services to
rural areas dropped a penny from the year-ago quarter.
Quarterly revenues of $1,185.3 million were in line with the
Zacks Consensus Estimate but dropped 5.4% from the year-ago
quarter. Lower voice revenues along with reduced switched and
non-switched access revenues impacted the quarterly performance,
partially compensated by increased data service revenues.
On a year-over-year basis, local and long-distance service
revenues fell 9.1% to $510.1 million, while data and Internet
services revenues improved 3.4% to $471.2 million. Other revenues
fell 21.5% to $68.8 million.
Adjusted operating income in the third quarter declined 25.1%
year over year to $206.2 million. Operating margin was 17.4%
compared with 22.0% in the year-ago quarter.
At the end of the third quarter, the number of residential
customers was 2,822,141 while business subscribers totalled
274,653. Customer churn was 1.81% compared with 1.64% in the
Frontier added approximately 26,800 broadband users in the
third quarter to reach 1,838,915 (up 5.1% year over year). As of
Sep 30, 2013, video subscribers were 377,915, with the addition
of 10,500 customers.
Frontier exited the third quarter with $661.0 million in cash
and cash equivalents compared with $1,326.5 million at 2012 end.
Long-term debt decreased to $7,887.3 million from $8,381.9
million at the end of 2012.
The company incurred a capital expenditure of $157.6 million
for business operation, while free cash flow was $232.2
The company paid $99.9 million in dividends in the third
quarter, equal to a dividend payout of 43% of free cash flow.
For 2013, Frontier's capital expenditures and free cash flow
guidance remains unchanged in the band of $625-$675 million and
$825-$925 million, respectively. The cash tax expense guidance
also remains unchanged at $125-$150 million.
Another telecom company,
United States Cellular Corp.
), a subsidiary of
Telephone and Data Systems Inc.
), reported third-quarter results on Nov 1, after the market
closed. The company reported a loss of 12 cents per share, widely
lagging the Zacks Consensus Estimate of 13 cents.
We appreciate the various strategic initiatives taken by
Frontier, which include market share gains, new product
deployments, broadband expansion, new pricing plans and lucrative
However, we prefer to remain on the sidelines based on strong
competition in the telecommunication market, regulatory issues
and the effects of high promotional costs as well as access line
loss, which continue to pose major threats to Frontier.
Frontier currently carries a Zacks Rank #2 (Buy). Among other
NTELOS Holdings Corp.
) with a Zacks Rank #1 (Buy) is worth mentioning.
FRONTIER COMMUN (FTR): Free Stock Analysis
NTELOS HOLDINGS (NTLS): Free Stock Analysis
TELEPHONE &DATA (TDS): Free Stock Analysis
US CELLULAR (USM): Free Stock Analysis Report
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