Frontier Communications (FTR) Q4 Loss Wider Than Expected
Frontier Communications Corp. (FTR - Free Report) reported disappointing financial results in the fourth quarter of 2016. The company’s adjusted net loss was wider-than the Zacks Consensus Estimate and revenues also fell short of the mark.
On a GAAP basis, net loss in the reported quarter was $133 million or a loss of 12 cents per share compared with a net loss of $156 million or 14 cents per share in the prior-year quarter. However, quarterly adjusted (excluding special items) loss per share was 4 cents, a penny higher than the Zacks Consensus Estimate.
Total revenues increased a whopping 70.5% year over year to $2,409 million. The significant jump in revenues can primarily be attributable to the acquisition of certain wireline assets from Verizon Communications Inc. (VZ - Free Report). However, the figure lagged the Zacks Consensus Estimate of $2,500.3 million.
Segment-wise, Customer revenue totaled $2,210 million, up a substantial 83.1% year over year while Switched access and subsidy revenues were $199 million, down 3.4% year over year. Within the Customer segment, voice services revenues totaled $774 million, climbing 60.6%, Data and Internet services revenues came in at $1,013 million, advancing 72%, video revenues were $365 million, soaring an astounding 414.1% and Other revenues totaled $58 million, down 10.8%. Category-wise Residential revenues were $1,196 million, up a massive 101.3% while Business revenues came in at $1,014 million, up 65.4%.
Operating income in the fourth quarter increased 40.1% year-over-year to $255 million. Quarterly operating expenses were $2,154 million, rising 75% year over year. Quarterly adjusted EBITDA was $966 million, up a considerable 61% year over year. However, adjusted EBITDA margin was 40% compared with 42.5% in the prior-year quarter.
Frontier Communications currently carries a Zacks Rank #5 (Strong Sell). Frontier Communications faces intense competition from large telecom operators like AT&T Inc. (T - Free Report) and Comcast Corp. (CMCSA - Free Report). Both the stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cash Flow
In the fourth quarter of 2016, Frontier Communications generated $714 million of cash from operations compared with $341 million in the prior-year quarter. Free cash flow in the reported quarter was $316 million compared with $243 million in the year-ago quarter.
Liquidity
Frontier Communications exited 2016 with $522 million of cash and cash equivalents compared with $936 million at 2015-end. Total debt at the end of 2016 was $17,923 million compared with $15,892 million at the end of 2015. At 2016-end, the debt-to-capitalization ratio was 0.79 compared with 0.80 at the end of 2015.
Subscriber Statistics
As of Dec 31, 2016, the number of residential customers decreased 2.9% sequentially to 4,891,000. The average monthly residential revenue per customer was $80.33, down 2.5% sequentially. Residential customer monthly churn was 2.08%, remains flat sequentially. Business customers decreased 2.7%, sequentially to 502,000. The average monthly business revenue per customer was $665.04, down 0.05% sequentially. Frontier Communications had 4,271,000 high-speed broadband subscribers, down 2.1% sequentially and 1,419,000 video customers, down 5.6% sequentially.
Outlook
For 2017, Frontier Communications expects adjusted free cash flow in the range of $800 to $1,000 million. Capital expenditures will be in the $1,000 to $1,250 million range. Cash taxes will be $0 to $50 million.
Frontier Communications Corporation Price, Consensus and EPS Surprise
Frontier Communications Corporation Price, Consensus and EPS Surprise | Frontier Communications Corporation Quote
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