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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