Frontier suspends dividend after Q4 loss of USD 1 bln on writedown

Wednesday 28 February 2018 | 09:51 CET | News

US operator Frontier Communications announced it's suspending quarterly dividends in order to devote more cash to debt reduction. Announcing its annual results, the company said the move will free up around USD 250 million to strengthen its balance sheet.

The news came with a reported net loss of USD 1.03 billion for the fourth quarter of 2017. Despite a USD 830 million benefit from the US corporate tax reform, Frontier took a USD 1.82 billion impairment charge to write down goodwill on acquisitions

The company ended the year with a net debt ratio of 4.59x, up from 4.39 in September 2017. Frontier said this was still within its financial covenants, and the company agreed in January a refinancing of its credit agreements already. 

Underlying results showed a continued decline at Frontier, although the company said subscriber trends and churn were improving in the main markets of California, Texas and Florida. Consumer revenue was down by USD 16 million from Q3 to USD 1.09 billion, and business revenue dropped by USD 17 million over same period to USD 941 million. On an annual basis, quarterly revenues fell 8 percent to USD 2.2 billion, and adjusted EBITDA dropped 6 percent to USD 919 million. The margin was at 41.5 percent versus 40.4 a year earlier. 

For 2018, Frontier targets adjusted EBITDA of around USD 3.6 billion, versus USD 3.7 billion last year. Capital expenditure is estimated flat to slightly lower at USD 1.0-1.15 billion, and interest expenses will total USD 1.5 billion. Operating free cash flow, a new measure defined as net cash from operations minus capex, should improve to USD 800 million from USD 662 million in the 12 months to December 2017. 

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