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A communications company providing services to rural areas and small and medium-sized towns and cities as an incumbent local exchange carrier. The Company offers its ILEC services under the 'Frontier' name.
Selloff is way overdone, Maggie Wilderotter has reassured shareholders that the dividend is well intact, making it one of the highest yielding stocks on the S&P. People are pricing in a dividend cut that won't happen, patient shareholders will be paid to wait for synergies of landlines acquired from VZ to be soon realized. It'll beat the S&P going forward, barring a recession, which I don't expect to happen.
I also think people are concerned that there is not much room for the company to grow, but who cares when it's paying such a big dividend?Two questions for you. Are you concerned at all about the high payout ratio? Do you know anything about any plans to pay down their debt?
I'm not that concerned with the payout ratio. People tend to look at the EPS payout ratio without looking at the FCF payout ratio, which is about 80%. I doubt there's much room to grow, but I think it's sustainable at least for the near future. I don't know much about the debt specifically, but I think the acquisition itself was a good move and well worth taking on that debt, and people who wait around in the stock will be rewarded when the infrastructure is fully integrated.
I'm a Frontier customer. I can't wait until another carrier is available in my area so I can drop these fools. Their service is mediocre at best. My DSL speed is 1.5 megabit and I'm paying $50/mo. Does that sound reasonable? When I lived in Metro St. Louis I paid $25/mo for a 5 megabit connection. Their customer service is horrible. They stood me up on my installation 3 times before I finally demanded they come on a weekend because I refused to waste another vacation day waiting on their pathetic excuse for technicians. Then after my install was done, I lost my connection every time it rained. After their minimum wage untrained staff made five visits to my house unable to find out why, I re-wired my own phone box (which I figured out with no training) and if fixed the issue. My story is pretty much identical to their other customers. Their revenue slowly leaks downward because everyone on their service switches as soon as another option is available. I wouldn't buy this stock if someone paid me to buy it.
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