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Broadband services

Frontier Lops Off 1,000 Jobs in Big Overhaul

Did Frontier bite off more than it could chew when it bought those three big properties from Verizon earlier this year?

Could be, given the latest news out of Frontier Communications Corp. (NYSE: FTR). The big US telco, which doubled in size earlier this year when it acquired three large wireline properties from Verizon Communications Inc. (NYSE: VZ) in Florida, Texas and California, confirmed reports Thursday that it will be laying off 1,000 employees as it struggles to re-stoke customer and revenue growth.

In a development first reported by DSLReports, Frontier will start cutting employees across its newly enlarged 29-state territory immediately as it prepares to launch a major organizational restructuring of its operations next month. Under the revamping, the telco plans to overhaul its current reporting structure and create new commercial and consumer business divisions.

"Change is necessary and the time for action is now," Frontier President & CEO Dan McCarthy wrote in a memo to employees obtained by DSLReports. "We must position ourselves to improve our execution, and to increase the span of control, while at the same time making Frontier more nimble and capable of responding in the marketplace. No company in our sector is standing still and neither are we."

While splitting Frontier's operations into two units, the restructuring plan also calls for separating the company into seven geographic operating areas, each led by a senior vice president of operations. Such current, regionally run functions as engineering, human resources, communications and marketing will all be centralized. The changes will take effect December 1.

The drastic steps by Frontier follow its disappointing third-quarter earnings release earlier this week, when the company reported its third straight quarter of poor results despite earlier hopes of a second-half rebound. In its second earnings report since buying the three wireline properties from Verizon for $10.5 billion, Frontier shed 155,000 residential customers and 12,000 business customers as it suffered prolonged outages for large numbers of subscribers. Breaking down the customer metrics a bit further, it lost 99,000 DSL broadband and 92,000 video subscribers in the summer quarter. (See Frontier Eyes Second Half Rebound.)

Due in large part to these continued customer losses, Frontier saw its revenue shrink to $2.52 billion, down $84 million from $2.61 billion in the second quarter. Seeking to cope by cutting expenses, it raised its annualized cost synergy target for the Verizon deal from $1.25 billion to $1.4 billion.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

danielcawrey 11/5/2016 | 3:24:14 PM
Re: Poor service Yeah, I agree with the taste of a bad experience. This is why people are moving to more attractive options such as Verizon. Comcast has been really pushing business services for many years as well, which is not good for Frontier. 
msilbey 11/4/2016 | 2:26:06 PM
Poor service The problem for Frontier is that the people who have had a bad experience in the transition from Verizon are going to remember that for a long time. An event like that is massively destructive to a brand.
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