Miami, FL – December 3, 2018 (EmergingGrowth.com NewsWire) — EmergingGrowth.com, a leading independent small cap media portal with an extensive history of providing unparalleled content for the Emerging Growth markets and companies, reports on Frontier Communications Corp. (NASDAQ: FTR).
Frontier Communications Corporation (NASDAQ: FTR) has been facing a number of issues that could warrant investors to ponder on whether it is worth holding or avoiding it altogether. After the third-quarter results, investors’ sentiment on the company’s stock dipped primarily because of weak subscriber data and lower outlook. There are at least three reasons to avoid the company’s stock.
In the last two years, Frontier Communications has been witnessing a steady drop. This is after it spent $10.54 billion in acquiring Verizon’s (NYSE: VZ) wireline business in Florida, Texas, and California. The company has trimmed down its dividend after the deal was closed in April 2016. But this is not the only thing as the company also continued to suffer customer losses every quarter. It has also lost its chief financial officer during the year and reduced its outlook while announcing its third-quarter numbers. There are also fewer prospects for growth despite upbeat third-quarter results.
The company had a loss of 7 cents per share on a $2.13-billion revenue, which was better than analysts’ estimation of 44-cent loss per share and $2.12 billion in revenue. However, the company reduced its outlook on earnings before interest, tax, depreciation, and amortization (EBITDA) from $3.6 billion to $3.5 billion for the full year, triggering fresh concerns. United Bank of Switzerland analyst Batya Levi thinks that any fall in EBITDA could result in elevated leverage and thus preferred to downgrade the stock. Though the company has repaid $431 million of its debts during the third quarter, it could still be an issue for any firm. In the past, the firm had diverted funds to deleveraging and also reduced its dividend.
Frontier Communications is not the only firm to suffer subscriber loss, which totals 93,000. Overall, pay-TV firms are also suffering from this increasing menace. This is quite evident when 1.2 million customers have preferred to cancel their accounts during the past three months. While Dish Network (NASDAQ: DISH) suffered a loss of 367,000 subscribers, ATT’s (NYSE: T) DirecTV witnessed over 300,000 customer loss. As far as cable firms are concerned, they have lost nearly 1.1 million TV customers, while Telco TV firms lost approximately 94,000 customers. This is attributed mostly to Verizon customers.
Though the company’s chief executive officer, Daniel McCarthy, tried to project positive numbers every time, investors’ hope of taking his promise has steadily been reducing. Gregory Williams of Cowen & Co. indicated lackluster subscriber metrics, weak outlook on EBITDA, free cash flow, and increased forecasts for CAPEX as reasons therefor. He believes that the second-quarter and third-quarter numbers have put it on a shakier footing since credit markets require long-term free cash flow stabilization, EBITDA, and revenue.
Century Link Inc. (NYSE: CTL) has also reported a drop in sales to $5.82 billion and in earnings to 25 cents a share in the third quarter. On an adjusted basis, the company also delivered a drop in earnings to 30-cent share. According to Kagan research firm, competition from streaming TV service firms is heating up with no respite, thus resulting in slower growth.
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