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Frontier Communications Corporation Message Board

  • burnaka Jul 25, 2011 1:06 PM Flag

    ftr earnings aug 3

    With declining volumes, the key is and will be reducing costs and debt. They are paying out way more in dividends now than prior to the vz takeover. People focus on the reduction in dividend, .25 to .18 but the truth is they increased the number of shares by 2/3 a major dilution. The actual cash outlay for dividends is up big, and sustainability is based on fcf.

    I do not see them raising the dividend until debt is below 6 billion, or a combination of cost savings and debt reduction. They did get a major revenue spike from vz, and have a track record of absorbing acquisitions seamlessly. I have held a position in this stock for about 16 years, they have always been share holder friendly. The stock price hasn't done much but the stock dividends, spinoff, and cash dividends make this well worth the hold.

    Put this one in an ira and forget about it. FTR will do everything in their power to increase shareholder value, and will definitely increase the dividend and do a share buy back when they get the debt level down. Bank on it.

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    • i believe that FTR is hoping that the accounting things
      that were done to give them a 2 year window to afford the
      div .. will bridge to the point at which the VZ acquisition
      becomes fully acretive , once that has happened , there
      should be plenty of cash flow to afford the div and maybe
      even increase it

      the big bugaboo that i see , is that FTR needs to spend
      a lot more capex to upgrade the VZ stuff than planned ..
      don't know yet ... it's pretty much a given , that when
      one company buys a unit from another one , that it will
      have been gutted of talented personnel and has not been
      kept up as it should .. the question is always .. how
      much a of wreck was purchased

      i'm sure that a signifigant amount has been and will be
      cut because of overlaps ....

      i think that it will be another 12-18 months before
      we know how valuable or not , the VZ was .. later ... garce

      but , the div should be assured for another year ..

      • 1 Reply to garceman1
      • burnaka Jul 25, 2011 2:42 PM Flag

        I think the vz purchase in retrospect will be viewed as phenomenal. FTR has a great history of acquisitions, and absorbing them. I think the legacy FTR FCF will be dwarfed by this acquisition, and that the VZ cash flow will be what allows them to grow the divi.

        Short term, 1-2 years to absorb it, that is a good estimate. This dividend is in no way getting cut, and will start to grow as debt comes in line. This is one to accumulate with dividends, and on weakness over the next 18-24 months. Once they start raising the dividend forget it, it will no longer be a super bargain stock.

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