Frontier line loss continues amid acquisition

The pace of residential landline loss quickened for Frontier Communications during the second quarter as it inched closer to the acquisition of landline properties in 14 states from Verizon, a deal that closed the day after Q2 ended.

Frontier saw an 8% decline in residential landlines between Q2 2009 and Q2 2010. That marked a slight increase over the 7% year-over-year decline reported during the first quarter of this year. Under the same comparison, business line loss remained about flat at 4%. With 1,296,471 residential lines at the end of Q2, Frontier showed a loss of roughly 26,000 household connections from Q1. The company had 2,052,091 total residential and business access lines as of June 30, compared to 2,082,812 total lines as of March 30.

Frontier CEO Maggie Wilderotter said the company has increased its sales focus on business lines during 2010, a strategy that it plans to keep up as it integrates the Verizon properties. Wilderotter said the Verizon network cutover and integration was proceeding as planned, though she added that the obligations of the integration project may have led to slower broadband customer growth during the second quarter.

“The company's growth of high-speed Internet and video customers during the second quarter of 2010 was lower than its historical trend rates,” Wilderotter said during the earnings call this morning. “Information technology and billing system conversions in preparation of the Verizon transaction limited our ability to design and implement new marketing campaigns and promotions.” Frontier should pick up the marketing pace again during the third quarter, she added.

In terms of broadband Internet additions, Frontier signed up 3400 new customers during the second quarter, about 4700 fewer than it added in Q1. However, net video additions actually increased, from 2800 sign-ups in Q1 to about 3800 sign-ups in Q2. Frontier had 647,500 high-speed Internet customers total at the end of Q2 and about 179,600 video customers.

Wilderotter said Frontier still has “heavy lifting” to do in the wake of the Verizon deal, particularly in the area of customer service, where the company is looking to increase the productivity of truck-roll technicians but not at the expense of thorough job completion and customer satisfaction. Also, she said Frontier inherited 14 call centers organized around discreet services — voice, Internet, video, etc. — and is determining how to better integrate them so that customers can make one call for all their service issues.

“Verizon managed all of its technicians from a centralized basis, not on a local basis, and that is one of the things we are trying to do,” Wilderotter said. “It’s a matter of getting over the hump and getting things more customer focused in these markets.”