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Frontier Communications’ Major Long-Term Growth Drivers

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Part 2
Frontier Communications’ Major Long-Term Growth Drivers PART 2 OF 12

Why Frontier Communications’ 2Q17 Earnings Missed Estimates

Frontier Communications’ earnings in 2Q17

Frontier Communications (FTR) may work with a definite plan to identify and deactivate non-paying customers, which could lead to increased profitability. In the near term, this plan would cause a decrease in broadband users. The company acknowledged that its integration with Verizon’s (VZ) California, Texas, and Florida (or CTF) wireline assets has been slower than anticipated.

Frontier Communications reported mixed 2Q17 results, with weak consumer revenues offset by stronger-than-anticipated EBITDA1 on cost reductions. Frontier Communications reported adjusted earnings per share (or EPS) of -$1.10 in 2Q17. FTR missed the Wall Street analysts’ consensus estimate of EPS of -$0.73.

Why Frontier Communications’ 2Q17 Earnings Missed Estimates

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Frontier Communications’ net loss increased to $662 million in 2Q17 compared to a net loss of $75 million in 1Q17. This sharp spike in its net loss was due to a goodwill impairment charge of $532 million that the company posted in the recent quarter.

Despite the procurement of Verizon’s wireline assets, Frontier Communications faces execution risk given the size of the acquisition and integration uncertainties. However, the company anticipates operational improvement in the acquired business going forward.

Frontier’s peer comparison of earnings per share in 2Q17

Among Frontier Communications’ peers, CenturyLink’s (CTL) adjusted EPS fell ~27.0% year-over-year to reach $0.46 in 2Q17. Windstream’s (WIN) EPS fell from $0.01 in 2Q16 to -$0.37 in 2Q17.

In the next part, we’ll look at the revenue growth of Frontier Communications in 2Q17.

  1. earnings before interest, tax, depreciation, and amortization
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