uploads///Telecom Frontier Q Adjusted EBITDA

Insights from Frontier Communications’ Earnings Trends

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Frontier’s EBITDA margin over the past few quarters

In the previous part, we discussed Frontier Communications’ (FTR) revenue trend over the past few quarters. Now let’s look at FTR’s adjusted EBITDA[1. earnings before interest, tax, depreciation, and amortization] margin.

Frontier Communications’ adjusted EBITDA was ~$906.0 million in 2Q17, which was slightly below analysts’ expectations of $910.0 million. The company’s adjusted EBITDA was ~$1.0 billion in 2Q16.

Frontier’s adjusted EBITDA margin was 39.3% in 2Q17, up from 39.2% in 1Q17. The sequential increase in its EBITDA margin can be traced to its continued cost-reduction programs and expense savings from synergy during its seasonally slowest quarter.

Frontier Communications’ management expects its EBITDA to stabilize on a sequential basis and potentially grow by the end of 2017. The company anticipates EBITDA margins that exceed 40% going forward.

During its 2Q17 earnings conference call, Frontier Communications’ management expressed confidence that it can achieve adjusted EBITDA of $3.8 billion by the end of 2017 through improved operating metrics and cost-cutting initiatives.

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Frontier’s peer comparison of EBITDA margins in 2Q17

In 2Q17, the integrated US telecom behemoth Verizon (VZ) reported a consolidated adjusted EBITDA margin of 37.2%. The EBITDA margin for AT&T’s (T) combined domestic wireless operations reached 41.8% in 2Q17.

Windstream’s (WIN) adjusted OIBDA (operating income before depreciation and amortization) margin was 22.6% in 2Q17.

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