Frontier continues to experience growing pains in its business and wholesale services division. The gains it continues to make are being offset by a declining copper and TDM-based voice base, a trend that continued into the first quarter.
The telco reported that its first-quarter Business and Wholesale revenue of $659 million was stable year-over-year as growth in fiber was offset by declines in copper.
Business and Wholesale fiber revenue of $300 million rose 6.8% year-over-year as growth in data was partly offset by declines in voice.
Another key highlight was business broadband. The company reported that 3,000 net additions to Business and Wholesale fiber broadband customers resulted in growth of 11.9% year over year.
“Business in wholesale was roughly flat, leading to overall revenue growth of 2%,” said Nick Jeffery, Frontier's CEO, during the first quarter earnings call. We expect the trends of accelerating consumer revenue growth in roughly stable business and wholesale revenue to continue for the rest of the year.”
Accelerating business
Frontier expects to see gains not only in consumers but also in growth in business services.
“We expect revenue to be up sequentially, and the same trend should continue with consumers having strong business acceleration and wholesale roughly flat,” he said.
He added that for “the full year, we expect to grow revenue, and that would be the major inflection point for full-year revenue growth in 2024 versus 2023.”
Heading for stability
As Frontier moves forward with its plans for the Business + Wholesale group, the service provider recently suffered a setback when a third party gained unauthorized access to portions of its IT environment.
Because the containment measures included shutting down certain of its systems, it said it resulted in an operational disruption that could be considered material.
"While we do not believe the incident is reasonably likely to impact our financial condition or results of operations materially, we continue to investigate the incident, have engaged cybersecurity experts, and have notified law enforcement authorities," said Frontier said in its recent 10-Q filing.
However, Frontier would not reveal any specific details about the attack it had not already addressed in its quarterly report. “We’ll stick to what we’ve said in the 8-K, where we don’t expect it to have a material financial impact,” Beasley said. But beyond that, we aren’t discussing any specifics around customers or systems.”
Frontier noted that Business + Wholesale results can often be affected by customer purchasing cycles.
“Regarding wholesale business, you know we’ve said that is the lumpy business where you get some orders, some big installations that may hit one quarter, not another quarter,” Beasley said. We’re encouraged by the underlying strength of the wholesale business. The fiber portion of that grew healthily. That’s going to be the driver there.”
He added that the focus for Frontier on the Business + Wholesale side will be to mitigate legacy product churn.
“We’re staying focused on that,” Beasley said. So, again, the wholesale business is expected to be stable throughout the year, plus or minus 2%, and this was an excellent start to the year.”
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