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What Does Frontier’s Low Churn Rate Suggest?

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Frontier’s customer churn rate in 4Q17

The telecommunication (or telecom) sector is highly competitive, and AT&T (T), Charter (CHTR), and Comcast (CMCSA) are presenting stiff competition to Frontier (FTR). In this environment, customer retention is an important metric. Frontier reported customer churn of 2.0% in 4Q17 as compared to 2.1% in the preceding quarter and the year-ago quarter. Customer churn is a measure of subscriber loss, and the lower the churn the better.

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In Frontier’s case, the 2.0% churn reported in 4Q17 showed an improvement from 2.1% in the prior quarter with CTF (California, Texas, Florida) FiOS and Legacy contributing to the overall improvement. A churn rate of 1.8% for Frontier Legacy and 2.2% for CTF were lower than the sequential quarter when it was 1.9% for Frontier Legacy and 2.3% for CTF.

If we compare the top telecom players in the US, Verizon (VZ) continued to have the best postpaid phone churn rate of 0.77% in 4Q17. AT&T had a postpaid phone churn rate of 0.89% in 4Q17.

Telecom companies are struggling to retain customers

Telecom companies are struggling to retain customers in the saturated US wireless market. The unlimited data offering plans from smaller competitors T-Mobile (TMUS) and Sprint (S) are hurting the market shares of AT&T and Verizon. Rising competition in the Internet space has further pressured these companies.

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