Frontier Communications Q4 Results Miss Estimates; Boosts Dividend

(RTTNews) - Telecommunications services provider Frontier Communications Corp. (FTR) reported Thursday a profit for the fourth quarter that declined from last year, despite revenue growth, reflecting significantly lower operating margins.

Both adjusted earnings per share and quarterly revenues missed analysts' expectations. The company also raised its quarterly dividend for the first quarter by 5 percent.

The company said separately that its Board of Directors has declared a regular quarterly cash dividend payment of $0.105 per share of common stock, payable on March 31 to holders of record of common stock at the close of business on March 12, 2015.

"During the quarter we began executing on our plans to simplify processes, eliminate redundancies and further reduce the cost structure while improving service to customers." President and CEO Dan McCarth said in a statement.

The Stamford, Connecticut-based provider of Voice, Internet data access and business communication solutions reported net income of $13.95 million or $0.01 per share for the fourth quarter, lower than $67.76 million or $0.07 per share in the prior-year quarter.

Results for the latest quarter include acquisition and integration costs of $70 million, partially offset by the gain on sale of assets of $12 million and certain tax benefit items of $14 million, a net combined impact of $0.03 per share.

Excluding the special items, adjusted net income for the latest quarter was $36.0 million or $0.04 per share, compared to $72.24 million or $0.07 per share in the year-ago quarter.

On average, ten analysts polled by Thomson Reuters expected Frontier to report earnings of $0.05 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter increased 13 percent to $1.33 billion from $1.18 billion in the same quarter last year, but missed ten Wall Street analysts' consensus estimate of $1.34 billion by a whisker.

The revenue growth was attributable primarily to the additional revenue of $216 million as a result of the Connecticut operations acquired in October 2014 and an increase in data services revenue, partially offset by declines in other revenue for the Frontier legacy operations.

Frontier said it delivered an eighth consecutive quarter of strong broadband net additions, adding 21,900 net broadband customers, excluding the impact of the Connecticut acquisition. It has had 220,900 net broadband customers since 2012.

Operating income margin for the quarter contracted 880 basis points to 13.0 percent from last year's 21.8 percent.

Looking ahead to fiscal 2015, the company company expects full-year free cash flow in a range of $785 million to $825 million, and capital expenditures in the range of $650 million to $700 million.

FTR closed Thursday's regular trading session at $8.19, up $0.01 or 0.12% on a volume of 13.01 million shares. The stock gained a further $0.06 or 0.76% in after-hours trading.