Stocks/Earnings

Frontier Broadband, Video Subs Decline in Q3

Company starting to weigh OTT video options 11/02/2017 6:52 PM Eastern

If broadband, as Comcast CEO and chairman Brian Roberts puts it, is becoming the “epicenter” of his company’s relationship with the subscriber, then that epicenter continues to shrink at Frontier Communications.

Frontier announced Tuesday (Oct. 31) that it lost 63,000 broadband subs in Q3, lowering its total to about 4 million, and its stock took a hit during the week as a result.

Its video business also felt some pain, as Frontier lost 26,000 video subs (not including the reselling of Dish Network’s satellite TV service), for a total of 981,000. Frontier also lost 10,000 subs through its partnership with Dish, falling to 244,000.

Speaking on the company’s Q3 call, Frontier president and CEO Dan McCarthy said the pressure in the company’s legacy footprint has been a “gross add issue for us.” The company believes that will improve in Q4 as it refines and enhances its retention tactics and beefs up marketing efforts in its CAF (Connect America Fund) territories.

McCarthy also expects Frontier to see improvements in the former Fios territories the company acquired, noting that Tampa is a “very vibrant growth market” with lower service penetrations to attack. Texas, he said, is a “little bit more mature, but we still have an opportunity to go back to some of the customers we lost there.”

On the video side, he said Frontier sees opportunities for OTT to be integrated into its ecosystem. That, he said, could come way of a partnership or something that Frontier does on its own.

McCarthy believes Frontier has the capability to “put together a pretty compelling, over-the-top product that we could use in our legacy markets or as an alternative for customers that just want a standalone product.”

Frontier, he added, is “not quite agnostic, because we're very heavily invested in the linear side, but we are looking at all sorts of different options to provide customers with choice.”

On the financial end, Frontier pulled down consolidated revenues in Q3 of $2.25 billion ($1.1 billion from consumer revenue, down by $22 million) versus $2.52 billion a year earlier, and a Q3 net loss of $38 million. Customer churn improved to 2.08%.

Hurricanes during Q3 resulted in an impact of $12 million -- operating expenses of $9 million and capital expenditures of $3 million.

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