Frontier Communications (FTR, Financial) is benefiting after enhancing its broadband service offerings. It has already added about 21,900 broadband subscribers and gained share in 81% of its markets. This effort will certainly keep its subscriber base strong in the future, while adding new broadband subscribers to its folds. Also, the growing number of major chunk of subscriber base is exploiting higher service data that should fuel up growth for its consumer and top line in the future.
The way ahead looks bright
Looking ahead, the company should benefit from growing number of broadband in United States. It is realizing increase in the rate of customers switching to greater broadband tiers. This could be the reason that the company is launching new products, targeted at different customer categories. It has recently launched Frontier Texting, which is powered by Zipwing for the small and medium enterprise market.
This new product in SME should enable the employers to communicate with employees and customers by way of landlines. This product will eliminated the need of keeping extra numbers for messaging, as this facility is inbuilt in the landlines. This should certainly help the company to win extra customers, as it is the first provider of such an appealing service.
In addition, Frontier has also created its AnyVare hosted business Voice-over-IP or VoIP telephony platform. This should better assist the company to tap small and medium businesses going forward, as VoIP market is expected to grow at a healthy rate in the future. In fact, according to a report, "In 2020, the market size of global VoIP services is expected to reach 348.5 million subscribers with revenue of USD $136.76 billion."
Connecticut business will boost its profitability
Frontier should benefit from the successful acquisition of Connecticut customers, employees and communities going forward. This acquisition should enhance its capabilities to better serve its customers while driving operation efficiencies. The company should benefit from the strong wire line market in the region, as it is the only company that has successfully acquired, converted and integrated wire line market in the state from both Verizon (VZ, Financial) and AT&T (T, Financial).
Further, the company is deploying a complete range of products and services that should resonate with the customers in Connecticut. The company has deployed Frontier Secure and Internet of Things or IoT in Connecticut. Also, it remains on track to create robust and competitive high-speed broadband capabilities.
Additionally, it should gain from its extended strategic partnership with Intuit. This extended agreement is valued at $100 million of revenue annually for the next three years. Frontier is expected to provide customer service support to its U.S.-based Frontier secure support services team for various Intuit products. These products include Quickbooks Online, Quickbooks Desktop, payment and payroll products. Frontier is really excited with this expanded relationship with Intuit that should enhance its growth for its technical capabilities.
Apart from these strategic moves, Frontier should benefit from the recent launch of 500 megabit capabilities in Durham, North Carolina. The company considers Durham as an attractive market place and therefore leveraging its network capabilities. These leverage network capabilities are directed to offer the Ultra-high speed products and services, without its adverse impact on its capital expenditure. The company remains on track to spread its fiber-to-the-home footprints in the region.
The company is additionally concentrating on driving performance for its products and services. It remains focused on providing rich experience to its customers across the region. It is also busy creating positive environment for its employees. These strategic moves should possibly create value for shareholders in the coming years.
Conclusion
Frontier looks a good bet that has promising return over the years. The analysts expect its earnings to grow at CAGR of 47.40% for next year that indicate strong return in a short-run. The stock is cheap with the trailing P/E of 37.57 and forward P/E of 24.82. This highlights strong growth for the stock in the future. Its balance sheet carries total cash of $808.52 million and has total debt of $9.45 billion. It has operating cash flow of $1.36 billion.
