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Frontier Communications Reports 2013 Third Quarter Results

Frontier Communications Corporation (NASDAQ:FTR) today reported third quarter 2013 revenue of $1,185.3 million, operating income of $206.2 million and net income attributable to common shareholders of $35.4 million, or $0.04 per share. Excluding pension settlement costs of $40.3 million, severance costs of $2.6 million, offset by discrete tax items of $5.6 million (combined impact of $21.1 million or $0.02 per share after tax), non-GAAP adjusted net income attributable to common shareholders for the third quarter of 2013 would be $56.5 million, $0.06 per share.

“Frontier’s 2013 third quarter delivered improved sequential performance adding to the positive trend established in the first two quarters of this year,” said Maggie Wilderotter, Chairman and CEO of Frontier Communications. “We delivered a slight increase in sequential residential revenue in the third quarter, and improved SME business revenue quarter over quarter. Our strong local engagement execution coupled with simple bundles and network improvements enabled us to, once again, take broadband market share, as illustrated by almost 27,000 broadband net adds, low churn and improved revenue metrics. Expanded alternate channel performance offset much of the typical impact of seasonality in the third quarter. Cost reductions remain on track and our employees are improving their competitive engagement every day. We are extremely pleased with the progress we have made this year and we are working hard to maintain these trends in the fourth quarter.”

Revenue for the third quarter of 2013 was $1,185.3 million as compared to $1,190.5 million in the second quarter of 2013 and $1,252.5 million in the third quarter of 2012. Total revenue for the third quarter of 2013 declined sequentially by only 0.4% from the second quarter of 2013. The third quarter of 2013 decrease in total revenue is primarily due to lower switched access, voice and non-switched access revenue, partially offset by the increase in data services revenue and subsidy revenue.

Customer revenue for the third quarter of 2013 of $1,050.1 million was essentially flat as compared to $1,051.9 million in the second quarter of 2013. Total residential revenue was $506.1 million for the third quarter of 2013 as compared to $505.5 million in the second quarter of 2013, a 0.1% sequential increase in the quarter. Total business revenue was $544.0 million as compared to $546.4 million in the second quarter of 2013, a 0.4% decline in the quarter.

At September 30, 2013, the Company had approximately 2,822,100 residential customers and 274,700 business customers. During the three months ended September 30, 2013, the Company improved the rate of decline in residential customers by 56% as compared to the prior year, losing approximately 20,700 customers as compared to 16,300 customers in the three months ended June 30, 2013 and 46,700 customers in the three months ended September 30, 2012. The modest increase in residential customer losses in the third quarter was primarily due to seasonality and plan migration. The average monthly residential revenue per customer improved in the third quarter to $59.56, or 1% higher than the second quarter of 2013.

During the three months ended September 30, 2013, the Company improved the rate of decline in business customers by 31% as compared to the prior year, losing approximately 3,500 customers as compared to 2,900 customers in the three months ended June 30, 2013 and 5,100 customers in the three months ending September 30, 2012. During the most recent quarter, the average monthly business revenue per customer was $656.06, or 1% higher than the second quarter of 2013.

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