Frontier Communications Corporation
), a provider of telecommunication services to rural areas,
reported adjusted earnings per share of 6 cents in second-quarter
2013, down 25% from the prior-year figure. The result was in line
with the Zacks Consensus Estimate.
Quarterly revenues of $1,190.5 million failed to meet the
Zacks Consensus Estimate of $1,196.0 million and also 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 offset by increased data service
On a year-over-year basis, local and long-distance service
revenues fell 8.7% to $513.8 million, while data and Internet
services revenues improved 3.4% to $467.4 million. Other revenues
fell 19.8% to $70.6 million.
Adjusted operating income in the second quarter improved 0.61%
year over year to $266.2 million. Operating margin was 21.8%
compared with 24.9% in the year-ago period.
At the end of the second quarter, the number of residential
customers was 2,842,883 while business subscribers totalled
278,131. Customer churn was 1.64%, flat in comparison to the last
year comparable quarter.
Frontier added approximately 29,511 broadband users in the
second quarter to reach 1,812,110 (up 3.6% year over year). As of
Jun 30, 2013, video subscribers were 380,180, with the addition
of 15,219 customers.
Frontier exited the second quarter with $548.6 million in cash
and cash equivalents compared with $1,326.5 million at 2012 end.
Long-term debt decreased to $7,900.9 million from $8,381.9
million at the end of 2012.
The company incurred capital expenditure of $137.5 million for
business operation, while free cash flow was $175.9 million.
The company paid $100.0 million in dividends in the second
quarter, equal to a dividend payout of 57% of free cash flow.
For 2013, Frontier keeps capital expenditures and free cash
flow guidance unchanged in the bands of $625-$675 million and
$825-$925 million, respectively. The company also keeps cash tax
expense guidance unchanged in the range of $125-$150 million.
Another telecom company,
Century Link Inc.
), reported second-quarter results on Aug 7, 2013, after the
market closed. The company's adjusted earnings of 69 cents
surpassed the Zacks Consensus Estimate of 67 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
Early April, the company announced the disposition of its
one-third stake in regional telecom carrier - Mohave Wireless -
to Verizon Wireless, a joint venture between
Verizon Communications Inc.
Vodafone Group Plc.
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 customer
loss in certain segments, which continue to pose major threats to
Frontier currently carries a Zacks Rank #3 (Hold).
CENTURYLINK INC (CTL): Free Stock Analysis
FRONTIER COMMUN (FTR): Free Stock Analysis
VODAFONE GP PLC (VOD): Free Stock Analysis
VERIZON COMM (VZ): Free Stock Analysis Report
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