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Frontier Communications’ Major Long-Term Growth Drivers

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Part 9
Frontier Communications’ Major Long-Term Growth Drivers PART 9 OF 12

Why Frontier Communications Reported Video Customer Losses in 2Q17

Frontier’s video subscribers

Frontier Communications (FTR) believes that its Video Services segment could act as a growth driver in the near term, as this space is becoming more competitive. The company expects that its acquisition of Verizon’s (VZ) California, Texas, and Florida (or CTF) wireline business could enhance its video service proposition.

Frontier Communications procured AT&T’s (T) Connecticut wireline market in October 2014, adding more video customers.

Why Frontier Communications Reported Video Customer Losses in 2Q17

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Frontier Communications’ video subscribers decreased ~5.3% sequentially to reach 1.3 million at the end of 2Q17. In 2Q17, on a net basis, the wireline player lost 70,000 video customers compared to 88,000 video net losses in 1Q17.

This decline in video subscribers is mainly due to the rapid growth in over-the-top (or OTT) video viewing trends and competitive promotional offers.

Threat from OTT video-streaming service

The OTT online video-streaming service has emerged as the biggest threat to Frontier Communications. There has been a significant surge in users subscribing to OTT services, which can be more affordable than the monthly cable and satellite TV bills.

According to the 1Q17 Digitalsmiths report, nearly 37.1% users pay more than $100 per month to their pay-TV provider. Currently, Netflix (NFLX), Sony’s (SNE) PlayStation Vue, and Dish Network’s (DISH) Sling TV are key video streaming players.

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