STAMFORD, Conn. (AP) ? Frontier Communications Inc., which provides phone service in parts of 27 states, reported a 30 percent drop in third-quarter earnings and revenue that came in slightly below Wall Street expectations. Its stock fell.
The company said Thursday that net income was $20.4 million, or 2 cents per share. That compares with net income of $29 million, or 3 cents per share, a year ago.
Frontier said that excluding a tax effect and costs related to the acquisition of phone lines from Verizon Communications Inc. last year, a deal that tripled Frontier’s size, earnings would have been 5 cents per share. That matched the average forecast of analysts polled by FactSet.
Revenue fell 8 percent from a year ago to $1.29 billion as customers continued to cancel their phone lines. Analysts were expecting $1.3 billion.
Because phone companies are relatively stable businesses, the small revenue miss is more significant than for other companies. Analysts also noted that operating income measures were below their estimates.
The weak figures should increase investor focus on whether Frontier can compete with cable companies, said Mike McCormack of Nomura Securities.
Frontier shares fell 43 cents, or 6.9 percent, to $5.77 in afternoon trading Thursday.
Frontier’s free cash flow ? a crucial measure of its ability to pay debts and reward shareholders ? declined 22 percent from a year ago to $264 million. However, only 71 percent of that went to support Frontier’s annual dividend yield of nearly 13 percent, implying that the company has some margin.
Frontier, which is based in Stamford, Conn., got some high-tech fiber-optic FiOS lines along with its Verizon purchase, but these are languishing. It reported losses of both FiOS Internet and FiOS TV subscribers for the third straight quarter.