Frontier's voice revenue keeps falling, data growth partly offsets

|About: Frontier Communications Cor... (FTR)|By:, SA News Editor

Thanks to local loop disconnections and other pressures on wireline voice, Frontier's (FTR) local/long distance services revenue fell 9% Y/Y in Q3 to $510.8M. However, 26.8K broadband net adds and 10.5K video net adds helped data and Internet services revenue rise 3% to $471.2M. Switched access/subsidy revenue fell 9% to $135.2M.

Frontier's total residential customer base declined by 20.7K Q/Q to 2.82M. Business customers declined by 3.5K to 274.7K. Residential ARPU rose by $0.46 Q/Q to $59.56, while business ARPU rose by $4.67 to $656.06. Residential churn rose 17 bps to 1.81%. Broadband subs total 1.84M, and video subs 378K.

Frontier notes its Y/Y drops in residential and business customers (3.8% and 5.7%, respectively) are the smallest seen in recent quarters.

Op. income margin was 22.2%, +40 bps Q/Q but -50 bps Y/Y. Op. cash flow margin was 46.3%, -50 bps Q/Q and -190 bps Y/Y. Job cuts have been bolstering margins in the face of revenue declines: Frontier ended Q3 with 13,937 employees, down from 14.069 at the end of Q2 and 15,250 a year earlier.

Frontier had $682M in cash/equivalents at the end of Q3, and over $8.1B in debt. Q3's dividend payout ratio was 43% vs. 57% in Q2 and 40% a year ago.

FTR unchanged AH. Q3 results, PR, slides.