Frontier Communications 2014 Annual Report Download - page 3

Download and view the complete annual report

Please find page 3 of the 2014 Frontier Communications annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

PART I
Item 1. Business
Frontier Communications Corporation (Frontier) is the largest communications company providing
services mainly to rural areas and small and medium-sized towns and cities in the United States.
Frontier and its subsidiaries are referred to as the “Company,” “we,” “us” or “our” throughout this report.
Frontier was incorporated in the state of Delaware in 1935, originally under the name of Citizens
Utilities Company, and was known as Citizens Communications Company from 2000 until July 31,
2008.
Our mission is to be the leader in providing communications services to residential and business
customers in our markets. 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 video services and products on a standalone basis and as bundled or packaged
solutions. We believe that our local engagement structure, 100% U.S.–based workforce and innovative
product positioning will continue to differentiate us from our competitors in the markets in which we
compete.
Effective October 24, 2014, Frontier’s scope of operations and balance sheet capitalization
changed materially as a result of the completion of the Connecticut Acquisition, as described below.
Historical financial data presented for Frontier is not indicative of the future financial position or
operating results for Frontier, and includes the results of the Connecticut operations from the date of
acquisition on October 24, 2014.
Highlights for 2014
In 2014, we continued to improve our customer metrics and revenue trends while strengthening
our financial profile as follows:
•The Connecticut Acquisition
On October 24, 2014, the Company acquired the wireline properties of AT&T Inc. (AT&T) in
Connecticut (the Connecticut Acquisition) for a purchase price of $2 billion in cash, excluding
adjustments for working capital. Following the Connecticut Acquisition, Frontier now owns and
operates the wireline broadband, voice and video business and statewide fiber network that
provides services to residential, commercial and wholesale customers in Connecticut, making
Connecticut our largest market. We also acquired AT&T’s U-versevideo and DISH satellite TV
customers in Connecticut.
In September 2014, the Company completed a registered debt offering of $775 million
aggregate principal amount of 6.250% senior unsecured notes due 2021, and $775 million
aggregate principal amount of 6.875% senior unsecured notes due 2025. The Company used
the net proceeds from the offering of these notes, together with borrowings of $350 million under
a term loan agreement and cash on hand, to finance the Connecticut Acquisition.
•Broadband Net Additions
During 2014, we added approximately 507,200 net broadband subscribers (an increase of
approximately 27%), bringing our total number of broadband subscribers to 2,373,900 as of
December 31, 2014. Excluding 398,600 broadband subscribers attributable to the Connecticut
Acquisition, we have added approximately 108,700 net broadband subscribers during 2014 and
220,900 net broadband subscribers since 2012. The net increase in broadband subscribers
contributed to our improved revenue performance.
•Investment In Our Robust Network
We continued to invest in network speed and capacity to support our goal of attracting additional
customers and increasing broadband penetration. In 2014, our broadband availability increased
by over 1.4 million new households, which includes 1.3 million new households attributable to
the Connecticut Acquisition, and we are now able to offer broadband to over 7.8 million
2
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES