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What Does Frontier Communications’ Low Churn Rate Indicate?

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Frontier’s customer retention rate

Frontier Communications (FTR) has been trying to retain its customers and maintain a lower churn rate amid an intensely competitive telecom sector. Customer churn is a measure of customer losses—the lower the churn, the better.

Frontier reported a customer churn rate of ~1.95% in the second quarter, compared to ~1.94% in the first quarter. The company’s customer churn rate was stable sequentially despite seasonal headwinds. However, it improved YoY (year-over-year) from ~2.24% in the second quarter of 2017, which reflects the success of the company’s initiatives to improve the subscriber experience and retention.

In the second quarter, the churn rates were ~1.76% for Frontier Legacy and ~2.25% for its CTF (California, Texas, and Florida) operations. In the previous quarter, the company reported a churn rate of ~1.71% for Frontier Legacy and a churn rate of ~2.3% for its CTF operations.

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In comparison, Verizon (VZ) reported a postpaid phone churn rate of ~0.75% in the second quarter, while rival AT&T (T) reported a postpaid phone customer retention rate of ~0.82%. T-Mobile (TMUS) reported a branded postpaid phone churn rate of ~0.95%. Sprint (S) posted a postpaid phone churn rate of ~1.55% in the same quarter.

Customer retention

Telecom operators are struggling to retain subscribers in the saturated US wireless market. AT&T and Verizon have started offering unlimited data plans to compete with smaller operators like Sprint and T-Mobile to grow their subscriber bases. Rising competition in the online video streaming space has further pressured telecommunications operators.

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