Frontier (NYSE: FTR) may have become one of the largest independent ILECs with its acquisition of Verizon's (NYSE: VZ) wireline assets in 14 states last month, but that's not enough to make up for the ongoing phone line losses it saw during the second quarter.
During the quarter, Frontier lost about 23,500 residential and business customer phone lines. As of the end of June, Frontier had 1,206,600 residential customers and 138,500 business customers. This was up from the 16,845 lines it lost in Q1 2010 but down from the 27,700 lines it lost in the same period last year.
These wireline voice line losses certainly made an impact on Frontier's financials. In Q2, Frontier reported $516.1 million in revenues, down slightly from $519.8 million in Q1 and three percent from the $532.1 million in Q2 09.
Broadband access, while seeing some gains, was not entirely impressive. The service provider added about 3,400 new DSL subscribers, leaving it with a total of 647,500 high-speed internet customers as of June 30, 2010. While it's good to see some subscriber uptick, the figures pale in comparison to the 8,113 subscribers it added in the first quarter and the 13,800 lines it added in Q2 09.
Video was a similar story to broadband. The service provider added 3,800 video customers during the second quarter of 2010 and had 179,600 video customers at June 30, 2010.
Frontier attributes the slowdown in broadband subscribership to the technology and billing system conversions it had to do to cutover Verizon's lines to its own systems. By having to focus on the Verizon cutover initiatives, Frontier did not have the resources to conduct new broadband marketing campaigns in markets like West Virginia that Verizon had all but abandoned.
"We did not do any material promotions in the second quarter, but nor did we see any pop in churn," said Frontier's CEO Maggie Wilderotter, during the second quarter earnings call. "We know that when we spend on promotions, we can drive share."
Going forward, Frontier has set an aggressive broadband upgrade plan that it says will increase broadband availability in the former Verizon territories with speed up to 3-6 Mbps.
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