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Frontier Communications (FTR) Posts Adjusted Earnings in Q1

Frontier Communications Corp. FTR operates as a communications company providing services primarily to rural areas and small and medium-sized towns and cities in the U.S.

Frontier’s security solutions division, Frontier Secure, has been a solid source of growth for the company. The division witnessed 141% growth in operating income at the end of the fourth quarter of 2015 and its subscriptions made a significant contribution to the Average Revenue per Customer (ARPC) for the company. Moreover, it has partnered with DistiNow to distribute its security solutions, which we believe can generate further revenues for Frontier.

Recently, Frontier launched its latest line of services branded as ‘Vantage’ – a premium digital platform to deliver HD TV, ultra-fast broadband and enhanced Voice over Internet Protocol (VoIP) services. The services will be made available to customers as Vantage TV, Vantage Internet, and Vantage Voice, respectively. With the launch of the Vantage brand, Frontier will join the likes of AT&T and Comcast, which have witnessed success with their respective U-Verse and Xfinity brands. We believe that with the introduction of a premium brand, the company can maintain sustainable broadband subscriber growth.

Also, Frontier is leaving no stones unturned in deriving benefits from the growing Business Service Segment. In particular, Frontier has been targeting the Small and Medium Businesses (SMBs). It has been enhancing its Ethernet capabilities lately and eyeing the retention of SMB customers with attractive plans. However, the persistent decline in the residential voice segment is a major headwind.

Frontier Communications currently carries a Zacks Rank #3 (Hold). The company has generated a significant positive average earnings surprise of 164.17% in the previous four quarters. We have highlighted some of the key stats from this just-revealed announcement below:

Earnings: Frontier Communications beats first quarter earnings. Our consensus estimate called for a loss of 9 cents per share, and the company reported adjusted earnings per share of 1 cent. Investors should note that these figures take out stock option expenses.

Revenue:  Frontier Communications generated total revenue of $1,355 million, beating the Zacks Consensus Estimate of $1,351 million.

Key States to Note:  As of Mar 31, 2016, Frontier Communications had 2,486,700 broadband customers and 543,400 video customers. In the reported quarter, the company added a net 24,600 broadband customers but lost a net 10,300 video customers.

Check back later for our full write up on the Frontier Communications earnings report later!  

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