The telecom industry is well known for its lucrative dividends, and rural telecom specialist Frontier Communications (NASDAQ: FTR) has one of the best dividend yields in the stock market. Frontier's share price, though, has been in the doldrums lately, as investors worry that the company won't be able to sustain long-term gains in revenue and profits despite its efforts to grow its business. With new CEO Dan McCarthy at the helm, Frontier's executives have some solid ideas for the company's future vision. Let's take a look at five things Frontier's leadership want their investors to know about its strategic plan and what to expect in the months and years ahead.

"Retaining customers will be at the top of my list of priorities. The first step in growing our business is to retain our existing customers, and we will move to a more balanced approach to acquisition and retention."
-- CEO Dan McCarthy

McCarthy took the opportunity to discuss his strategic vision for Frontier. In addition to keeping its customer base, Frontier needs to grow broadband share, build up commercial sales, and start working to grow its video business. Yet all of that starts with retaining customers, and particularly after spending so much to acquire customers from other companies, Frontier needs to protect its investment and squeeze as much profit as possible from clients while demonstrating its superiority over their previous service providers.

"Roughly three-quarters of our base of residential broadband customers remain at the basic speed tier, so we still have substantial runway to migrate the majority of our customers to higher-speed tiers and drive higher revenue."
-- McCarthy

Broadband Internet service is the easiest way for Frontier to get more money from rural subscribers, especially given the dead-end prospects for landline voice service and other antiquated offerings. Once people get broadband service, the next step is demonstrating the value proposition of faster Internet access. From there, once customers perceive the value of broadband access, it becomes easier to market bundles that promote other services and get a larger share of each customer's telecom budget. With so many of Frontier's customers at the beginning of that process, the company has the chance to boost its sales and profits substantially if it can convert its customer base toward faster speeds.

"We allowed a significant percentage of Connecticut bundle customers who were no longer under contract to migrate to our current promotion."
-- McCarthy

Frontier has made several acquisitions over the years, and each time, it has been important to make sure that it didn't lose customers in the process. Obviously, the last thing that Frontier wants to do is to have customers paying more right off the bat for the same service they got before.

Usually, telecom providers reserve their best deals for brand-new customers, but Frontier wisely chose to treat newly acquired customers in Connecticut as well as those who hadn't previously been affiliated with the company. Even though that costs money in the short-term, it builds positive goodwill that could pay off with longer relationships extending well into the future and producing much greater profits.

"We see the Verizon acquisition as a transformative opportunity that will meaningfully enhance Frontier's long-term competitive position, diversify our business, and significantly increase shareholder value."
-- McCarthy

Frontier has done deals with Verizon before, but the latest move involves huge markets in Florida, Texas, and California. In addition to traditional landline service, Verizon's assets there also include digital television and even the company's trademark FiOS fiber-based Internet service.

That produces both additional opportunity and additional risk for Frontier. On one hand, customers are more likely to pay up for premium services in these markets than in out-of-the-way portions of the country. On the other hand, though, customers are savvier and have more competitive options. Frontier will have to adapt its strategy in order to retain its newly acquired customer base, but once it does, Frontier could end up enjoying much better results than it has seen in other locations.

"Frontier's operating results, the Connecticut transaction, our prudent capital investments, and our expense management all provide a strong cash flow base and a solid financial platform for supporting and investing in the business. We have ample capital to invest in and enhance our competitive infrastructure, service our debt, and comfortably sustain our dividend."
-- CFO John Jureller

After two dividend cuts that sent its quarterly payout down 60%, the last thing investors want is another Frontier dividend reduction. Concerns about the costs of acquisitions had many worried about the potential need for further cuts in the future, but Jureller's comments make it clear that Frontier intends to find other ways to get the money for the latest Verizon deal without endangering the dividend. As long as the company's business strategy works out, it should have the cash it needs to keep rewarding dividend investors with solid payouts.

Frontier Communications has made investors nervous about its future, since increasing its size may increase its risk. At least as Frontier's executives see it, though, the telecom company has the ability to take advantage of new business opportunities and boost its overall growth in a way that should support dividends and share-price gains over the long haul.

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Dan Caplinger has no position in any stocks mentioned.

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