Frontier revenue hitch on inherited Verizon non-payers

US telco Frontier Communications reported its 2016 figures this week taking the brave decision to cut off non-paying customers it inherited from the wireline homes it acquired from Verizon in California, Texas, and Florida. This led to a $45 million cull of customer revenue, and it expects a further $25 million next quarter.

In April, last year, Frontier completed a year-long deal to spend $10.54 billion acquiring residential, commercial and wholesale customers in the three states including 3.3 million voice connections, 2.1 million broadband lines and 1.2 million FiOS video subscribers. This deal allows Verizon to focus on its contiguous consumer wireline footprint across Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, Virginia and Washington, as well as its national cellular assets.

Frontier revenue for Q4 was $2.4 billion, down from $2.52 billion, resulting in a net loss of $80 million, although the company reassured investors, showing a strong EBITDA improvement and generated $316 million in free cashflow. Net cash provided by operations for the entire year was $1.67 billion.

Frontier said that it effected an intensified effort to address overdue accounts in the fourth quarter and it says that it has one more quarter of clearing out dead wood before it reverts back to its old way of handling derelict accounts.

Frontier reported ARPU falling from $82.34 to $80.33, and said broadband subscribers fell from 4.36 million, down to 4.27 million off by 91,000 lines; and video subscribers from 1.5 million to $1.41 million a fall of 104,000 customers. Domestic revenue was around 54% of Frontier’s business with the rest being from businesses. For the year, revenue was $8.9 billion up from 2015 before the deal, at $5.58 billion.