Acquisition Of New Markets Leading Frontier Communications Corp (NASDAQ:FTR) Growth

Frontier Communications Corp (NASDAQ:FTR) reported that the revenue in 2Q2016 came at $2.61 billion compared to $1.36 billion in 1Q2016 with the acquisition of the new markets leading the large increase. Net loss to common shareholders amounted to $80 million while adjusted EBITDA came at $1.03 billion. The company recorded free cash flow of $250 million following dividend payout on the preferred stock.

Increased ARPR

Frontier Communication stated that 2Q2016 revenue included revenue of $1.33 billion from the current markets compared to $1.36 billion in 1Q2016. Within the company’s current markets, the drift in residential is robust with revenue decline of almost 1% sequentially. This performance indicates a full quarter gain of the increased average revenue per customer. There was a sequential drop in business revenue, primarily led by a weakening of wholesale segment including wireless backhaul.

The performance

Frontier Communication reported that adjusted operating expenses in 2Q2016 in the current markets surged $6 million QoQ to $821 million. For the current markets, adjusted EBITDA came at $505 million for a 38.1% margin, while for the new markets; it amounted to $527 million with a 41.2% margin. With the remarkable achievement in addressing the cost base of the bought business compensating for the starting revenue recorded for the VSTO business.

The management speaks

Dan McCarthy, the CEO and President of Frontier, said that they are very delighted with the performance of recently bought assets and accomplishment of yearly cost synergies amounting to $1 billion in the reported quarter. The annual cost synergies linked to the acquisition is expected to come at $1.25 billion, up from the previous projection of $700 million. McCarthy said that as they move forward, the focus will remain on executing the planned strategy for growth, including expansion of Vantage video service, execution of commercial distribution capabilities in new markets and up gradation of broadband speed competencies.

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