It's hard to find any good news in the three quarters Frontier Communications (NASDAQ:FTR) has reported on so far this year.
The company has been bleeding residential and business customers while also steadily losing video subscribers in each quarter. While that was happening, Frontier's stock was moving steadily downward.
The past 12 months were not kind to the company. And while the moves it made during the the year may help it next year -- specifically, improving its integration of the customers it purchased from AT&T (NYSE:T) and closing a deal to buy some systems from Verizon (NYSE:VZ) -- that was probably little solace to investors in 2015.
Even the company's best-performing business segment was just OK. Frontier steadily added broadband customers every quarter, but the numbers were, on a percentage of customers added, in the middle of the pack.
They weren't bad, and the broadband adds give the brand something positive to build on as it heads into 2016.
Some good news from broadband
While cord cutting has caused many cable companies to lose pay-television customers, the byproduct of that phenomenon is that more people need high-quality Internet connections. If you want to ditch cable and replace it with streaming services, you need broadband Internet to make that happen.
That has been a saving grace for the pay-TV industry, but some companies have done better than others. Frontier is still a small player in the broadband world. It closed 2014 with 2,342,500 customers, according to data from Leichtman Research Group (LRG). That puts it well below major players including Comcast (NASDAQ:CMCSA) (21,962,000), Time Warner Cable (UNKNOWN:TWC.DL) (12,253,000) and the telephone companies it has been buying system from AT&T (16,028,000) and Verizon (9,205,000).
|Company||2014 Close||Q1||Q2||Q3||Total||% Change|
|Time Warner Cable||12,253,000||328,000||189,000||246,000||763,000||6.22%|
On the positive side, while Frontier can't match the numbers the two largest cable companies put up, even on a percentage basis, it did outperform the telcos that LRG groups it with. That success is largely because AT&T and Verizon have been gaining subscribers for their fiber services -- which compares with what Frontier offers -- and losing them in DSL.
Something to build on
Consumers clearly want top-tier broadband, and Frontier's service meets those standards in most cases. That's good news for the company, which will more than double in size on a customer basis when its deal with Verizon closes, probably in March.
Frontier and its rivals are going to lose cable customers, and it's logical to think they will lose traditional phone customers even faster. To remain viable, that means adding broadband customers at a steady clip.
In a bleak year, Frontier showed that it could do that. That wasn't enough to save its 2015, but it might be something that helps it rebound in 2016.
Daniel Kline has no position in any stocks mentioned. He was one of those people who added Frontier broadband in 2015. The Motley Fool recommends Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.