Frontier’s market share
Earlier in the series, we learned about opportunities for Frontier Communications (FTR) from the Verizon (VZ) transaction assets. In the recent JPMorgan Global Technology, Media, and Telecom Conference, Daniel J. McCarthy, Frontier’s CEO (chief executive officer), talked about an aspect affecting Frontier’s Internet proposition.
Regarding the residential broadband market share, McCarthy said, “We have been taking share in about 75% of the market for the last several years.” He also mentioned, “In the case of our FiOS areas now that we just acquired, the standard speed is 100 megs. And we’ve had much higher speeds in our other FiOS areas for several years now, up to a gig. And we just don’t see the really high take points. It’s really – it’s great from a marketing perspective, but customers really haven’t demanded it yet.” He added, “We think having speeds of 40 to 100 megs is actually probably very acceptable to customers for the foreseeable future.”
Frontier’s growing Internet base
Frontier continued to add broadband customers on a net basis in 1Q16. These net additions were ~24,600 for the quarter. As we can see in the above bar graph, Frontier’s broadband subscribers increased marginally by ~1% YoY (year-over-year) to reach ~2.5 million by the end of the quarter.
According to the company, 30% of its residential Internet customers subscribed to Internet speeds above 6 Mbps (megabits per second) at the end of 1Q16. According to the company, this figure was 29% at the end of 4Q15.
For a diversified exposure to select US telecom companies, you can consider investing in the SPDR S&P 500 ETF (SPY). SPY held a total of ~2.7% in AT&T (T), Verizon (VZ), CenturyLink (CTL), Frontier Communications (FTR), and Level 3 Communications (LVLT) at the end of April 2016.
In the next part, we’ll look at Frontier’s value proposition in the US telecom space.