What’s Frontier’s Video Strategy?
Frontier’s video subscribers
Frontier (FTR) believes that its video services could act as a growth driver in the near future. The carrier anticipates that Frontier’s procurement of Verizon’s (VZ) California, Texas, and Florida (or CTF) wireline segments will boost its video service proposition. Nevertheless, in October 2014, Frontier had procured AT&T’s (T) Connecticut wireline segment, thereby adding more video customers.
During the Goldman Sachs Communacopia Conference held on September 12, 2017, Perley McBride, Frontier’s chief financial officer, talked about the company’s video strategy. McBride stated that the video business is important for the company because of the benefits of bundling services. The firm does realize that pay-TV video subscribers are falling but noted that video is a low margin business and therefore should have a negligible impact on the company’s EBITDA (earnings before interest, tax, depreciation, and amortization).
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Threat from OTT video streaming service
Frontier’s video customers fell nearly 5.3% sequentially to reach 1.3 million at the end of 2Q17. In 2Q17, on a net basis, the company lost 70,000 video subscribers as compared to 88,000 video net losses in 1Q17. This decrease in video customers is primarily due to the robust growth in OTT (over-the-top) video streaming services and competitive promotional offers. Currently, Netflix (NFLX), Sony’s (SNE) PlayStation Vue, and DISH TV’s (DISH) Sling TV are the dominant players in the video streaming space.