Frontier Communications 2010 Annual Report Download - page 6

profile similar in characteristics such as age, income and property ownership to our legacy customers. We
therefore have a broader operating footprint that provides greater revenue opportunities through the expansion
of our existing operating strategies into the acquired Territories, through greater broadband penetration and
through new product and services offerings in the acquired Territories.
Strong financial profile with lower leverage. For the year ended December 31, 2010, on a pro forma
basis, assuming the Transaction had occurred in January 1, 2010, we would have generated revenue of
approximately $5.7 billion, compared to revenue of approximately $2.1 billion for Frontier legacy operations
for the year ended December 31, 2009. Taking into account the significant decrease in our leverage as a result
of the Transaction and the reduction of our annual dividend rate to $0.75 per share of common stock effective
July 1, 2010, we have strengthened our balance sheet and improved the sustainability of our annual dividend.
Experienced management team with proven track record of successful business integration. We are
managed by a senior management team with a proven track record of successful business integration, as
demonstrated by the team’s integration of former GTE Corporation properties, former Global Crossing
properties and former Commonwealth and GVN businesses into Frontier, and the team’s consolidation of five
billing systems covering 2.1 million access lines into a single system over the past seven years.
Company Strategies
The key elements of our strategy are as follows:
Expand broadband footprint. We are concentrating on broadband as a core component of our service
offering and growth. Consequently, we have earmarked capital expenditures for the expansion of broadband
availability in the acquired Territories and view this expansion as an opportunity to satisfy customer needs and
expectations, retain a greater number of customers and increase average revenue per customer. These capital
expenditures include enhancing the existing outside plant by pushing fiber deeper into the network, enhancing
interoffice transport and expanding the capability of our data backbone.
As of December 31, 2010, approximately 70% of the households in the acquired Territories had access to
our broadband products. As of December 31, 2010, approximately 91% of the households in our legacy
territories had access to our broadband products. In addition, in connection with the approval of the Transaction
by the Federal Communications Commission (FCC) and certain state regulatory commissions, we have
committed to expand broadband availability in certain areas of the acquired Territories. See “—Regulatory
Environment—Regulation of our business.”
Enhance customer loyalty through local engagement. We will continue our strategy of engaging the
markets at the local level to ensure that we have a customer-driven sales and service focus that differentiates us
from our competitors. Our local markets, including those in the acquired Territories, are now operated by local
managers responsible for the customer experience, as well as the financial results, in those markets. We invest
in infrastructure improvements and enhancements each year, recognizing that the economic livelihood of the
communities we serve will affect opportunities to grow the business. We therefore have a vested interest in the
economic development of the communities we serve. We are also continuing our community involvement
practices to create a competitive advantage through long-term customer loyalty. We remain committed to
providing best-in-class service throughout our markets and, by doing so, we expect to maximize retention of
current customers and gain new customers.
Increase revenue per customer. We continue to apply the sales and marketing practices that we have
historically employed throughout our markets, including the sale of voice, data and video services as bundled
packages and the use of promotions and incentives, including gifts such as personal computers, digital cameras
and gift cards, to drive market share. We believe these marketing strategies yield increased revenue per
customer, strengthened customer relationships and improved customer retention. In the acquired Territories, we
have significantly enhanced the customer experience with our call center representatives and field technicians.
We tailor our services to the needs of our residential and business customers in the markets we serve and
continually evaluate the introduction of new and complimentary products and services. We are increasing
broadband availability to the customer base in the acquired Territories and, through innovative packages and
promotions, plan to improve subscription rates for broadband services. We continue to offer direct broadcast
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES