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Are Frontier Communications’ Cost-Cutting Initiatives Paying Off?

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Frontier focuses on cutting costs

Frontier Communications’ (FTR) adjusted EBITDA decreased by ~3.9% YoY to reach $878 million in the quarter ended September 30. This reduction was due to increased costs such as branding initiatives. The company’s adjusted EBITDA margin expanded to 41.3% in the third quarter from 40.6% in the same period a year earlier. For 2018, Frontier expects adjusted EBITDA of ~$3.55 billion.

During the UBS Global Media and Communications Conference held earlier this month, Dan McCarthy, Frontier’s president and CEO, spoke about the company’s latest cost-cutting initiatives. McCarthy reiterated the company’s goal of a $500 million run rate EBITDA benefit by the end of 2020. The company is undertaking revenue enhancement as well as operational enhancement initiatives to benefit EBITDA.

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Peer comparison

In the quarter ended September 30, the integrated US telecom behemoth Verizon (VZ) reported a consolidated adjusted EBITDA margin of 37.4%. AT&T’s (T) combined domestic wireless operations EBITDA margin was 42.8%, while Charter Communications’ (CHTR) adjusted EBITDA margin was 36.3% in the same quarter.

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