Frontier plans to grow FiOS, business services in Verizon markets it is acquiring

Frontier Communications says it sees potential revenue opportunities to expand FiOS and business services in California, Florida, and Texas -- three markets where it will enter next year when it completes its acquisition of Verizon's (NYSE: VZ) assets in those states.

Speaking to investors during the Deutsche Bank 2015 Leveraged Finance Conference, John Gianukakis, VP and treasurer for Frontier, said that it will look for ways to expand the FiOS footprint in California, Florida, and Texas with minimal investments.

"In terms of growing that footprint, I think it where makes sense from a subdivision growth, where we can make modest capital investments [to] grow business; where we see opportunities we'll do that tactically," Gianukakis said.

When it formally enters these three states, Frontier plans to continue with the same marketing plans for FiOS in order to make the transition seamless for existing customers.

"We really like the plans they implemented in those states," Gianukakis said. "Our plan is to maintain -- whether it's pricing plans, channel lineups and packages customers have today in their markets -- when we own that business after we make the flash cut."

Gianukakis added it will migrate existing FiOS customers to the same platforms that Verizon uses to manage FiOS customers today.

"In our FiOS markets we're going to be migrating our customers to similar programs today and getting our call centers and our operations lined up the way the Verizon assets are run today to make it as smooth a transition as possible for our customers when they migrate over to being a Frontier customer," Gianukakis said.

These assets have continued to perform well for Verizon. According to a recent Securities and Exchange Commission (SEC) 8-K filing it said that the wireline assets it is acquiring from Verizon in California, Texas and Florida performed well during the second quarter with revenues rising year-over-year to $1.45 billion.

Verizon will release its third quarter earnings on October 20.

But FiOS expansion is only one part of the potential growth equation for Frontier. Similar to the expanded presence gained in Connecticut via its acquisition of AT&T's (NYSE: T) wireline assets, Frontier hopes to repeat similar successes in these new markets. In Connecticut, the telco has continued to see gains in business services revenues.

"There are also opportunities on the commercial side," Gianukakis said. "Like we have seen in Connecticut, we see the same opportunities we can roll out as well to medium and small businesses."

An additional element that it can bring to these markets is the Frontier Secure offering, a suite of security, backup and PC maintenance services. Offering these services to the existing Verizon customer base would allow Frontier to potentially grow average revenue per customer (ARPC).

The service provider reiterated that it will also continue to look for ways to upgrade and expand the existing DSL capabilities. It's likely it could use a mix of ADSL2+ and VDSL2 to potentially deliver higher speeds like the 100 Mbps offering it launched in Connecticut. 

"The other thing we have talked about is the rest of that market," Gianukakis said. "While these markets are 54 percent FiOS enabled, we have a lot of experience in building out DSL, something we have done successfully in our other markets by working with our partners to deploy technology to improve the quality of service in other markets."

For more:
- hear the webcast (reg req.)

Related articles:
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Frontier's Jureller: We can improve Verizon's broadband service without large investments
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