Frontier Communications (OTC:FTR) has been moving mostly in a negative direction for the past few quarters, but its shares plunged when the company reported fourth-quarter and full-year results.

What happened?

The fourth quarter was the third since Frontier spent $10.54 billion acquiring Verizon's former wireline properties in California, Texas, and Florida (CTF). In the previous two full quarters the company had owned those territories, subscriber counts had dropped.

CEO Daniel McCarthy had plausibly blamed that on problems from the switchover from the previous provider, and greatly lessened marketing efforts while those issues were being dealt with. The fourth quarter was supposed to be the period when subscriber counts started moving in the right direction.

That did not happen, and shareholders were unhappy. After opening February at $3.44, shares closed the month at $2.93, a 15% drop, according to data provided by S&P Global Market Intelligence. Much of that drop, it should be noted, happened after the company reported on Feb. 27:

FTR Chart

FTR data by YCharts.

So what

In the Q4 earnings release McCarthy blamed the unexpected continued loss of customers on a "resolution of non-paying acquired CTF accounts." Aside from that, the company said that it has experienced an "improved trend in broadband in both legacy and CTF markets, excluding impact of non-paying account resolution."

That's a new excuse the company has never even hinted at before, even though you might assume the problem would have been known for most of the nine months Frontier has owned the CTF properties.

A cable remote

Frontier has been losing cable customers as well as broadband users. Image source: Getty Images.

Now what

McCarthy continues to insist that the subscriber losses will end after this one last unexpected problem. He also reiterated the positive news the company has been able to deliver over the last three quarters: its success in saving money since buying the CTF properties.

"We now expect annualized cost synergies of $1.6 billion to be achieved by mid-year 2018, up from the $1.4 billion target outlined in the 2016 third quarter earnings report, and a full year earlier than anticipated," he said. "We expect $1.25 billion of the $1.6 billion in synergies will be achieved by the end of the first quarter of 2017, which is a quarter earlier than previously announced."

The future for Frontier will not be secured by cost-cutting or adding efficiencies. Instead the company needs to show it can grow, or at least stabilize its customer base. If McCarthy can do that -- and it remains doubtful -- these stock losses could quickly move in the other direction.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.