- Company should not have increased dividends as it already offers attractive yield and cash flows could be invested in future growth projects.
- FTR is overvalued according to my price target.
- Strong broadband subscriber addition to continue in future as well due to attractive speeds capabilities.
Frontier Communications Raises Dividend And Raises Questions
- Frontier raises dividend 5%.
- A dividend increase is an affirmation of the sustainability of the dividend.
- There are better uses for that cash.
- FTR announced a 5% dividend increase effective Q1 2015.
- The forward dividend yield is 6.7%.
- For a business with a declining customer base, the dividend increase comes as a surprise to me.
- I believe the increased dividend was a risky decision by management.
Why Frontier Communications Shouldn't Pay A Bigger Dividend
- Frontier Communications hikes the divided 5% starting in March 2015.
- With a large debt load, the stock is down on the news with investors wanting more flexibility in capital allocation.
- Investors should avoid the stock despite a solid 6.8% dividend yield.
Update: Frontier Communications' Dividend Increase Signals Good Times Ahead
- The company has announced a 5% increase in its quarterly dividend.
- I recommended Frontier Communications for the dividend portfolio on the basis of improving cash flows.
- The increase in dividends will most likely result in giving further push to the stock price over the next few weeks.
High-Speed Broadband Can Continue Driving Frontier Communications Higher
- Frontier Communications is tapping the growing demand for high-speed broadband by deploying new products.
- Frontier's products are gaining good adoption as it is gaining market share.
- Frontier's AT&T Connecticut acquisition will increase cross-selling opportunities for the company.
- Frontier's focus on infrastructure growth is another catalyst worth watching.
Frontier Ticks All Boxes On Its Way To Earning Bullish Thesis
- Intelligent strategic initiatives for consistent enhancement and expansion of broadband network will keep its subscriber base healthy.
- Recently completed T’s Connecticut asset acquisition will contribute towards long-term growth of top and bottom-line numbers.
- Stock offers safe and high dividend yield, making it good investment for dividend investors.
Update: Frontier Q3 Earnings Report Shows Fewer Broadband Net Adds
- Quarterly broadband gains solid, although lowest since 2012.
- Opinion about sustainability of the dividend remains unchanged.
- Broadband growth less than expected, but still strong enough to maintain recommendation to buy Frontier for dividend income.
- Q3 2014 revenue was $1,140.9 million vs. consensus of $1,141.6 million and Q3 2013 of $1,185.3 million.
- The dividend payout ratio in Q3 increased to 67% of free cash flow, compared to 46% last quarter and 43% in Q3 2013.
- In light of a higher dividend payout ratio and customer volume contracting more than prices increasing, I am changing my thesis to be less optimistic on FTR.
Update: AT&T Closes On $2 Billion Sale Of Connecticut Properties To Frontier Communications
- AT&T and Frontier announce the closing of the sale of AT&T's wireline assets to Frontier.
- Opinion about improved dividend coverage for Frontier remains unchanged.
- Transaction closes in time frame anticipated.
- The Connecticut Public Utilities Regulatory Authority (PURA) approves the proposed acquisition.
- Opinion about improved dividend coverage remains unchanged.
- Last regulatory approval required for 2014 closing.
- Effective and correct strategic efforts helping strengthen subscriber base.
- Through aggressive efforts to expand and enhance services, FTR moderating top-line decline.
- Stock offers potential price appreciation of 8%.
AT&T Is Selling, Frontier Is Buying, Who's Right? Part 2
- Frontier erred in 2010 when it bought a significant portion of Verizon's assets.
- Are they making the same mistake with this purchase from AT&T?
- Acquisition should close next month.
Update: Frontier Communications Acquisition From AT&T
- Frontier Communications obtains financing for acquisition from AT&T.
- Opinion about improved dividend coverage remains unchanged.
- Acquisition remains on track for second half of 2014 closing.
Frontier Communications: Capital Structure Doesn't Make Sense
- Frontier Communications has a capital structure too focused on maintaining a historical dividend.
- High debt load causes interest expense to hit operating income.
- Stock is reasonably valued but the large stock gains leave limited upside from these levels.
Frontier Communications: 6% Yield And REIT Structure Upside
- Investors speculate up to 25% of FTR's cash flow could be spun out into a REIT.
- A recent deal with AT&T should increase revenue, lower costs and improve cash flow.
- Current dividend yield is 6%.
- Target price is $8.00/share.
Wed, Jan. 14, 4:08 AM
- Building on his previous call for the FCC to regulate broadband service as a utility, President Obama will push the FCC today to overturn state laws that prevent cities from building their own broadband networks.
- The centerpiece of the initiative is a call for the FCC to pre-empt laws in 19 states that can prevent cities and localities from building their own high-speed broadband networks.
- FCC Chairman Tom Wheeler has already indicated that he is strongly considering the move.
- Related Tickers: CMCSA, T, VZ, TWC, NFLX, CTL, CHTR, FTR, ELNK
Mon, Jan. 12, 9:36 AM
- BofA/Merrill's David Barden has upgraded Frontier (FTR +2%) to Buy, albeit while belatedly cutting his target by $2.50 to $7.50. He thinks there could be upside to AT&T deal synergies, and expects the FCC's rural broadband efforts (via the Connect America Fund) to provide a boost.
- Frontier has risen above $6.60. Its dividend yield stands at 6.2%.
Dec. 11, 2014, 6:38 PM| Comment!
Dec. 8, 2014, 9:11 AM
- With Frontier's (NASDAQ:FTR) purchase of AT&T's Connecticut wireline ops on the books as of late October, the telco now expects 2014 leveraged free cash flow of $755M-$780M and capex of $575M-$600M.
- Frontier previously guided for free cash flow of $725M-$750M and capex of $575M-$625M. The company is presenting today at a UBS conference at 10AM ET (webcast).
Nov. 6, 2014, 1:31 PM
- CenturyLink (CTL -6%) is selling off after providing soft Q4 guidance to go with a Q3 beat, and Windstream (WIN -5.6%) is doing the same after stating it now expects 2014 revenue growth to be at the low end of its prior guidance range.
- Frontier (FTR -3.2%), another telco with considerable rural and local voice exposure, is also declining. Frontier dropped on Tuesday after posting its Q3 numbers.
- D.A. Davidson is reiterating an Underperform on CenturyLink, arguably the most aggressive of the three telcos in trying to cut its voice exposure. "We don't see tremendous downside in the stock, but still think CTL may raise its capex budget more in 2015 as it rolls out Gigabit speeds in more cities and Prism TV to new markets. Our long-term target remains $40.”
- CenturyLink's dividend yield now stands at 5.2%, Windstream's at 9.6%, and Frontier's at 6.3%.
Nov. 3, 2014, 4:54 PM
- Thanks to voice disconnections, Frontier's (NASDAQ:FTR) residential customer base fell by 21.8K Q/Q in Q3 to 2.74M (a smaller drop than Q2's 31.8K), and its business customer base fell by 3.4K to 260.8K (a bigger drop than Q2's 2.2K).
- On the other hand, the telco added 21.9K broadband subs, growing its total base to 1.95M. Video subs rose by 2K to 395.9K. The recently-closed AT&T deal will boost Frontier's sub counts for both businesses.
- Voice services revenue -8% Y/Y to $471.8M; data/Internet services -1% to $468.8M; switched access/subsidy -8% to $124.2M; other revenue +10% to $76M.
- Op. cash flow margin slipped to 42% from 44.9% in Q2 and 41.5% a year ago. Free cash flow (historically lumpy) fell to $149M from $215.9M in Q2 and $232.2M a year ago. The dividend payout ratio was a steep 67%.
- FTR -0.5% AH. Q3 results, PR.
Nov. 3, 2014, 4:03 PM| Comment!
Nov. 2, 2014, 5:35 PM
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Oct. 28, 2014, 12:33 PM
Oct. 24, 2014, 11:02 AM
- Frontier's (FTR -0.7%) $2B purchase of AT&T's Connecticut wireline assets has officially closed. Connecticut's AG had signed off on the deal in August.
- The purchase gives Frontier 875K voice, 415K data, and 215K video connections, and 2.5K employees. Frontier respectively had 1.93M and 393K broadband and video subs, and 13.9K employees, at the end of Q2.
- Frontier has promised to invest $63M over the next three years to expand U-verse service coverage and increase broadband speeds in the state. The telco predicts it will "realize significant cost savings from leveraging its current infrastructure in supporting the new Connecticut business operations."
Sep. 3, 2014, 9:41 AM
- Citing AT&T deal risk and industry challenges, Morgan Stanley has downgraded Frontier (FTR -1.2%) to Underweight. Its target is $5.20.
- The downgrade comes a month after Frontier posted a Q2 report featuring light subscriber figures.
- Separately, Frontier has announced it's selling $1.55B worth of senior notes - $775M are due in 2021, and an equal amount in 2024. The proceeds will be used to help finance the AT&T deal.
- Frontier had $7.9B in debt as of June 30, and $805M in cash.
Aug. 19, 2014, 2:50 AM
- The National Association of Broadcasters has filed a lawsuit against the FCC's plans to auction off airwaves stating that the plan will incur expense and harm coverage of TV stations.
- The auction is set to take place next year, and will allow TV stations to take bids and sell their airwaves to meet the surging demand of mobile broadband.
- The new lawsuit challenges the regulations stating that it doesn't fully protect broadcasters that don't participate in the auction.
- Broadcasters say that they should not be forced into having their coverage area reduced or to pay out of pocket for the expense of moving their broadcast signal to a new frequency.
- Relevant tickers: CMCSA, TWC, ALLT, LVLT, CCOI, FTR, WIN, CTL, CHTR, CVC, DISH
Aug. 12, 2014, 6:44 PM
- The Connecticut Attorney General has signed off on Frontier's (NASDAQ:FTR) $2B purchase of AT&T's wireline assets in the state, following a series of commitments.
- Among other things, Frontier has promised not to hike "the basic primary residential rate in effect for transferred [local] exchanges" for 36 months, and to offer its basic and standalone broadband services at or below current prices.
- Frontier is also committing to $63M in broadband-related capital investments within Connecticut from 2015-2017.
- Connecticut's public utilities regulator still has to sign off. Frontier originally planned for the acquisition to close during 2H14.
Aug. 5, 2014, 5:34 PM
- Frontier (NASDAQ:FTR) is reiterating full-year guidance for free cash flow of $725M-$775M and capex of $575M-$625M. The forecasts exclude the AT&T deal.
- Voice line disconnections led residential customers to fall by 31.8K Q/Q in Q2 to 2.762M, and business customers by 2.2K to 264.2K. Those figures compare with Q1 declines of 10K and 4.4K. Residential churn rose to 1.8% from 1.64% a year ago, ARPU rose by $0.58 to $59.64.
- Broadband subs grew by 27.7K to 1.93M, and video subs by 3.6K to 394K; those numbers are down from Q1's 37.2K and 5K.
- Total voice revenue -8% Y/Y to $471.6M, data/Internet revenue -1% to $462.7M, other customer revenue +12% to $79M, switched access/subsidy revenue -3% to $134M.
- Free cash flow was $215.9M vs. $235.1M in Q1 and $175.9M a year ago. Frontier's Q2 dividend payout ratio was 46%, up from Q1's 43% but down from 57% a year ago.
- Q2 results, PR
Aug. 5, 2014, 4:04 PM
Aug. 4, 2014, 5:35 PM
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FTR vs. ETF Alternatives
Frontier Communications Corporation provides communication services to rural areas and small and medium-sized towns and cities in the U.S. Its offerings include data and Internet services, local and long distance voice services, and access services.
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