Frontier Communications Corp. Reports Soft Earnings Alongside a Rare Dividend Boost

Image source: Frontier.

Just after the closing bell on Tuesday, regional American telecom Frontier Communications reported results for the first quarter of fiscal year 2015. The company continued to grow its broadband subscriber list but missed Wall Street's earnings estimates. Trading of the stock was briefly halted on the news, but it resumed right where it had left off at the end of the regular session.

Analysts were looking for adjusted earnings of $0.04 per share on something like $1.39 billion in total sales. Frontier missed both of these targets. The company reported revenue of $1.37 billion, leading to adjusted earnings of $0.02 per share.

Sales increased 19% year over year, largely thanks to the acquisition of AT&T's wireline operations in Connecticut, which closed near the end of last October.

Frontier's monthly revenue per residential customer increased by 8.6% year over year, but the company lost 0.4% of its consumer-line subscribers during the quarter.

In the business-oriented segment, Frontier lost 1.2% of its subscribers but raised its revenue per customer by 4%.

Providing a bright spot amid these subscriber losses, Frontier chalked up a net gain of 17,100 new broadband customers.

Acquisition and integration costs added up to $57 million during the quarter, or about $0.04 per share. About one-third of these costs came from the Connecticut transaction, and the rest from preliminary work on the pending buyout of Verizon's wireline markets in Texas, Florida, and California. Management still expects that deal to close in the first half of 2016.

Frontier's recently appointed CEO, Dan McCarthy. Image source: Frontier.

Looking ahead, Frontier's management saw no need to tinker with the existing full-year guidance that was given three months ago. Hence, Frontier still expects free cash flows of roughly $805 million this year, including about $675 million of capital expenses. The company didn't offer any sales or earnings guidance for the next quarter, nor for the full year.

"I am very pleased to report that we continued our track record of consistent, strong broadband growth for the quarter," said Frontier CEO Dan McCarthy in a press release. "Throughout this year our priorities are improved customer retention, broadband market share growth in the residential and commercial base, and improved commercial sales results in all segments. I remain excited about Frontier's prospects, including the pending acquisition and the growth potential in our current markets."

Separately, this company also announced its next dividend payout. Payable on June 30 to shareholders of record as of May 28, Frontier shareholders will receive a check for $0.105 per share. That's a 5% increase from the latest payout, and Frontier's first dividend boost since 2004.

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