Frontier Communications 2011 Annual Report Download - page 8

FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
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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, 2011, approximately 81% of the households in the acquired Territories had access to our broadband
products with at least 1 Mbps. As of December 31, 2011, approximately 91% of the households in our legacy territories
had access to our broadband products with at least 1 Mbps. 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.”
Ensure integration of the Acquired Business. Effective with the closing of the Transaction, the Acquired Business (other
than in West Virginia) operated on a common Verizon replicated information systems platform on an independent basis,
and the Acquired Business in West Virginia was integrated on to our existing systems. The main integration effort required
for us to operate the Acquired Business (in West Virginia) immediately following the Transaction was successfully
completed prior to the closing of the Transaction, freeing up our resources to implement further strategies to achieve cost
savings and drive revenue enhancements, including the information and network integration described below and the
expansion of the broadband footprint.
In October 2011, the Company converted all operating systems in four states of the Acquired Business to our legacy
systems and converted all of the remaining nine Acquired Business states onto the Company’s legacy financial, human
resources and engineering systems. In March 2012, the Company expects to commence the conversion of the other
operating systems in the remaining nine states of the Acquired Business onto the Company’s legacy systems. The
completion of the conversions will significantly enhance the Company’s ability to manage the business and further reduce
costs.
Increase operating efficiencies and realize cost savings. We achieve cost savings by applying our corporate
administrative functions and information technology and network systems to cover certain former Acquired Business
functions (including certain functions formerly provided by Verizon, or other third-party service providers, to the Acquired
Business). Based on current estimates and assumptions, we expect that our annualized cost savings will reach
approximately $650 million by the end of 2012.
Growth through selective acquisitions. We continue to evaluate and may pursue select strategic acquisitions that would
enhance revenues and cash flows, although until July 2012 we are subject to certain restrictions on the acquisition,
issuance, repurchase, or change of ownership of our capital stock. We will continue to adhere to our selective criteria in
any acquisition analysis.
Services
We offer a broad portfolio of high-quality communications services for residential and business customers in each of our
markets. These include services traditionally associated with local telephone companies, as well as other services such as
long distance, Internet access, broadband-enabled services and video services. We offer these services both á la carte and,
increasingly, as bundled packages which are purposely designed to simplify customer purchasing decisions and to provide
the customer with pricing discounts. We also offer incentives and promotions such as gifts to influence customers to
purchase or retain certain services. We also enhance customer retention by offering one-, two- and three-year price
protection plans under which customers commit to a term in exchange for predictable pricing or other incentives and
promotions. We are staffed locally with skilled technicians and supervisory personnel, which enables us to provide
efficiently and reliably an array of communications services to meet our customers’ needs. Our call center operations and
field technicians are staffed with 100% U.S.-based personnel.
Generation of Revenue
We generate revenue primarily by providing: (1) basic local and long distance voice wireline services to residential and
business customers in our service areas; (2) data and Internet services and wireless data services; (3) network access to