Frontier reports lackluster Q3 performance

Appearances are everything even in telecom. Just as it prepares to swallow up a major portion of Verizon's rural lines in 14 states, Frontier's earnings are not exactly painting a pretty picture to the regulators that still need to approve the acquisition.

There were the obvious losses. During the third quarter, Frontier lost an additional 30,436 voice lines, leaving it with 1.4 million lines. This was a higher increase than the Q2 09 21,891 loss, but slightly lower than the 31,593 loss in Q3 08. Although Frontier was able to stem some of the line loss bleeding through service bundling, Frontier Chairwoman and CEO Maggie Wilderotter said during the third quarter earnings call that it has also seen less of its customers move out of the region.

"We are encouraged by these trends, and also note that our customers are seeing value in our voice services, with over 50 percent of our phone customers on multi-year price protection plans," she said.

Two slight growth areas for Frontier were seen in VoIP and bundled services. Frontier's VoIP service now serves 631,000 customers, while the bundled service penetration saw a 56 percent increase during the quarter, respectively. However, Internet data services added a paltry 7,521 subscribers down from the 13,700 it added in the second quarter and 12,646 in Q3 08.

However, the shaky Q3 performance will put the service provider under the microscope as it proceeds with its acquisition of Verizon's rural lines. Such scrutiny over Frontier's acquisition is not surprising given the fact that both Hawaiian Telcom and FairPoint Communications, which both acquired former Verizon properties, have both filed for Chapter 11 protection. Fearing massive job cuts, Already the Communications Workers of America has launched a protest to block the deal.  

Nonetheless, Frontier continues to press on with the deal as state regulators in Nevada, South Carolina and California recently gave their thumbs up for the deal.

For more:
- see the official company release here
- see this OneTrack article

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