Frontier Communications Q3 Earnings Preview

(RTTNews) - Telecom company Frontier Communications Corp. (FTR) is scheduled to publish its third-quarter results before the bell on Tuesday, November 3, with Thomson Reuters' analysts estimating a loss of $0.01 per share on revenue of $1.42 billion.

For the full year of 2015, the company updated its guidance to take into consideration its acceptance of the Federal Communications Commission's CAF II subsidy program. The company's expectation for free cash flow is $825 million - $865 million and for capital expenditures for Frontier business operations is $700 million - $750 million.

Recent Happenings

September 11, Frontier Communications priced its private offering of $6.6 billion aggregate principal amount of unsecured Senior Notes, as follows: $1 billion of 8.875% Senior Notes due 2020; $2 billion of 10.500% Senior Notes due 2022; and $3.6 billion of 11.000% Senior Notes due 2025. Each will be issued at a price equal to 100% of its principal amount.

Earlier in September, Frontier received the approval of Federal Communications Commission or FCC for its acquisition of Verizon's wireline, broadband and video operations, including the FiOS network, in California, Florida and Texas. The Public Utility Commission of Texas also approved the transfer of Verizon Southwest's CLEC certificate to Frontier Communications.

Mid-August, the company entered into a new $1.5 billion senior secured delayed-draw term loan facility. The loan will be drawn upon the closing of Frontier's acquisition of Verizon Communications Inc.'s wireline operations in California, Florida and Texas, which is expected at the end of March 2016. Frontier completed the equity portion of its financing plan for this acquisition with a $2.75 billion dual-tranche equity offering in June 2015.

Q2 Synopsis

The company's second-quarter net loss was $28 million, or $0.03 per basic share compared to profit of $38 million or $0.04 per basic share, last year.

The second quarter of 2015 encompassed acquisition related interest expense of $73 million, acquisition and integration costs of $35 million and certain tax benefit items of $15 million.

Adjusted net income was $27 million, or $0.03 per basic share, for the second quarter of 2015. On average, nine analysts polled by Thomson Reuters expected earnings of $0.02. Analysts' estimates typically exclude certain special items.

Revenue was $1.37 billion, compared to $1.15 billion, a year ago. Analysts expected revenue of $1.36 billion for the quarter.

The company added 29,200 net broadband customers during the second quarter of 2015 compared to 17,100 net additions in the first quarter of 2015. At June 30, 2015, the company had 3,177,000 residential customers, 299,000 business customers, 2,407,400 broadband customers, and 569,500 video customers.

Free cash flow was $200 million for the second quarter of 2015.