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Frontier Posts Q3 Losses: Will They Continue?

Sophia Nicholson - Author
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Nov. 8 2018, Published 9:35 a.m. ET

Frontier is posting losses

Frontier Communications (FTR) has been posting negative EPS for the past ten consecutive quarters. The telecommunications company again disappointed investors with its third-quarter earnings results, which it released on November 6.

Frontier posted EPS of -$0.07 in the third quarter. The stock plummeted 22.9% on November 7 and closed at $4.05 after the company lowered its guidance on EBITDA and free cash flow. The stock was down 3.80% in after-hours trading on November 6.

During the third quarter, Frontier’s adjusted EPS of -$0.07 were narrower than analysts’ consensus expectation of -$0.23. Meanwhile, its revenue of $2.126 billion marginally exceeded Wall Street’s expectation of $2.125 billion in the quarter.

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Frontier’s third-quarter results

Frontier’s EPS of -$0.07 in the third quarter were better than the estimate. Its EPS also improved from -$0.94 in the previous year’s quarter. However, its revenue of $2.126 billion in the quarter marked a fall of 5.6% YoY (year-over-year) due to a falls in the consumer segment, subsidy revenue, and other regulatory revenue. The commercial segment’s revenue rose marginally in the quarter.

Frontier lost 61,000 broadband customers in the third quarter compared to a loss of 63,000 customers in the previous year’s quarter. However, its broadband customer losses were more pronounced than expected in the quarter.

Rivals Charter Communications (CHTR) and Comcast (CMCSA) managed to add the most broadband subscribers in the period. While Comcast added 363,000 residential high-speed Internet customers, Charter added a total of 266,000 broadband customers.

Frontier also lost 29,000 video customers in the quarter, as traditional cable subscribers are shifting to cheaper online streaming alternatives provided by tech giants such as Netflix (NFLX) and Amazon’s (AMZN) Prime Video. Netflix and Amazon are increasingly investing in original content to dominate the streaming services market and offer original shows and movies to consumers.

Charter and Comcast lost 66,000 and 95,000 residential video customers, respectively, in the third quarter. AT&T, the second-largest US wireless carrier, lost 359,000 satellite TV customers and added 13,000 U-verse TV customers in the third quarter.

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