Frontier Communications(US:FYBR)2019-02-27 02:05Financial Data and Key Metrics Changes - Revenue for Q4 2018 was $2.12 billion, stable sequentially, driven by an increase in Consumer revenue and a decline in Commercial revenue [8][27] - Adjusted EBITDA increased to $895 million, a 2% sequential increase, with an adjusted EBITDA margin of 42.1% [9][29] - The net loss for Q4 was $219 million, including a goodwill impairment of $241 million [27] Business Line Data and Key Metrics Changes - Total broadband net losses were 67,000, compared to a loss of 61,000 in Q3 2018, reflecting improved churn but a more disciplined approach to gross additions [11] - Consumer revenue saw a sequential increase of just over 1%, with strength in data and Internet services offsetting a decline in voice revenue [31] - Commercial revenue achieved sequential stability in SME, while the wholesale portion experienced a small decline [31] Market Data and Key Metrics Changes - Consumer ARPC (Average Revenue Per Customer) was $86.05, reflecting gradual increases due to improved base management and migration from promotional pricing [33] - Capital expenditures for Q4 were $245 million, with a total of $1.19 billion for the year, focusing on revenue-generating and productivity-enhancing projects [34] Company Strategy and Development Direction - The company is targeting $200 million in EBITDA run rate improvements by year-end 2019 and $500 million by year-end 2020 through transformation initiatives [24][40] - The transformation program includes revenue enhancements, operational enhancements, and customer care improvements, with a focus on reducing churn and improving customer lifetime value [18][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the $500 million EBITDA benefit from the transformation program and noted that the focus on churn has yielded substantial results [9][24] - The company anticipates improvements in revenue trends and continued cost management throughout 2019 [81] Other Important Information - The company repaid $431 million of unsecured notes and purchased $56 million of March '19 unsecured notes at a discount [36] - The company has ample liquidity to meet obligations and is committed to reducing debt and improving leverage [39] Q&A Session Summary Question: Can you provide more color on the drivers of the ARPC growth in consumer? - Management indicated that improved base management, recovering content costs, and transitioning customers from promotional to steady-state pricing contributed to ARPC growth [46] Question: What drove the broadband subscriber trend? - Management acknowledged that while churn improved, gross additions were lower due to a selective targeting approach aimed at improving customer lifetime value [52] Question: Can you talk about fiber backhaul for 5G? - Management stated that 5G will develop at its own pace, and the company is positioning itself for commercial opportunities, including 10 gigabit upgrades [56] Question: What drove the sequential increase in video revenues? - The increase was attributed to customers moving from promotional pricing and content pricing increases [61] Question: What are the expectations for Consumer and Commercial subscribers? - Management expects to change trends on both copper and fiber and build traction in Commercial with new products [66] Question: Can you talk about the CAF initiatives? - Management reported that they hit their targeted build for the CAF initiatives and are focusing on marketing to accelerate penetration [74]