Frontier's data revenues rise 9 percent to $18.3 million

Frontier Communications (Nasdaq: FTR) reported that Q1 data service revenues of rose $18.3 million, or 9 percent, helping to partially offset ongoing losses from traditional local and long-distance voice service revenues.

Residential data, for instance, grew 3.7 percent year-over-year as it extended broadband service to more homes in its territory.

However, the increase in data services was not enough to prevent overall Q1 revenues from declining $27 million, or 2.2 percent, sequentially to $1.21 billion.

"Our Q1 total revenue quarter-over-quarter decline was a disappointment," said Maggie Wilderotter, chairman and CEO of Frontier, during the earnings call. "The primary reasons include lost customers, lower voice revenues and slower business purchase decision cycle."

Wilderotter added that they "do expect the improved Q1 retention of current customer along with higher broadband net additions, will start to close the quarterly revenue declines over the next few quarters."

Here's a breakdown of their key metrics:

Voice: In Q1, the telco reported that local and long distance services revenue declined $16.6 million or 3.1 percent to $526 million.

Broadband and video: Broadband was the clear star in Frontier's Q1 revenue mix as it added 28,177 new customers during the quarter. As of the end of the quarter it had a total of 1.8 million broadband subscribers.

Wilderotter said that the uptick in broadband subscribers was the highest it has seen since it acquired Verizon's rural lines in 2010. "This is a record achievement since the 2010 acquisition of the Verizon properties," she said. "The first quarter performance was greater than the entire net additions for all of 2012."

Frontier said it plans to build broadband services to another 130,000 homes this year, adding that about 55,000 of them will be funded by the Connect America Fund (CAF). It will also the FCC approves the release of additional funds for unserved rural households. Through these efforts, Frontier will be able to pass about 90 percent of its homes with broadband by the end of the year, up from 88 percent at the end of Q1.

Wilderotter said that "Expanding our high-speed coverage provides a great opportunity for revenue growth."

Coupled with its expansion, Frontier is expanding the availability of its 20 Mpbs and 12 Mbps speed tiers, which currently can reach 42 and 54 percent of its footprint, respectively.  

In addition to broadband, Frontier reported that it added 18,300 video subscribers due to its agreement to resell Dish Network (Nasdaq: DISH) satellite TV programming.

Business services: Driven by an uptick in Ethernet and IP voice sales, Frontier's business revenues were $548.3 million in Q1. Ethernet services are currently available in 82 percent of its telephone exchanges, up 10 points since Q4. However, the telco said it has forecast lower business revenue in 2013 due to the expected decline in wireless backhaul revenue.

The service provider reiterated its capex and free cash flow guidance of 2013 guidance of $625 million to $675 million and $825 million to $925 million, respectively.

Shares of Frontier were listed at $4.11, up 2 cents, or 0.37 percent, in late morning trading on Tuesday on the Nasdaq stock exchange.

For more:
- see the earnings release
- here's the earnings transcript (sub req.)
- see FierceCable's coverage

Earnings roundup: Wireline telecom earnings in the first quarter of 2013

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