Frontier Communications Corporation Earnings: Growth, Bought by the Truckload

Frontier's mascot, Frank A. Buffalo . Source: Frontier.

Frontier Communications just reported results for the fourth quarter and full year of fiscal year 2014. Fourth-quarter figures were roughly in line with analyst expectations, and share prices rose slightly on the news in the after-hours session.

The analyst consensus pointed to fourth-quarter revenue of $1.34 billion, yielding bottom-line earnings near $0.05 per share. Frontier fell slightly below both of these targets, as adjusted earnings stopped at $0.04 per share on $1.33 billion in total sales.

The regional telecom added 420,500 broadband subscribers and 191,000 video customers during the quarter. The majority of these additions came from the recently closed acquisition of AT&T 's wireline operations in the state of Connecticut. The deal closed on October 24, about one month into the just-reported quarter.

Backing that one-time adrenaline shot out of Frontier's subscriber totals, the company added 22,000 organic broadband subscribers, while losing roughly 5,000 Frontier-branded video accounts. The company now offers gigabit broadband services in six of its 28 service states, not counting the fiber footprint inherited from AT&T's U-Verse markets in Connecticut.

The Connecticut deal added $216 million to Frontier's fourth-quarter revenue, and also unlocked $165 million of cost-saving synergies right away.

Management did not have much to say about the pending acquisition of wireline operations in Texas, Florida, and California from Verizon . Expected to more than double Frontier's subscriber counts and revenues on closing, but slated for completion no earlier than the first half of 2016, this game-changing contract is still too distant to affect the next quarter or the current fiscal year in any meaningful way.

Earlier on Thursday, Frontier announced a 5% dividend increase. The new payout of $0.105 per Frontier share is payable on March 31 to investors of record as of March 12. It's Frontier's first dividend increase in more than a decade, as the company instead has preferred lowering its payouts in connection with large service-market buyouts.

"We are very pleased to report strong progress in our continuing business as well as an excellent start in Connecticut," said Frontier CEO and chairman Maggie Wilderotter in a prepared statement. "Frontier exceeded the high end of our prior guidance range for Free Cash Flow, which translates into continued strength in our dividend payout ratio and a more secure dividend."

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