This Huge Dividend Is Safe

When Frontier acquired a bushel of rural phone networks from Verizon (NYSE: VZ) , regulators put some stipulations on the deal. The biggest one was a requirement to give broadband access to 85% of households in Verizon's old territories by 2013. Verizon had extended DSL or fiber-optic FiOS services to only 65% of those households as the contract was signed, leaving a lot of heavy lifting to be done by Frontier. Frontier's capital expenses have indeed skyrocketed. A year ago, the company spent $70 million on network upgrades and maintenance in the first quarter. In the first-quarter report for 2011 that was just released, that figure jumped to $209 million -- a nearly threefold increase. Those required network builds are costly.... Read more