"Frontier Communications has fundamentally been in capital preservation mode since eliminating it's dividend early last year." ?(Zacks.com)
Management have stated "there would be material realization of $500 million from Transformation Program in 2019. The company is focusing on executing it's cost control expense program and so far, has achieved $350 million annualized cost target."
Sheldon Bruha stated "we have about $400 million unsecured notes coming due in March 2019. Frontier once having paid these will result in $64 million interest savings.
Former CFO Perley McBride stated in previous company reports "As for the 18% drop in video revenue - Video offerings to our customers are basically a loss leader to attract customers to our broadband connections were we do make a profit."
Frontiers' last quarterly report highlights an important additional point relating to 18% drop "A big part of the video loss was due to changes in accounting rules required by ASC 606 - so ignore video losses they have little or no effect on EBITDA.
Chief executive Officer Dan McCarthy, has stated "We're open to considering strategic transactions that recognize the substantial value our assets and allow us to reduce leverage." Any further asset sales could go a good way to improving the company's financial position.
Increasing Stock Positions held by Hedge Funds & Institutional Investors
1) Allianz Asset Management GMBH grew their position during 3rd Quarter adding 1,477,370 shares.
2) BlackRock Inc grew their position adding 4,021,298 shares adding to their previous holdings.
3) Renaissance Technologies LLC grew their position in the 3rd Quarter adding 557,000 shares.
4) Rhumbline Advisors grew their position adding 53,227 shares in the 3rd Quarter.
Positive Numbers emerging from Frontiers recovery efforts
1) The average revenue per user has been on the rise - increasing from $80.91 to $84.92 as remaining customers move towards Frontier's Broadband services.
2) Frontier has been able to expand into new markets using CAF-II Funds resulting in expanded Broadband services into 8 states : Florida, Idaho, Illinois, Indiana, Michigan, Tennessee, Texas & Wisconsin. These states joined New York, Washington and West Virginia which already reached the 40% milestone.
3) In January 2019 Frontier launched "Frontier Connect - Cloud" working with Equinix (NASDAQ:EQIX) whose Equinix Cloud exchange Fabric offers direct connectivity to more than 1,000 participants.
Rewarding Stock Opportunity
Frontier Communications isn't an investment for everyone, however, currently priced around $2, the stock represents a cheap long date 2/3 year option. The fact is (FCF) Free cash Flow is around $7 per share ...so if there is any good news in revenue or cost reduction revealed in February's results... the stock will likely reach $3 - a healthy 50% gain.
Frontier Communications has the potential to surprise to the upside in 2019 given Capex possible reductions of $100 /$150m , which will help improve (FCF), plus $100M of interest savings from debt reduction.
If you can handle the volatility, Frontier Communications Stock is the stock to watch.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.