Frontier Communications Changes Its Focus


We have been writing about Frontier Communications (FTR) on SA since late February 2011 when the stock was at $6.93 (adjusted for dividends). The stock closed at $4.81, down 31% at the time of this writing. The current attraction is the yield since this is not a growth story. Is now the time to add this high yielder to the portfolio or is there more pain ahead? The goal of this discussion is to give the reader a basic understanding of the “new FTR,” assessing so the sustainability of the dividend and the potential for reversing revenue declines based on management’s change in focus.

The term “new FTR” not only refers to the company expansion from the 2010 acquisition but management contention access lines are no longer a relevant measure going forward, changing the focus to customer metrics.

The discussion includes:

  • A brief history of the transformation tripling the size of the company.
  • A deeper look into revenue metrics.
  • FCF (Free Cash Flow) and dividends.
  • Risk
  • Conclusion


FTR was founded in 1935 as Citizens Utilities and became a pure-play telecom network operator in 2004. Frontier announced a deal with Verizon Communications (VZ) in May 2009. Frontier acquired approximately 4.8 million access lines from Verizon, tripling the size of the company. The Verizon properties were packaged into an entity called SpinCo and merged with FTR. The all-stock transaction was valued at approximately $8.6 billion and closed July 1, 2010…. Click here to continue reading the full story at SA


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