Frontier Communications 2007 Annual Report Download - page 5

CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
PART I
ITEM 1. BUSINESS
Citizens Communications Company (Citizens) and its subsidiaries will be referred to as the “Company,”
“we,” “us” or “our” throughout this report. Citizens was incorporated in the State of Delaware in 1935 as
Citizens Utilities Company.
We are a communications company providing services to rural areas and small and medium-sized towns and
cities. We offer our services under the “Frontier” name. Revenue from our Frontier operations was $2.3 billion in
2007. Among the highlights for 2007:
•Acquisitions
On March 8, 2007, we acquired Commonwealth Telephone Enterprises, Inc. (Commonwealth or CTE)
in a cash and stock taxable transaction, for a total consideration of approximately $1.1 billion.
On October 31, 2007, we completed the acquisition of Global Valley Networks, Inc. and GVN Services
(together GVN) for a total consideration of $62.0 million in cash.
•Cash Generation
We continued to generate significant free cash flow through further growth of broadband and value
added services, productivity improvements, and a disciplined capital expenditure program that
emphasizes return on investment. The first quarter of 2007 included the $37.5 million favorable impact
of a cash settlement of a switched access dispute.
•Stockholder Value
During 2007, we repurchased $250.0 million of our common stock and we continued to pay an annual
dividend of $1.00 per common share.
•Growth
During 2007, we added approximately 130,700 new high-speed internet customers and almost 116,100
customers began buying a bundle or package of our services. At December 31, 2007, we had
approximately 523,800 high-speed data customers and almost 633,800 customers buying a bundle or
package of services. During 2005, we also began offering a television product in partnership with
Echostar’s DISH Network (DISH), and at the end of 2007 we had approximately 93,600 DISH
customers.
Our objective is to be the leading provider of communication services to homes and businesses in our
service areas. We are committed to delivering innovative and reliable products and solutions with an emphasis on
convenience, service and customer satisfaction. We offer a variety of voice, data and internet services, and
television that are available as bundled or package solutions or, for some products, a la carte. We believe that
superior customer service and innovative product positioning will continue to differentiate us from our
competitors in the marketplace.
TELECOMMUNICATIONS SERVICES
As of December 31, 2007, we operated as an incumbent local exchange carrier (ILEC) in 24 states.
The telecommunications industry is undergoing significant changes and difficulties and our financial results
reflect the impact of this challenging environment. As discussed in more detail in Management’s Discussion and
Analysis of Financial Condition and Results of Operations (MD&A), we operate in an increasingly challenging
environment and, accordingly, our Frontier revenues have decreased slightly in 2007 after excluding the impact
of the CTE and GVN acquisitions.
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