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Analyzing Frontier Communications’ Second-Quarter EBITDA

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Frontier’s EBITDA trend

In the second quarter, Frontier Communications’ (FTR) adjusted EBITDA fell ~3.5% YoY (year-over-year) to $884 million from $916 million, and ~2.6% sequentially from $908 million. This reduction was mainly due to seasonal customer activities, storms, and a reserve established for exiting a partnership. This year, Frontier expects adjusted EBITDA of ~$3.6 billion.

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Frontier focuses on cutting costs

In Q2 2018, Frontier’s adjusted EBITDA margin expanded YoY to 40.9% from 39.8%, primarily due to continued cost-saving initiatives. Frontier’s focus on cost savings has helped reduce its operating costs and improve its profitability.

The company achieved annualized cost synergies of ~$350 million in the second quarter, in line with its target. It is now targeting a $500 million run-rate benefit to EBITDA by the end of 2020.

In comparison, in the second quarter, integrated US telecom behemoth Verizon (VZ) had a consolidated adjusted EBITDA margin of 36.8%, while AT&T’s (T) was 44.1% and Charter Communications’ (CHTR) was 37.3%.

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