Frontier adds 27,800 new broadband customers in Q4, offsets voice declines

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Frontier Communications (Nasdaq: FTR) continues to grow its broadband customer base, signing up nearly 28,000 new subscribers in the fourth quarter of 2013 to reach a total of 1.9 million as of the end of December.

This was the fourth consecutive quarter where the telco exceeded the total 23,400 net additions in all of the year 2012. For the full year, Frontier's net additions of broadband customers were 112,250.

Expanding broadband service to more customers was a key priority in 2013, extending service to an additional 167,000 households. Complementing its own efforts, the service provider built out facilities to 56,000 new households from FCC Connect America Funding (CAF) grants last year and began deployment of a second round of CAF additional Phase 1 funds covering 101,714 households.

Frontier agreed to accept $71.5 million from the CAF program as it looks to build out broadband service to an additional 119,000 households in 2013.

Frontier said that broadband availability is now at 90 percent of homes passed.

In addition to expanding broadband availability, Frontier increased speeds for existing and new customers. Nearly 50 percent of households in its territories are capable of getting 20 Mbps or more, while over 60 percent of households are capable of 12 Mbps.

The average monthly residential revenue per customer was $59.62 in the fourth quarter of 2013, up 6 cents from $59.56 in the third quarter of 2013.

It also saw a slight uptick in video subscribers, adding 7,400 net video customers during the fourth quarter of 2013. The company had a total of 385,400 video customers as the end of 2013.

Over in the business segment, revenues declined 0.4 percent sequentially to $542 million.

Despite the sequential declines, Frontier reported that new small business bundles contributed to "an improved revenue trend." It also improved the rate of decline in business customers by 27 percent, losing about 3,900 customers vs. 5,300 customers in the same period a year ago. Average monthly business revenue per customer was $662.15, up 1 percent sequentially from the third quarter of 2013.

One of the highlights of the fourth quarter was the introduction of new higher speed optical and Ethernet products: a 10G optical transport service, QoS that enables traffic prioritization capability based on user-defined applications and two new Ethernet Virtual Private Line (EVPL) service tiers.

Overall fourth-quarter revenue was $1.18 billion, down from $1.19 billion sequentially and $1.23 billion from the same period a year ago.

The telco attributes the decrease in total revenue to lower voice revenue, along with lower non-switched and switched access revenue, partially offset by the increase in data services revenue and subsidy revenue. Local and long distance voice revenues declined sequentially to $495 million from $510 million, while data and internet services were $473 million, up from $471 million in the third quarter of 2013.

Looking toward the rest of full year 2014, Frontier said it expects to incur additional operating expenses of $140 million to $170 million and capital expenditures of $85 million to $105 million related to acquisition and integration activities in connection with its pending acquisition of AT&T's Connecticut operations.

Shares of Frontier were listed at $4.71, up 12 cents or 2.61 percent, in Monday after-hours trading on the Nasdaq stock exchange.

For more:
- see the earnings release

Earnings summary:  Wireline telecom earnings in the fourth quarter of 2013

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