Frontier thinks its brand might be repairable after 33-point NPS swing

Frontier Communications executives have been weighing a rebranding move to boost the company’s turnaround effort, but a rapid change in consumer perception that occurred in 2021 suggests that might not be necessary after all.

During the operator’s Q4 2021 earnings call, CEO Nick Jeffery highlighted a drastic swing in the Frontier’s fiber net promoter score (NPS) last year, noting it turned positive “for the first time ever” in November. Net promoter scores measure a customer’s loyalty to a brand on a scale of -100 to +100 and are key indicators of likely churn.

Jeffery noted Frontier started the year with a fiber NPS of -24 in January but steadily improved that to reach +9 in December. The shift was reflected in the company’s consumer broadband churn metrics, which dropped 24 points year-on-year to 1.32% for fiber and 27 points to 1.69% for copper customers.

The CEO said it was able to drive the uplift by homing in key points of customer dissatisfaction to make targeted changes. He added the company expects further improvement going forward as it continues to alleviate pain points and gains new fiber subscribers.

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“I’m encouraged by the fact that the NPS of our newer customers is also higher on average than the NPS of our base or legacy market customers, which is also improving,” Jeffery said. “The fact that we’re building at a very aggressive rate means that we’ve probably got some NPS upside into to see into the future as well as we have more new customers relative to our base customers.”

While Frontier executives have discussed a potential rebranding effort in the past, Jeffery said the NPS swing “would suggest from the early results that the brand is repairable and indeed is repairing quite rapidly.” That said, it is experimenting with new brand “tonality” with a new color palette and font to make it appear more modern and relevant. “We’ll be monitoring that very closely” as it works to come to a decision in the coming quarters on what to do with its brand.

Analyst Jonathan Chaplin of New Street Research argued the NPS improvement “deserves more airtime,” noting “NPS is hard to move; it requires a maniacal focus on price, product and the customer experience. A move of this magnitude is impressive and that it was accomplished in a year is more impressive.”

He added the shift offers Frontier an advantage going forward given the link between NPS and churn. While churn levels are currently at record lows across the industry, that could change and “Frontier’s low churn relative to others will leave them well positioned to take share.”

By the numbers

The operator preannounced its subscriber metrics in January, highlighting 45,000 fiber net additions and 9,000 overall broadband net additions in Q4 2021. All told it gained 99,000 fiber broadband customers in 2021.

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Frontier previously laid out its plans for a massive fiber expansion, aiming to add 600,000 new locations in 2021 and 1 million in 2022 on its way to growing its footprint to a total of 10 million locations by the end of 2025. The operator said it added 638,000 new fiber passings last year, increasing its footprint to a total of 4 million by the end of 2021. Executives reiterated its plan to add 1 million new passings in 2022, though Executive Chairman John Stratton said “if we can go faster, we will.”

Consolidated revenue of $1.5 billion in Q4 was down year on year from nearly $1.7 billion, though net income improved from a loss of $50 million to a gain of $189 million. Full year revenue came in at $6.41 billion with net income of $4.96 billion.

Frontier CFO Scott Beasley said a previously announced cost reduction plan is progressing well ahead of schedule. The company was originally aiming to achieve gross run-rate savings of $25 million in 2021 and $100 million in 2022, but was able to achieve $90 million in savings last year alone.

The operator isn’t yet updating guidance for its cost-cutting initiative, but Beasley said it is “likely to exceed” it’s overall target of $250 million in savings by end-2023.