Frontier Communications 2013 Annual Report Download - page 8

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During 2013, we lost 83,600 residential customers, net, and 15,300 business customers, net, or 3% of total
customers, as compared to 216,700 residential customers, net, and 23,800 business customers, net, lost during
the year ended December 31, 2012, or 7% of total customers. We believe the improved customer retention in
2013 as compared to 2012 is principally due to our investments in our network, our local engagement strategy,
improved customer service and simplified products and bundles. Our residential customer monthly churn was
1.69% and 1.62% for the years ended December 31, 2013 and 2012 respectively.
Average monthly residential revenue per customer (residential ARPC) increased $0.97, or 2%, to $59.30
during 2013 as compared to 2012. Total residential revenue for the year ended December 31, 2013 declined
$99.4 million, or 5%, as compared to the year ended December 31, 2012 primarily as a result of decreases in
local voice and long distance revenues, partially offset by increases in data services revenue and increases in
subscriber line charges due to additional access recovery charges. These charges are a result of regulatory
changes related to Intercarrier Compensation reform and are expected to continue to increase, as allowed by the
FCC to partially offset regulatory mandated declines in switched access rates. We had approximately 2,803,500
and 2,887,100 total residential customers as of December 31, 2013 and 2012, respectively. Total residential
customers declined by approximately 83,600 since December 31, 2012, principally driven by declines in voice
customers. The overall increase in residential ARPC is primarily due to additional bundled customers at a
higher ARPC combined with declining counts in voice-only customers at a lower ARPC. The Company expects
continuing improvements in data services revenue, primarily driven by increased broadband subscribers, and
continuing declines in voice services. Economic conditions and/or increasing competition could make it more
difficult to sell our bundled service offerings, and cause us to increase our promotions and/or lower our prices
for our products and services, which would adversely affect our revenue, profitability and cash flows.
Average monthly business revenue per customer (business ARPC) increased $14.13, or 2%, to $653.26,
for 2013, as compared to 2012. We had approximately 270,800 and 286,100 total business customers as of
December 31, 2013 and 2012, respectively. Total business revenue for the year ended December 31, 2013
declined $95.7 million, or 4%, as compared to the year ended December 31, 2012, principally as a result of
decreases in our local and long distance revenues and wireless backhaul. Total business customers declined by
approximately 15,300 since December 31, 2012. The overall increase in business ARPC is primarily due to
declining customer counts for our small business customers that carry a lower ARPC. The Company expects
the declines in local voice and long distance revenues and wireless backhaul revenues from business customers
to continue into 2014, mitigated, in part, by increases in data revenues.
During 2013, we added approximately 112,250 new broadband subscribers, net, as compared to 23,400
during 2012. The Company had 1,866,700 broadband subscribers at December 31, 2013. As of December 31,
2013, we were able to offer broadband to approximately 6.4 million households, or 90% of the 7.1 million
households in our territory. We continue our efforts to increase broadband subscribers and increase our share of
the applicable residential and business markets. We continue to invest in network speed and capacity to support
our goal of driving additional broadband penetration. We also believe our customers value the convenience and
price associated with receiving multiple services from a single provider. We expect to continue to increase
broadband subscribers in 2014. As of December 31, 2013, approximately 76% of our residential broadband
customers, (excluding multiple dwelling units and wireless high speed Internet), subscribe to a bundle of
services. Throughout our territories, we offer satellite video services through DISH and, in addition, we offer
fiber optic-based video services in three states. We gained 38,700 video subscribers, net during 2013. At
December 31, 2013, we had 385,400 video customers.
7
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES