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Why Frontier’s Cost Reduction Initiatives Are Paying Off

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Frontier on track to cut $350 million in costs

Frontier Communications (FTR) is implementing a cost-saving plan as part of its efforts to improve profitability. In 3Q17, the telecom (telecommunications) company continued its cost-cutting plan with a favorable outcome.

During the recent Frontier 3Q17 earnings conference call, Frontier’s management noted that the company accomplished $19 million in cost synergies in 3Q17. Management also highlighted that the company remains on track to accomplish its target of $350 million in annual cost savings by the end of the second quarter of 2018.

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Frontier’s operating expenses fell 14.1% YoY

A close look at Frontier’s cost structure reveals a $51 million reduction in adjusted operating expenses in 3Q17 compared to the previous quarter, implying that the company’s cost-control efforts are bearing fruit.

The chart above depicts Frontier’s quarterly operating expenses trend. Frontier’s total operating expenses for 3Q17 were $1.9 billion compared to $2.3 billion in 3Q16. That trend means that the company’s operating expenses fell 14.1% YoY (year-over-year).

In comparison, AT&T’s (T) operating expenses fell 3.5% YoY in 3Q17. Verizon’s (VZ) operating expenses rose 0.5% YoY, T-Mobile’s (TMUS) rose 5.3% YoY, and Sprint’s (S) fell 3.9% YoY during the same period.

These metrics suggest that Frontier registered the sharpest YoY fall in operating expenses in 3Q17 among its industry competitors.

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