Frontier Communications 2005 Annual Report Download - page 25

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CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
• The effects of increased medical, retiree and pension expenses and related funding requirements;
• Changes in income tax rates, tax laws, regulations or rulings, and/or federal or state tax assessments;
• The effect of changes in the communications market, including significantly increased price and service
competition;
• The effects of state regulatory cash management policies on our ability to transfer cash among our
subsidiaries and to the parent company;
• Our ability to successfully renegotiate expiring union contracts covering approximately 1,400 employees
that are scheduled to expire during 2006;
• Our ability to pay a $1.00 per common share dividend annually may be affected by our cash flow from
operations, amount of capital expenditures, debt service requirements, cash paid for income taxes (which
will increase in the future) and our liquidity;
• The effects of any future liabilities or compliance costs in connection with worker health and safety
matters;
• The effects of any unfavorable outcome with respect to any of our current or future legal, governmental,
or regulatory proceedings, audits or disputes; and
• The effects of more general factors, including changes in economic, business and industry conditions.
Any of the foregoing events, or other events, could cause financial information to vary from management’s
forward-looking statements included in this report. You should consider these important factors, as well as the risks
set forth under Item 1A. “Risk Factors” above, in evaluating any statement in this Form 10-K or otherwise made by
us or on our behalf. The following information is unaudited and should be read in conjunction with the consolidated
financial statements and related notes included in this report. We have no obligation to update or revise these
forward-looking statements.
OVERVIEW
We are a communications company providing services to rural areas and small and medium-sized towns and
cities as an incumbent local exchange carrier, or ILEC. We offer our ILEC services under the “Frontier” name. In
addition, we provide competitive local exchange carrier, or CLEC, services to business customers and to other
communications carriers in certain metropolitan areas in the western United States through Electric Lightwave, LLC,
or ELI, our wholly-owned subsidiary. In February 2006, we entered into a definitive agreement to sell ELI and we
expect the sale to close in the third quarter of 2006.
Competition in the telecommunications industry is intense and increasing. We experience competition from
many telecommunications service providers including cable operators, wireless carriers, voice over internet protocol
(VOIP) providers, long distance providers, competitive local exchange carriers, internet providers and other wireline
carriers. We believe that competition will continue to intensify in 2006 across all products and in all of our markets.
Our Frontier business experienced erosion in access lines and switched access minutes in 2005 as a result of
competition. Competition in our markets may result in reduced revenues in 2006.
The communications industry is undergoing significant changes. The market is extremely competitive, resulting
in lower prices. Demand and pricing for certain CLEC services have decreased substantially, particularly for long-
haul services. These trends are likely to continue and result in a challenging revenue environment. These factors
could also result in more bankruptcies in the sector and therefore affect our ability to collect money owed to us by
carriers.
Revenues from data and internet services such as high-speed internet continue to increase as a percentage of
our total revenues and revenues from services such as local line and access charges and subsidies are decreasing as
a percentage of our revenues. These factors, along with increasing operating costs, could cause our profitability and
our cash generated by operations to decrease.