Frontier CEO leaves the door open to a California exit

by Steve Blum • , ,

Frontier Communications had a rough day yesterday, following the release of its fourth quarter 2017 results and the announcement that is would no longer be paying dividends to shareholders. Instead, it will direct that money toward paying down its substantial debt.

The company’s share price dropped about 24% on the day, continuing a slide that’s seen it lose more than 80% of its value over the past year. In a conference call with analysts, president and CEO Dan McCarthy was asked about rumors that Frontier was trying to sell off the wireline systems it acquired from Verizon two years ago in California, Texas and Florida – what it calls its “CTF” market. According to the transcript posted on SeekingAlpha, McCarthy is making no promises…

First of all, I’d say, we don’t comment on any specific rumors or speculation or stories that are in the market…

But I would say that we’re very pleased with the assets we acquired in the last transaction, the CTF assets. And their performance continues to improve each and every month. And we’re very pleased with where we’ve taken that to this point.

But as we’ve always said in the past, we would always do what’s right for shareholders in trying to improve value creation and recognise the substantial value of our assets and reduce our leverage over time.

McCarthy also confirmed that Frontier is deploying fixed wireless service – as opposed to upgrading wireline DSL systems – and plans to expand that coverage to 15,000 to 20,000 homes in California, Texas and Florida this year.

Frontier continues to lose broadband customers in the three former Verizon states, although the rate of decline slowed. In the fourth quarter of 2017, Frontier lost 17,000 DSL and 2,000 fiber-to-the-home customers in that territory, versus 19,000 and 11,000 respectively in the third quarter. Its video business showed a similar pattern, with a net decrease of 17,000 subscribers in California, Texas and Florida, versus 24,000 lost in the previous quarter.