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What’s behind Frontier’s Improved Customer Churn Rate in Q4?

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Feb. 28 2019, Updated 9:00 a.m. ET

Frontier’s customer retention rate in Q4 2018

Frontier (FTR) has been trying to retain and attract customers and maintain a lower churn amid a highly competitive telecom sector. In the fourth quarter of 2018, Frontier’s consumer churn rate of 1.94% improved from the year-ago quarter of 1.98% owing to its transformation initiatives. The churn rate also improved sequentially from the third-quarter churn rate of 2.03%, probably driven by the CTF (California, Texas, and Florida) FiOS market.

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Focus on keeping churn rate lower

Frontier is focusing on maintaining a lower churn rate, as lower churn rates are favorable for telecom companies. The churn rate is a crucial metric for customer retention. CTF FiOS and Legacy led to the overall improvement in Frontier’s customer churn of 1.94% in the fourth quarter. The churn rate was 1.79% for Frontier Legacy and 2.17% for CTF operations in the fourth quarter compared with the sequential quarter, where the company posted 1.91% for Frontier Legacy and 2.22% for CTF operations.

Verizon (VZ) reported a postpaid phone churn rate of 0.82% in the fourth quarter. After Verizon, rival T-Mobile (TMUS) posted a postpaid phone customer retention rate of 0.99%. AT&T (T) and Sprint (S) had a postpaid churn rate of 1.00% and 1.84%, respectively, in the December quarter.

Telecom companies are struggling to retain customers

Telecom companies are struggling to maintain their subscribers in the saturated US wireless market. Rising competition in the online video streaming space has further pressured the telecom companies. Consumers nowadays prefer over-the-top (or OTT) video streaming services instead of satellite television offerings. OTT service providers such as Amazon Prime (AMZN) and Netflix (NFLX) are some of the established players in the video streaming market.

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