Frontier Communications, one of two major TV and internet providers in the Tampa Bay area, is facing financial struggles because of a declining customer base and significant debt.
In its annual filing with the Securities and Exchange Commission, Frontier noted that its share price dropped to "historically low levels" this year. Its shares have been trading at less than $1 since its August filing came out last week and were trading at 70 cents per share mid-Thursday.
Among the issues the company faces, its filing said, are "customer trends." Namely, its customers are cutting the cord.
Frontier's national customer base for the year's second quarter was 4.3 million, down from 4.5 million in the same quarter a year before. The telecommunications company saw declines in all of its customer metrics nationally, including how many residential customers it had (3.9 million, down from 4.1 million the same quarter last year), its commercial customers (390,000, down from 411,000 the same quarter in 2018), broadband subscribers (3.6 million, down from 3.7 million) and satellite DISH subscribers (190,000, down from 205,000).
The company also faces $17 billion in debt. Frontier announced earlier this year that it would sell off all of its operations in Washington, Oregon, Idaho and Montana for $1.4 billion to help alleviate some of its financial pressures, a deal that is expected to close in the first half of next year.
It is also pursuing a "transformation" program, which sought to drive $500 million in revenue annually by the end of 2020 through a number of initiatives that included increasing subscribers, reducing its operating costs and improving customer satisfaction. But according to its federal filing, the program won't hit the $500 million mark as expected.
"If the transformation program or other initiatives are unsuccessful, it could have a material adverse effect on our financial position and our results of operations," Frontier said.
Aurelius Capital Management LP, a Frontier investor, urged the company in a June letter to its board to avoid chapter 11 bankruptcy. Instead, Aurelius' managing director Dennis Prieto said, the company should seek to extend the deadline for when its debt comes due and reduce the interest rate.
The company does not currently have any plans to change its presence in Tampa Bay.
"The Tampa area is an important market for Frontier, and the company continues investing and building infrastructure that drives economic growth throughout the region," Javier Mendoza, spokesman for Frontier, said in a statement. "Service to our customers is our highest priority. We anticipate no changes and remain focused on continuing to provide connectivity services to our customers, including major institutions and businesses."
Moody's Investors Service, a credit rating agency, downgraded Frontier's outlook to "negative" citing Frontier's debt and that it "may not be able to sustainably reverse" its declining revenue and customer loss. And that could threaten its ability to pay down its debt.
"Given the company's weak fundamentals, a ratings upgrade is unlikely at this point," the rating agency's analysis said.
Contact Malena Carollo at email@example.com or (727) 892-2249. Follow @malenacarollo.