Frontier Communications reported positive consumer revenue growth for the first time in over two years in Q3 2023, hitting the milestone well after becoming a new publicly traded company in May 2021.
Consumer revenue of $787 million slightly rose from $785 million in Q3 2022, as Frontier noted fiber growth was “substantially offset” by declines in copper products. The uptick comes after the company in Q2 reported positive year on year business and wholesale revenue for the first time in six years.
In Q3, however, consolidated business and wholesale revenue of $634 million was down 1% from $641 million in the year-ago quarter.
CEO Nick Jeffery called out Frontier’s consumer average revenue per user (ARPU), which increased 2.4% year on year to $64.49 representing positive growth “for the first quarter in more than a year.”
“This is the direct result of the targeted changes we made earlier this year to bring our ARPU more in line with the market,” he said on the call, referring to annual rate adjustments and the cutback on gift card promos.
Fiber progress
Frontier added 332,000 new fiber passings in Q3, ending the quarter with 6.2 million total passings – more than halfway to its target of 10 million by the end of 2025. For full year 2023, it’s on track to reach 1.3 million new passings.
The operator gained 75,000 fiber broadband customers, bringing its overall fiber subscriber tally to 1.8 million. This marked a 19% year on year increase from 1.5 million customers in Q3 2022.
All told, Frontier ended the period with 2.9 million broadband customers across residential and business segments. That figure includes around 967,000 copper customers. Total broadband net adds were 16,000, thanks to the aforementioned copper losses.
Executives declined to comment on recent reports of Jana Partners acquiring a stake in Frontier, with Jeffery noting “we’ve always engaged in open and regular communication with all of our shareholders and we will continue to do so.”
Analysts at New Street Research commented, “this was the quarter where things were supposed to start moving in the right direction, and they did.”
Penetration-wise, Frontier reached a fiber penetration rate of 44%, just shy of its long-term target of 45%.
“The improvement will help ease fears of intensifying competition,” NSR analysts wrote in a note to investors.
Metrics
Consolidated revenue of $1.4 billion was roughly flat year on year, as copper declines continued to offset growth in fiber. Consumer fiber revenue of $479 million increased 13%, despite declines in video. Business and wholesale fiber revenue jumped 5% to $281 million.
Net income fell from $120 million in the year-ago quarter to $11 million.