Frontier Communications 2013 Annual Report Download - page 19

service, switched network access, long distance and subsidy revenues to continue to decline, and these factors
may cause our cash generated by operations to decrease.
We face intense competition, which could adversely affect us.
The communications industry is extremely competitive. Through mergers and various service expansion
strategies, service providers are striving to provide integrated solutions both within and across geographic
markets. Our competitors include competitive local exchange carriers, Internet service providers, wireless
companies, VoIP providers and cable companies that may provide services competitive with the services that
we offer or intend to introduce. We also believe that wireless and cable telephony providers have increased
their penetration of various services in our markets. We expect that competition will remain robust. Our
revenue and cash flow will be adversely impacted if we cannot reverse our customer losses.
We cannot predict which of the many possible future technologies, products or services will be important
in order to maintain our competitive position or what expenditures will be required to develop and provide
these technologies, products or services. Our ability to compete successfully will depend on the success of
capital expenditure investments in our properties, in addition to our new marketing efforts, our ability to
anticipate and respond to various competitive factors affecting the industry, including a changing regulatory
environment that may affect our business and that of our competitors differently, new services that may be
introduced, changes in consumer preferences, demographic trends, economic conditions and pricing strategies
by competitors. Increasing competition may reduce our revenues and increase our marketing and other costs as
well as require us to increase our capital expenditures and thereby decrease our cash flows.
Some of our competitors have superior resources, which may place us at a cost and price disadvantage.
Some of our competitors have market presence, engineering, technical, marketing and financial
capabilities, substantially greater than ours. In addition, some of these competitors are able to raise capital
at a lower cost than we are able to. Consequently, some of these competitors may be able to develop and
expand their communications and network infrastructures more quickly, adapt more swiftly to new or emerging
technologies and changes in customer requirements, take advantage of acquisition and other opportunities more
readily and devote greater resources to the marketing and sale of their products and services than we will be
able to. Additionally, the greater brand name recognition of some competitors may require us to price our
services at lower levels in order to retain or obtain customers. Finally, the cost advantages of some of these
competitors may give them the ability to reduce their prices for an extended period of time if they so choose.
We may be unable to stabilize or grow our revenues and cash flows despite the initiatives we have
implemented.
We must produce adequate revenues and cash flows that, when combined with cash on hand and funds
available under our revolving credit facility, will be sufficient to service our debt, fund our capital expenditures,
pay our taxes, fund our pension and other employee benefit obligations and pay dividends pursuant to our
dividend policy. We have experienced revenue declines in 2013 and 2012 as compared to prior years. While we
have identified some potential areas of opportunity and implemented several revenue initiatives, we cannot
assure you that these opportunities will be successful or that these initiatives will improve our financial position
or our results of operations.
Weak economic conditions may decrease demand for our services or necessitate increased discounts.
We could be adversely impacted by weak economic conditions or their effects. Downturns in the economy
and competition in our markets could cause some of our customers to reduce or eliminate their purchases of our
basic and enhanced voice services, broadband and video services and make it difficult for us to obtain new
customers. In addition, if economic conditions deteriorate, our customers may delay or discontinue payment for
our services or seek more competitive pricing from other service providers, or we may be required to offer
increased discounts in order to retain our customers.
Disruption in our networks, infrastructure and information technology may cause us to lose customers
and incur additional expenses.
To attract and retain customers, we must provide reliable service. Some of the risks to our networks,
infrastructure and information technology include physical damage, security breaches, capacity limitations,
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES