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Frontier Communications’ Major Long-Term Growth Drivers

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Part 10
Frontier Communications’ Major Long-Term Growth Drivers PART 10 OF 12

Why Frontier Reported Broadband Subscriber Losses in 2Q17

Frontier’s broadband subscribers

Let’s look at the performance of Frontier Communications (FTR) in the broadband space. Subscriber losses continued as the company shed broadband and video customers in 2Q17. 

Frontier Communications’ broadband customers decreased ~2.4% sequentially to reach 4.1 million at the end of 2Q17. In 2Q17, on a net basis, the wireline player lost 100,000 broadband customers compared to 107,000 broadband net losses in 1Q17.

Why Frontier Reported Broadband Subscriber Losses in 2Q17

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This decline in broadband customers is due to the migration of Frontier Communications’ (FTR) customers to the cable companies providing higher network speeds. FTR’s management believes that strong promotions could trigger increased subscriber additions going forward.

Frontier Communications faces its greatest competition from its rivals, which include Charter Communications (CHTR) and Comcast (CMCSA), which added the most broadband customers. 

Dan McCarthy, CEO of Frontier Communications, noted during the company’s 2Q17 earnings call August 1, “With regard to our Legacy operations, churn and average revenue per customer (ARPC) stabilized compared to the first quarter of 2017, which was offset by lower-than-expected broadband gross adds primarily due to DSL.”

Frontier’s broadband net additions in CTF and Legacy segments

Frontier Communications (FTR) noted that in 2Q17, its broadband net additions improved sequentially in CTF (California, Texas, and Florida) markets, as the company offered faster speeds and new offers. However, in 2Q17, the company still lost 44,000 FiOS and 23,000 DSL subscribers. 

Legacy markets had net losses of 33,000 broadband customer in 2Q17 compared to 26,000 net losses in 1Q17. This trend reflects a one-time impact of the automation process, which accelerated deactivations of non-paying customers. The process started in 1Q17 and ended in April 2017, impacting FTR’s 2Q17 results.

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