Frontier Communications Corp (NASDAQ: FTR) stock surged over 25.6% on May 2nd, 2018 (as of 2:24 PM GMT-4; Source: Google finance). They achieved a Net income of a positive $20 million, being the first positive net income from fourth quarter 2014. The group intends to maintain this from their ongoing expense management, despite seasonal headwinds and ongoing trend of sequential fall in adjusted operating expense. They achieved over $275 million in annualized cost synergies and on track to achieve their $350 million annualized run rate cost synergy target by the end of Q2 2018.
The group’s better results was driven by data and Internet services revenue returning to growth again, boosted by broadband services revenue. Video revenue trends showed improvement and has been stable sequentially. Consumer revenue rose sequentially during the first quarter but Revenue from their commercial business was under pressure sequentially. The carrier-wholesale was roughly stable and the small, medium and enterprise portion of the business fell sequentially. Over half of the sequential decline led from the decline in voice revenue and a slight sequential decline in data with the rest being a result of the seasonality of large customer solutions revenue.
The group delivered a first quarter revenue of $2.2 billion which included a sequential rise in consumer revenue. They witnessed a sequential improvement in customer churn to 1.94% while consumer ARPC was very strong. They also reported a positive CTF FiOS broadband net addition of 5,000 and expect this to rise further given the sequential improvement in gross additions coupled with a very slight seasonal rise in CTF FiOS broadband churn.
The group also enhanced retention of customers at contract expiration and intends to continue to be very diligent and disciplined in managing the customer’s experience.
Capital spending during the first quarter was $297 million. The group forecast to deploy broadband to 60% of eligible locations by the end of 2018, Under their commitments for the Connect America Fund or CAF II program. The group has three states exceeding the 60% threshold. They offer broadband capability to 357,000 locations in its CAF II eligible areas, with their goal to pass 774,000 locations by the end of 2020.