Frontier Communications lost a large set of potential customers -- 40,000 to be exact -- during its problematic switchover of Verizon's (NYSE: VZ) wireline assets to its own systems in three states. The newly signed-up subscribers decided to look elsewhere for service after their orders could not be fulfilled by the promised service activation date.
Speaking to investors during the 44th Annual J.P. Morgan Global Technology, Media and Telecom Conference, Dan McCarthy, CEO of Frontier said that while it has seen pockets of existing customer disconnects, the real impact came from new customer orders it could not immediately fulfill.
"Where we did probably lose some customers, who really weren't our customers yet, was as we came out of conversion we had 40,000 service orders in the backlog," McCarthy. "Those are customers that have bought the service and Verizon has given them a due date in April and during that time frame customers did not want to wait any longer and wound up going to a competitor."
Additionally, McCarthy admitted that during the conversion process the telco lost a number of existing customers who opted to end their contracts. He didn't give specific numbers, however.
"We have seen some early termination fee promotions where people buy out contracts, but by and large we haven't seen a major uptick in churn associated with that," McCarthy said.
As it continues to resolve customer issues, Frontier plans to begin network installation of its broadband service in the three states where it entered -- California, Florida and Texas -- through its acquisition of Verizon's wireline properties in early April.
McCarthy said that the service provider will begin marketing its service via online and direct marketing.
"We're at a point now where we can do it in every state and what we're doing channel by channel," McCarthy said. "It's a very controlled process where we can turn on digital marketing, door to door or any number of alternate channels and really the next step is when we can make mass as the main means of communicating with customers, which will be over the next couple of weeks."
McCarthy said that while it will take time for the sales funnels to ramp, "we hope to be there in the June timeframe."
Given the fact that Frontier knew it would be working through the conversion process, the service provider advised during its first quarter earnings call that it would put a hold on marketing.
"We certainly have had competitors targeting us," McCarthy said. "(It's) one of the reasons why we guided on our first quarter earnings call that we would not be doing marketing during this period. We did not say that earlier because we did not want people to start targeting us right out of the gate."
- listen to the webcast (reg. req.)
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