Does anyone have the replay number for the Frontier CC?
Some of the comments made are mentioned in this The Wall Street Urinal article. (i bolded the CLEC part. i'm thinking that there is no need to buy a CLEC and would rather see Global looking to acquire/ build more international.)
July 29, 1999
Frontier To Close Global Crossing Merger In Sept.
By Maria V. Georgianis
NEW YORK (Dow Jones)--Frontier Corp. (FRO) remains committed to closing its $11.1 billion
merger with Global Crossing Ltd. (GBLX) by late September, the company said Thursday during its
second-quarter earnings conference call.
The company anticipates no regulatory hurdles and hasn't lost time in closing the deal, despite the
"distraction" of Qwest Communications International Inc.'s (QWST) dueling bid, Frontier Chief
Operating Officer Rolla Huff said.
Before the open, Frontier reported earnings of 20 cents a share, in line with previously reduced
expectations. This compares with year-ago earnings of 26 cents.
Second-quarter profit was hurt by price erosion in Frontier's circuit-switched long-distance business
and by the loss of a wholesale customer in the United Kingdom due to credit issues. Frontier had
issued an earnings warning in June.
Huff said that while price erosion continues in the switched long-distance market, there has been
some easing from the rate of declines seen in the past four months.
Revenue for the period ended June 30 was $646.8 million, or flat with the year-ago quarter.
Integrated services revenue of $464.7 million was also flat with the prior year.
During the conference call, Huff reiterated the company's previous guidance of achieving $1.00 in
per-share earnings for the year. In 1998, Frontier earned $1.02.
He also backed the company's previous guidance that integrated services revenue would increase
between 4% to 5% for 1999, boosted by growth in data services.
During the conference call, Frontier's Huff said he expects the company's Integrated Services
business unit to post double-digit revenue growth in the fourth quarter, largely aided by growth in data
services.
Integrated Services includes Frontier's consumer, wholesale and commercial account business.
Data revenue is a major revenue growth driver for telecommunications companies, fueled by the
burgeoning expansion of the Internet as a data network.
Frontier's data revenue, which was about 11% of the quarter revenue, grew by 123% year-over-year
to reach $49 million for the period. Within data, frame relay and Internet revenue were the fastest
growers.
The company expects its data revenue to rise at triple-digit rates for the balance of the year.
"The majority of revenue is already in backlog," Huff said, referring to an unspecified backlog of data
revenue in Frontier's wholesale and commercial business.
Frontier expects to see improvements in its wholesale and consumer business throughout the year.
Wholesale operations are expected to be up 25% for the year, aided by growth in data revenue, a
Frontier spokeswoman said.
In the second quarter, wholesale revenue was up 8.8%, to $168.7 million, hurt by the loss of a
customer and pricing pressures. Wholesale business, representing sales to carriers, is 36% of
Frontier's Integrated Services revenue.
Year-to-date, Frontier's wholesale business is up 22%, Huff said.
Frontier's consumer business, which fell 26.8% during the quarter to $45 million, is seen posting a
decline between the high teens to 20% for the year, the spokeswoman said.
The company expects its consumer business, also been hurt by price erosion, to improve in part due
to Frontier's marketing of its "Call Home America" calling plan in the fall, the spokeswoman said.
The company's consumer business accounts for 10% of Frontier's Integrated Services revenue. It is
not a strategic part of Frontier's business, Frontier's Huff said, noting the company no longer throws
money at that unit.
Frontier's commercial business, which reported revenue growth of 1.2% for the quarter to $251
million, is expected to remain flat for the year, according to the company.
The other bright spot for Frontier's 1999 revenue outlook, other than its wholesale and data business,
is its competitive local exchange carrier, or CLEC, business.
The company's CLEC revenue grew 54% during the quarter to $54 million and is expected to rise
between 40% to 50% for the year, the Frontier spokeswoman said.
Frontier also expects to improve gross margins by "well over 400 basis points" in the fourth quarter
from the 36% gross margin reported in the second quarter, Huff said. The margin improvements will
be driven by the company's transition away from leasing lines from other carriers, according to the
company.
The company is in the final stages of completing its 20,000-mile national network, expected by the
end of the year.
As Frontier completes its network, it plans to expand its capability to carry high-speed services using
Internet technology. By 2002, most of the company's voice traffic is expected to run over the
high-speed portion of the network.
Frontier's merger with Global Crossing will facilitate the company's movement toward Internet-based
technology for its networks, Huff said.
Internet-based networks have cost advantages over traditional phone networks and open the door
for telecommunications companies to offer more services.
Toward these ends, Frontier launched application networking services to host its customers' business
software in its data centers. The company also plans to partner with an unnamed large PC maker so
both can offer each others' services to their customers. These services include Internet messaging and
calendaring services. |
