Frontier's Q2 revenue declines to $1.26B

August 1, 2012 | By Sean Buckley

Frontier Communications (Nasdaq: FTR) reported in its second-quarter 2012 earnings call Tuesday that revenue declined sequentially to $1.258 billion, from $1.27 billion in Q1 2012.

Once again, the service provider attributed lower revenues to a decrease in tresidential and business customers, switched access, data services and video revenue.

As of the end June, Frontier had a total of 2,9 million residential customers and 296,500 business customers.

The service provider reported $28.6 million ($0.02 per share after tax) in integration costs for Verizon's (NYSE: VZ) former rural lines during the quarter, down from about $35.1 million ($0.02 per share after tax) in Q1 2012, and $20.3 million ($0.01 per share after tax) in Q2 2011.

In March, Frontier completed the conversion of the final nine states onto its billing systems and other network integration work, and expects integration costs and related capex will be completed by the end of this year.

Here's a breakout of Frontier's key Q2 metrics:

Landline loss: Following the industry-wide trend, the telco lost over 92,000 traditional access lines, ending the quarter with 5.07 total lines. Frontier had 3.13 million residential access lines and 1.9 million business access lines.

Broadband services: Frontier added 5,400 new broadband subscribers, reflecting what it said was an increase in conversion of non-pay disconnects and less robust marketing campaigns. The service provider ended the quarter with 1.78 million broadband customers. There were two notable developments Frontier made to expand broadband into more "unserved" rural areas: it secured a $71.9 million grant from the Federal Communications Commission's Connect America Fund and established a reseller agreement with satellite provider Hughes Network Systems.  Through the FCC CAF I grant, Frontier said it will be able to connect an additional 92,876 additional homes with broadband service.

Video: Frontier's video-subscriber base continues to be hurt by ongoing FiOS-TV losses. While it added 13,300 satellite-TV customers it lost 7,000 FiOS video customers. As of the end of June, the telco had a total of 568,200 video customers. Donald Shassian, Frontier's CFO, told analysts on an earnings call that the company is seeing "very, very robust" gross subscriber additions from its relationship with Dish Network (NYSE: DISH).

Looking at full-year 2012, Frontier left unchanged its capex and free cash flow expectations of $725 million to $775 million, and $900 million to $1 billion.