Why Frontier Faces the Most Competition from Charter
Frontier’s broadband subscribers
Now let’s analyze the performance of Frontier (FTR) in the broadband market. Customer losses continued as the carrier shed broadband and video customers during 2Q17. Frontier’s broadband subscribers fell nearly 2.4% sequentially to reach 4.1 million at the end of 2Q17. In 2Q17, on a net basis, the company lost 100,000 broadband subscribers as compared to 107,000 broadband net losses in 1Q17.
During the Goldman Sachs Communacopia Conference on September 12, 2017, Perley McBride, Frontier’s chief financial officer, talked about the company’s broadband business. McBride stated that this decrease in broadband subscribers was primarily due to the migration of Frontier’s customers to cable companies providing superior speeds. Frontier faces the most competition from Charter (CHTR), whose network overlaps 40% of Frontier’s network, while Comcast’s (CMCSA) network overlaps in 20%. To better compete, Frontier now promotes 100 Mbps data speeds as compared to 50 Mbps data speeds where available. Also, the carrier believes that it will remain competitive with the low capital intensity nature of its fiber-to-the-home assets.
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Frontier’s broadband net additions in CTF and legacy markets
As Frontier offered faster speeds and new offers, the company’s broadband net additions improved sequentially in the California, Texas, and Florida (or CTF) markets during 2Q17. However, in 2Q17, the carrier still lost 23,000 DSL and 44,000 FiOS subscribers. Legacy markets had 33,000 broadband subscriber net losses in 2Q17 as compared to 26,000 net losses in 1Q17, reflecting a one-time impact of automation processes, which increased deactivations of non-paying customers. The process started in the first quarter of 2017 and ended in April, impacting 2Q17 results.