Serving city dwellers and country folk alike, Frontier Communications provides phone, Internet, and satellite TV (through a partnership with DISH Network) services across 28 US states. The company has more than 7.5 million residential and business voice subscribers. It also has 2.5 million broadband Internet customers and about 554 million video subscribers. Frontier is active mostly in rural and small to mid-sized markets, where it is the incumbent local-exchange carrier (ILEC). The company's top four markets in terms of subscribers are West Virginia, Illinois, Indiana, and New York. The company's 2015 acquisition of Verizon's wireline operations for $10.5 billion substantially expanded Frontier's footprint.
Frontier’s local and long distance services contributes about 36% of the company's revenues while its data and Internet services contribute about 42%, followed by switched access and subsidy revenue, 12%, and other services, 10%.
The company can offer broadband service to about 8 million households, which is 93% of its markets.
The company has operations in Alabama, Arizona, California, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Mexico, North Carolina, New York, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Washington, West Virginia, and Wisconsin.
Sales and Marketing
Frontier is able to remain competitive with other triple-play providers because of the TV service it offers through DISH Network. (Satellite TV operators can't offer digital phone service, which puts them at a disadvantage to cable companies such as Comcast and Charter Spectrum, which completed acquisitions of Time Warner Cable and Bright House Networks in 2016.)
Residential and business customer each accounted for 44% of Frontier's revenue while switched access and subsidy accounted for 12% in 2015.
In 2015 Frontier revenue increased 17% to $5.58 billion from 2014. The revenue included $833 million from its Connecticut operations that the company acquired in 2014. Subtracting the Connecticut revenue, Frontier showed sales declines in residential and business operations. The company noted decreases in voice services revenue and switched and nonswitched access revenue. It gained in revenue from data services and subsidies.
Frontier's net income of $133 million in 2014 fell to a loss of $196 million in 2015. The company spent more on selling, general, and administrative expenses and had increases in depreciation, amortization, and interest expense in 2015 than in 2014.
Cash flow from operations was steady from year-to-year at about $1.3 billion.
Residential landlines may be on the decline as more households switch to a wireless provider for their primary phone service, but Frontier operates mostly in rural markets, where cellular service can still be spotty.
The company puts broadband at the center of its strategy in bundles with their voice and video services or as a standalone product. Frontier added more than 100,000 net broadband subscribers in 2015 and about 323,000 since 2012 when it began to emphasize broadband penetration,. The company has invested $710 million to upgrade and build out its broadband network.
In 2015 Frontier accepted the Connect America Fund (CAF) Phase II offer, which provides for $280 million in annual support from the federal government from 2015 through 2020 to deliver 10Mbps/1Mbps broadband service to about 654,000 households in its 28 states.
Mergers and Acquisitions
In late 2013 it agreed to purchase AT&T's wireline operations in Connecticut for $2 billion. The deal -- which includes 415,000 data, 900,000 voice, and 180,000 video residential connections -- will enhance Frontier's services in its home state.
In 2014, Frontier agreed with the Connecticut Attorney General and the Office of Consumer Counsel that will guarantee customer and community benefits resulting from Frontier's proposed acquisition of AT&T's incumbent local exchange operations and statewide fiber network that provides services to residential, commercial and wholesale customers in Connecticut. As part of the transaction, Frontier will also acquire AT&T's U-verse video and satellite TV operations in Connecticut.
In 2015, Frontier did itself one better and bought Verizon Communications Inc.'s wireline operations for to residential, commercial, and wholesale customers in California, Florida, and Texas for about $10.5 billion in cash. For that payout, Frontier gained 3.7 million voice connections, 2.2 million broadband connections, and 1.2 million FiOS video connections.