Why Frontier Communications’ Revenues Declined in 2Q17
Frontier’s revenue trend since 2Q16
In the earlier part of this series, we learned that Frontier Communications’ (FTR) earnings decreased year-over-year (or YoY) during 2Q17. In this part, we’ll look at the company’s top-line performance over the past few quarters.
In 2Q17, Frontier Communications reported stronger EBITDA,1 but modestly weaker broadband volumes and customer revenues. The company’s management noted that the integration of Verizon’s (VZ) California, Texas, and Florida (or CTF) wireline assets have proven more difficult than anticipated.
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Frontier Communications generated total revenues of $2.30 billion in 2Q17, a decrease of ~11.7% on a YoY basis and approximately $10.0 million below the consensus estimates. Analysts had expected revenues of $2.31 billion in 2Q17.
Revenues for its Voice Services segment fell ~13.4% YoY to $724.0 million, whereas its Data and Internet Services revenues fell ~7.1% YoY to $974.0 million. FTR’s Video Services revenues fell ~21.5% YoY to $329.0 million in 2Q17.
Decline in FTR’s revenues in 2Q17
In 2Q17, Frontier Communications’ total (FTR) revenues saw a sequential decrease of $52.0 million. However, the company continued the trend of sequential improvement in CTF revenues in 2Q17. FTR reported stronger commercial and regulatory revenues, offsetting weaker consumer revenues during 2Q17.
Its consumer revenues fell $40.0 million sequentially, mainly driven by declines in its CTF markets. In 2Q17, sequentially, Frontier Communications’ legacy customer revenues fell ~2.2%, while its CTF customer revenues fell ~2.7% during the quarter.
Frontier Communications’ management highlighted the company’s commitment to improving customer and revenue trends in 2017. The company considers its Video Services segment as a future growth driver.
Accordingly, Frontier Communications expects that the Verizon transaction could boost its Video Services segment. By procuring AT&T’s (T) Connecticut wireline properties in October 2014, Frontier Communications gained additional video users.
Continue to the next part for a discussion of Frontier Communications’ EBITDA margin.
- earnings before interest, tax, depreciation, and amortization ↩