[Frontier Reports 17% Earnings Gain But Warns Of New Network Delay]
(sections in bold might explain QWST's swoon today. -- mark)
NEW YORK -(Dow Jones)- Frontier Corp., a long-distance phone company that has been working to become a one-stop provider of various telecommunications services, Wednesday posted a 17% increase in its second-quarter earnings but said its new network isn't coming on-line as quickly as originally planned.
Rochester, N.Y.-based Frontier (FRO) said net income came to $45.9 million, or 26 cents a share on a fully diluted basis, compared with $39.3 million, or 23 cents a diluted share, in the year-earlier period. Revenue increased 10% to $648.3 million.
The mean estimate of analysts surveyed by First Call was for earnings of around 25 cents per share. The latest results included a $2.5 million gain from the sale of some assets and a $1.8 million charge because of an accounting change. The company cited increases in sales of data services, local phone services and wholesale services to businesses.
Frontier is helping to build a $475 million fiber-optic network that was expected to be completed by the end of this year. The system will better equip Frontier to handle Internet and other business data traffic. Frontier has signed up several partners for the effort and has agreed to swap capacity with other telecom firms.
Frontier said the network isn't coming on-line as quickly as originally planned because of severe-weather conditions, difficulty in securing rights-of-way on certain network segments, and delays in partner Qwest Communication International Inc.'s construction schedule. Frontier said a few network segments that will serve high-traffic markets may be delayed into early 1999.
Frontier said it needs to extend capacity leases to keep up with the increase in traffic volumes. The company said it expects the delay to resolve itself in early 1999 when more of the network becomes available.
Frontier also said it signed a $68 million agreement with Williams Cos. to jointly expand Frontier's network by about 3,000 route miles in the southeastern U.S. Williams will provide Frontier with multiple fiber-optic routes linking networks in Houston, Atlanta, Tampa and Miami.
The companies said Frontier's base 13,000-mile national fiber network is expected to be completed in early 1999. When the Southeast segments come on-line at the end of 1999, Frontier's network will be an 18,000-mile system that connects 120 cities. Frontier said the Williams network will expand to 18,000 miles by the end of 1998 and to 32,000 miles connecting 100 cities by the end of 2001. |
