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Will Frontier Communications’ Revenue Decline in 1Q16?


Apr. 27 2016, Published 7:37 a.m. ET

Frontier Communications’ revenue in 1Q16

In the previous part of this series, we learned that Wall Street expects Frontier Communications (FTR) to have an adjusted loss in 1Q16. Now let’s look at the expectations for the wireline player’s top line during the quarter. Wall Street analysts expect Frontier Communications’ revenue to fall ~1.3% YoY (year-over-year) to ~$1.4 billion in 1Q16.

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Consensus estimates versus actual performance in recent quarters

As seen in the above bar chart, the telecommunications, or telecom, company’s revenue figures were lower than Wall Street’s expectations in 1Q15 and 4Q15. However, in 2Q15 and 3Q15, Wall Street’s revenue expectations were on the conservative side with respect to reported figures.

Frontier Communications’ revenue in 4Q15

In 4Q15, Frontier Communications’ revenue was ~$1.4 billion, ~$257 million of which came from its Connecticut operations. On a quarter-over-quarter basis, the company’s revenue fell by ~0.8%. The shrinking voice component led to this decline.

On a quarter-over-quarter basis, the company’s voice revenue decreased ~3.6% to ~$0.48 billion. Meanwhile, the company’s data and Internet service revenue remained flat on a quarter-over-quarter basis at ~$0.59 billion in 4Q15.

The revenue from the company’s Connecticut operations declined ~2.7% quarter-over-quarter in 4Q15. Frontier had acquired these wireline operations from AT&T (T) in October 2014.

Meanwhile, in 4Q15, the ~$5 million expansion (quarter-over-quarter) in regulatory revenue was due in large part to the CAF (Connect America Fund) Phase 2 funding.

For diversified exposure to select US wireline telecom companies, you might consider investing in the iShares Core S&P 500 ETF (IVV). IVV had a total of ~2.8% of its holdings in AT&T, Verizon Communications (VZ), CenturyLink (CTL), Level 3 Communications (LVLT), and Frontier Communications at the end of March 2016.


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