Customer Metrics - Frontier Communications had approximately 4.3 million customers and 3.6 million broadband subscribers as of June 30, 2019[164]. - Consumer customer churn increased to 2.14% for the three months ended June 30, 2019, compared to 1.95% for the same period in 2018[173]. - Broadband subscribers decreased by approximately 71,000 for the three months ended June 30, 2019, compared to a loss of 32,000 in the same period of 2018[176]. - Video subscribers decreased by approximately 54,000 for the three months ended June 30, 2019, resulting in 738,000 linear video subscribers[178]. Financial Performance - Total revenue decreased by $95 million, or 4%, to $2,067 million for the three months ended June 30, 2019, compared to $2,162 million in 2018[180]. - Average monthly consumer revenue per customer (ARPC) increased by $3.40, or 4%, to $88.68 for the three months ended June 30, 2019[173]. - Commercial customer revenue decreased by $48 million, or 5%, for the three months ended June 30, 2019[180]. - The decrease in consolidated total revenue for the six months ended June 30, 2019, was primarily due to fewer customers, partially offset by improved consumer ARPC[183]. - Video services revenue decreased due to a net decrease in total video subscribers for the three and six months ended June 30, 2019[191]. - Other revenue decreased primarily due to a decline in switched access revenue, influenced by reduced rates mandated by regulatory changes[193]. Expenses and Impairments - Network access expenses decreased by $51 million (14%) for the three months and $85 million (11%) for the six months ended June 30, 2019, driven by lower video content costs[196][198]. - Network related expenses decreased by $33 million (7%) for the three months and $60 million (6%) for the six months ended June 30, 2019, attributed to decreased compensation costs and network services costs[200][201]. - Selling, general and administrative expenses (SG&A) decreased by $15 million (3%) for the three months and $28 million (3%) for the six months ended June 30, 2019, mainly due to lower outside service and compensation costs[203][205]. - Goodwill impairment of $5,449 million was recorded for the three and six months ended June 30, 2019, due to a decline in share price and lower profitability outlook[210]. - A loss on disposal of $384 million was recorded during the three months ended June 30, 2019, related to the evaluation of asset recoverability[212]. - Restructuring costs and other charges increased to $31 million for the three months and $59 million for the six months ended June 30, 2019, due to workforce reductions and transformation program costs[214][216]. Net Loss and Tax Benefits - Basic and diluted net loss attributable to common shareholders was $(5,404) million, or $(51.97) per share, for the first six months of 2019, compared to a net loss of $(105) million, or $(1.35) per share, in the same period of 2018[225]. - Income tax benefit of $516 million was recorded on a pre-tax loss of $5,920 million for the six months ended June 30, 2019, primarily driven by the tax impact of the goodwill impairment[223]. Cash Flow and Capital Expenditures - Operating cash flows decreased by $66 million to $857 million for the six months ended June 30, 2019, primarily due to lower revenues[230]. - Capital expenditures for the six months ended June 30, 2019, were $580 million, down from $618 million in the same period of 2018[233]. Debt and Financing - The company completed a private offering of $1,650 million aggregate principal amount of 8.00% First Lien Secured Notes due 2027 on March 15, 2019[235]. - During the six months ended June 30, 2019, the company used cash on hand for the scheduled retirement of $358 million principal amount of senior indebtedness[239]. - The company has $9 million of debt maturing in the last six months of 2019, $245 million maturing in 2020, and $327 million maturing in 2021[243]. - The company has a $1,740 million senior secured term loan B facility maturing on June 15, 2024, and an $850 million secured revolving credit facility maturing on February 27, 2024[246]. - As of June 30, 2019, the estimated fair value of the company's total debt was approximately $12.8 billion, with a weighted average borrowing rate of 8.91% and a weighted average maturity of about seven years[280]. - As of June 30, 2019, 88% of the company's total debt had fixed interest rates, with only 12% exposed to floating rates[279]. Regulatory and Market Conditions - The company accepted the CAF Phase II offer, providing for $332 million in annual support through 2020 to enable broadband service to approximately 774,000 households[258]. - The FCC proposed two auctions totaling $20.4 billion for the Rural Digital Opportunity Fund, which could materially change the funding level for the company as early as 2021[272]. - The company is currently unable to predict the impact of regulatory changes on revenues due to ongoing litigation and changes in legislation[275]. - The company’s trading price declined to historically low levels in 2019, leading to a significant deterioration in business outlook[265]. - The company’s market multiples approach for enterprise fair value is sensitive to changes in estimated annual EBITDA, with a $100 million decline in EBITDA potentially leading to impairment of the remaining $276 million goodwill balance[267]. Pension and Cash Position - As of June 30, 2019, the company had unrestricted cash and cash equivalents totaling $267 million[227]. - The working capital surplus increased to $314 million compared to a deficit of $1,231 million at December 31, 2018[228]. - The company’s pension plan assets increased from $2,348 million at December 31, 2018, to $2,621 million at June 30, 2019, marking a 12% increase[282]. - The company has no significant equity security investments outside of its pension plan assets, limiting its exposure to equity price risk[281]. - As of June 30, 2019, the company was in compliance with all of its indenture and credit facility covenants[255].
Frontier Communications(FYBR) - 2019 Q2 - Quarterly Report