FRONTIER COMMUNICATIONS CORP. $4.25 - Nasdaq symbol FTR

FRONTIER COMMUNICATIONS CORP. $4.25 (Nasdaq symbol FTR; Income Portfolio, Utilities sector; Shares outstanding: 997.8 million; Market cap: $4.2 billion; Price-to-sales ratio: 0.9; Dividend yield: 9.4%; TSINetwork Rating: Average; www.frontier.com) sells phone, Internet and video services to 3.1 million customers in 27 states.

The company continues to attract high-speed Internet users, but demand for traditional phone services is falling. That cut its overall revenue by 4.9% in the quarter ended March 31, 2013, to $1.2 billion from $1.3 billion a year earlier. Earnings fell 7.0% to $48.8 million from $52.5 million. Due to more shares outstanding, earnings per share were unchanged at $0.05.

Frontier continues to do a good job of integrating local phone systems it purchased from Verizon in 2010. It feels this will save it $100 million in 2013. That should help it pay down its debt of $8.4 billion, which is a high 2.0 times its market cap.

To conserve cash, the company has cut its dividend twice since 2010. The current annual rate of $0.40 yields 9.4%. The stock trades at 19.3 times Frontier’s forecast 2013 earnings of $0.22 a share.

Frontier Communications is a hold.

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