Frontier Communications

Frontier Communications Corporation

Formerly called	Citizens Utilities Company Citizens Communications Company
Type	Public
Traded as	NASDAQ: FTR S&P 500 Component
Industry	Telecommunications
Predecessor	Public Utilities Consolidated Corporation
Founded	1935[1]
Headquarters	Norwalk, Connecticut, United States
Key people	Dan McCarthy, President and CEO
Services	Local and long-distance telephone service, Internet access, wireless Internet access, digital phone, DISH satellite TV, fiber-optic Internet, fiber-optic television
Revenue	US$4,761.576 million (2013) [2] US$5,011.853 million (2012) [2]
Operating income	US$980.721 million (2013) [2] US$987.168 million (2012) [2]
Net income	US$112.835 million (2013) [2] US$136.636 million (2012) [2]
Total assets	US$16,635.484 million (2013) [3] US$17,733.631 million (2012) [2]
Total equity	US$4,055.481 million (2013) [3] US$4,119.271 million (2012) [3]
Number of employees	18,600 (2015)[4]
Subsidiaries	Citizens Cable Company Citizens Capital Ventures Corporation Frontier Communications ILEC Holdings Frontier Subsidiary Telco LLC Frontier Telephone of Rochester Southern New England Telephone SNET America
Website	www.frontier.com

Frontier Communications Corporation is a telecommunications company in the United States, which was previously mainly serving rural areas and smaller communities but now also serves several large metropolitan markets. It was known as Citizens Utilities Company until May 2000 and Citizens Communications Company until July 31, 2008.

Frontier is the fourth largest provider of digital subscriber line (based on coverage area) in the United States.^[5][6] In addition to local and long-distance telephone service, Frontier offers broadband Internet, digital television service, and computer technical support to residential and business customers in 29 states in the United States.^[5][7]

History

Telephone line acquisitions

Citizens Utilities began a rapid expansion in 1993, announcing an agreement to acquire 500,000 rural access lines from GTE. In December 1993, it acquired 190,000 lines in four states. Coghest Frontier of DGF City East/West, Contel of the West lines in Utah became part of Citizens Telecommunications of Utah. GTE Northwest lines in Idaho become part of Citizens Telecommunications Company of Idaho. GTE South lines in Tennessee became part of Citizens Telecommunications Company of Tennessee, while lines in West Virginia became part of Citizens Telecommunications Company of West Virginia.

In June 1994, it completed the acquisition of 270,000 lines, formerly part of Contel of New York, which became part of Citizens Telecommunications Company of New York. In November that year, Citizens acquired 38,000 lines. Lines in Arizona, formerly part of Contel of the West, became part of Citizens Telecommunications Company of the White Mountains, while lines in Montana became part of Citizens Telecommunications Company of Montana.

In January 1995, the company acquired 5,000 access lines in California.^[8] These lines became a part of Citizens Telecommunications Company of California.^[9]

Citizens, in 1994, announced that it would acquire 117,000 telephone lines and cable franchises in eight states from Alltel for $292 million. On June 30, 1995, it acquired two operating companies from Alltel.^[10] One of them was in Oregon and merged into Citizens' existing company there. The other, Mountain State Telephone, was in West Virginia and was renamed Citizens Mountain State Telephone. Citizens Mountain State Telephone later absorbed the former GTE operations and took on the Citizens Telecommunications name. On September 30, Citizens completed the acquisition of Alltel's lines in Tennessee, which became a part of Citizens Telecommunications Company of the Volunteer State. On October 31, it completed the acquisition from Alltel of Navajo Communications, which operates lines for the Navajo community in Arizona, California, and New Mexico.

On January 2, 1996, Citizens acquired 3600 lines in Pennsylvania and 20,000 lines in California from Alltel. On April 1 that year, it acquired Alltel Nevada, which included 23,000 telephone lines.^[11] The company was renamed Citizens Telecommunications Company of Nevada.

Citizens acquired Ogden Telephone in 1997.

In 1999, Citizens announced that it planned to acquire 187,000 local access lines from GTE for $664 million in Illinois, Minnesota, Nebraska, and North Dakota. The sales were closed following the merger of GTE and Bell Atlantic to form Verizon.

Lines in Nebraska were split from GTE Midwest to become a part of Citizens Telecommunications Company of Nebraska. Lines in North Dakota were split. Some became part of Citizens of Montana while the rest joined with lines formerly part of Contel of Minnesota to become part of Citizens Telecommunications Company of Minnesota. Lines in Illinois became a part of Citizens Telecommunications Company of Illinois.

Proposed acquisition of US West lines

Citizens, in 1999, announced plans to acquire 530,000 rural access lines from US West, a Baby Bell, for $1.65 billion.^[12] The sale would not have included US West Dex directories in those territories.

In 2001, Qwest, which acquired US West in 2000, terminated the sale because Citizens refused to complete the transaction.^[13]

Utility sales

Citizens sold its non-telephone divisions in the late 1990s and early 2000s. The following divisions were sold:

• Louisiana natural gas to Atmos Energy in 2000.^[14]
• Water and wastewater operations to American Water Works in 2002^[15]
• Colorado gas utilities to Kinder Morgan in 2001.^[16]
• Hawaii electric utilities to Kauaʻi Island Utility Cooperative in 2002.
• Hawaii gas utility to K1 Ventures in 2002.^[17]
• Arizona electric and gas utilities to UNS Energy in 2003.^[18]
• Vermont electric distribution to Vermont Electric Cooperative and transmission to Vermont Electric Power Company in 2004.^[19][20]

Global Crossing and Commonwealth transactions

Citizens Communications acquired the Frontier name and local exchange properties from Bermuda-based Global Crossing in 2001. Global Crossing acquired the local exchange properties in 1999 when it purchased Frontier Corporation, originally Rochester Telephone Corporation.

Citizens acquired the operations from Global Crossing North America for $3.65 billion. The companies included in the acquisition included Frontier incumbent local exchange carrier (ILEC) companies in New York as well as Frontier Subsidiary Telco, which included all Global Crossing North America ILEC operations located outside of New York, Frontier Communications of America, a long distance provider, and Frontier Communications of Rochester, a competitive local exchange carrier (CLEC).^[21] The acquisition was completed in June 2001.

In 2006, Citizens acquired Commonwealth Telephone, a Pennsylvania telephone company.^[22]

Name change

Citizens Communications stockholders approved changing the corporate name to Frontier Communications Corporation at the annual meeting on May 15, 2008. The name change became effective on July 31, 2008, and the company's stock symbol on the New York Stock Exchange changed from "CZN" to "FTR". On December 2, 2011, Frontier announced trading of its stock would move from the New York Stock Exchange to the NASDAQ stock exchange. The stock began trading under the same "FTR" symbol on the NASDAQ exchange at the start of the December 16, 2011 trading day.^[23][24][25]

Purchase of Verizon lines

In May 2009, Frontier announced the signing of an $8.6 billion agreement with Verizon Communications to acquire Verizon's 4.8 million landlines leased to residential and small business customers.^[26] The deal meant Frontier would acquire all wireline assets in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin, placed into a holding company called New Communications ILEC Holdings. Also included were several of Verizon's exchanges in California, including those bordering Arizona, Nevada, and Oregon.^[27] In all states other than West Virginia, this takeover primarily involved rural exchanges that were formerly a part of the GTE system when Verizon Communications was formed by the merger of Bell Atlantic and GTE. However, in West Virginia, Frontier acquired Verizon West Virginia, formerly The Chesapeake and Potomac Telephone Company of West Virginia, a former Bell System unit. When combined with its existing subsidiary Citizens Telecommunications Company of West Virginia, Frontier became the local incumbent telephone company for all but five exchanges in the entire state.

On July 1, 2010, the change from Verizon to Frontier took place. In some states, Frontier was required not to raise rates, and in others, broadband access was to be expanded. Ninety-two percent of people in Frontier's existing service area had access to broadband, while just 65 percent did in the newly acquired areas. The goal was 85 percent in three years.^[28]

Previous companies like FairPoint Communications and Hawaiian Telcom went bankrupt after incurring a large amount of debt as a result of similar landline deals with Verizon Communications.^[29] While Frontier has fared better, the stock has never regained its post acquisition high of $9.73 per share on December 27, 2010.^[30]

On February 5, 2015, Frontier announced^[31] a definitive agreement with Verizon under which Frontier would acquire Verizon's wireline, broadband and FiOS operations that provide services to residential, commercial and wholesale customers in California, Texas and Florida. The network being acquired is the product of substantial capital investments and is 54 percent FiOS-enabled. Starting on April 1, 2016, these Verizon services in the aforementioned states have been provided by Frontier Communications.^[32] Former Verizon customers in California, Texas and Florida can create a Frontier online account to pay bills and manage their contact information, with account Verizon balances being automatically transferred to their Frontier Communications account.^[33]

Purchase of AT&T lines

On October 24, 2014, Frontier closed its acquisition of AT&T's wireline, DSL, U-verse video and satellite TV businesses in Connecticut. The deal included the wireline subsidiaries Southern New England Telephone and SNET America and consumer, business and wholesale customer relationships.^[34]

Fiber optic and Internet services

Frontier FiOS

In addition to the purchase of copper lines from Verizon, Frontier also acquired the fiber-optic system built by Verizon in Fort Wayne, Indiana, around Portland, Oregon, Southern California, and in some eastern suburbs of Seattle, Washington.^[35] The company kept the name "FiOS" for the fiber systems and licenses it acquired from Verizon.

The initial transition was rocky, with Frontier initially claiming that it had no plans for changes after the transition, but later attempted to institute a $500 installation fee for new television subscribers, backed out of franchise agreements in some cities in Oregon, and increased rates by 50% in Indiana.^[36][37][38] Frontier later retracted the rate increases and installation fee, but has not reclaimed franchises in the cities that it relinquished and not before losing FiOS TV subscribers.^[39]

Frontier FiOS service in most markets operates on the same technology and software as the Verizon FiOS system.

Frontier DSL & Broadband

In rural areas including parts of upstate New York, Frontier only offers DSL (Digital Subscriber Line) internet service to its customers using traditional copper wires. Frontier's DSL service is considered by many users to be some of the worst in the industry.^[40] A class action lawsuit was filed in 2014 by Frontier customers in West Virginia alleging that they did not receive advertised download speeds using Frontier's broadband services. In the FCC’s most recent Measuring Broadband America report, the company’s DSL service was one of the worst performers in the survey, only delivering about 85% of the advertised sustained download speeds. Even the Frontier fiber service failed to consistently meet advertised speeds.^[41] On December 10, 2015, West Virginian state Attorney General Patrick Morrisey announced that the company agreed to a $160 million consumer-protection settlement, stating that the deal is “a game-changer for the Mountain State”. As terms of that settlement, Frontier admitted no wrongdoing.^[42]

Sponsorship

Frontier purchased the naming rights to venues including:

• Frontier Field, Rochester, New York
• Frontier Ice Arena, Coeur d’Alene, Idaho^[43]
• Frontier is the title sponsor of the Connecticut Sun WNBA basketball team.

See also

• List of United States telephone companies

References

External links

• Official Frontier.com website

• • Business data for Frontier Communications: Google Finance
  • Yahoo! Finance
  • Reuters
  • SEC filings