Seeking Alpha

Frontier rallies post-earnings; rural telco peers also higher

  • Investors are giving a thumbs-up to Frontier's (FTR +5.2%) largely in-line Q3 results and full-year guidance reiteration. Peers CenturyLink (CTL +1.3%), Windstream (WIN +1.4%), and Alaska Communications (ALSK +7.3%) are also trading higher; CenturyLink and Alaska report after the close.
  • Frontier's moderating Y/Y customer decline rates and (slightly) increasing ARPUs are likely going over well with investors, and so might be the company's attempt to limit margin declines via job cuts.
  • On the CC (transcript), Frontier mentioned residential ARPUs are benefiting from bundled package sales, a higher mix of customers subscribing to broadband services, and a higher attachment rate for Frontier Secure. Business ARPUs are getting a lift from pricing and product mix changes.
  • With the company still posting Y/Y revenue drops thanks to voice declines, Frontier is directing a large chunk of its capex towards expanding the reach of its corporate Gigabit Ethernet and high-speed (20Mbps or greater) consumer broadband offerings, with the goal of further growing data revenue.
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