Frontier Communications Corporation
(
FTR
) in collaboration with
AT&T, Inc.
(
T
) has launched new voice and data services. Frontier's customers
can now enjoy AT&T's mobile broadband network along with
wireless devices and applications as a part of Frontier's bundled
services.
The services launched are in accordance with the three year
agreement that took place in November 2011 between Frontier and
AT&T. Under the terms of the agreement, Frontier's customers
would be provided with an access to AT&T's wireless broadband
services that included access to over 29,000 AT&T's Wi-Fi Hot
Spots. Further, the agreement offered Frontier's customers a
variety of AT&T smartphones, tablets and applications and use
of 4G network.
We expect that Frontier's tie up would undertake sales of
AT&T's products over the next three years and support a strong
portfolio of broadband, voice and satellite TV services. The deal
would also fuel subscriber growth while retaining the old customer
base. It would also boost Frontier's competitive position against
CenturyLink, Inc.
(
CTL
) which has a similar deal with another tier 1 company -
Verizon Communications Inc.
(
VZ
).
Apart from the AT&T deal, Frontier also made a lucrative
agreement with Verizon to acquire 4.8 million access lines in 2009.
In April this year, Frontier completed the transfer of Verizon's
assets from 14 rural states, positioning itself as the largest
rural telecommunications company in the U.S. and fifth largest
incumbent local exchange carrier (ILEC). It is anticipated that
these conversions would boost earnings and provide cost synergies
of approximately $650 million by the end of 2012.
Overall, Frontier is progressing well in its profitability
enhancement through lucrative deals, cash flow management and
customer retention and wins, new product deployments as well as
broadband expansion.
However, intense competition, a highly leveraged balance sheet
and regulatory pressure may limit the earnings potential of the
company.
We maintain our long-term Neutral recommendation supported by a
Zacks #3 Rank (Hold).
CENTURYLINK INC (CTL): Free Stock Analysis
Report
FRONTIER COMMUN (FTR): Free Stock Analysis
Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research