Morningstar Rating

Stock Research and Analysis

by Michael Hodel, CFA

Bulls Say

Frontier again cut its dividend in 2012, but at $0.40 per share, the stock still offers a very attractive yield. The new payout totaled less than half of cash flow in 2013.
While the 2012 dividend cut was painful for shareholders, the move puts Frontier on stronger financial footing, a necessity in the capital-intensive telecom industry.
Frontier's phone lines are often in small markets and rural areas where competition is less severe and government subsidies pad margins. Read more 

Bears Say

Frontier faces tough choices as the core phone business erodes. The firm needs to invest heavily in its networks to keep pace with rivals while meeting shareholder expectations for yield and managing the balance sheet.
Frontier took on a huge burden with the Verizon assets. Verizon neglected these territories over the years, eroding customer loyalty.
Given the dispersed nature of many of Frontier's territories, deploying the latest technologies may not be economical for several years, if at all. These areas could make prime targets for wireless data services. Read more 

Management

Leonard Tow took control of Frontier in 1989 and shaped it into a telecom firm, buying assets and selling off utility operations. Tow resigned as CEO in 2004 and later surrendered the chairman title. Maggie Wilderotter, who had spent two years as a   Read more 

Profile

Frontier Communications provides phone, Internet, and other data transport services to 2.8 million residential and about 265,000 business customers in 27 states. The firm   Read more 

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