Consolidated Communications touted another quarter of record fiber net additions, as it aims to coat approximately half of its footprint with fiber by year-end.
The operator posted 18,651 fiber net additions in Q2, an increase from 9,643 in the year-ago quarter. Fiber gains helped offset Consolidated’s DSL and copper customer losses, resulting in nearly 7,000 overall consumer broadband net adds.
CEO Bob Udell said Consolidated continues to see “favorable trends” with Fidium Fiber. In July alone, it gained nearly 7,300 fiber subscribers.
“This positions us to again exceed our record fiber net adds results in the third quarter,” he said on an earnings call.
As for its fiber build progress, Consolidated passed over 57,000 locations in Q2, reaching nearly 1.12 million total passings (43% of its overall footprint). It remains on track to upgrade 225,000 locations to fiber by the end of 2023.
Consolidated has been focusing on expanding fiber across New England, such as in Maine, New Hampshire and Vermont. Last year, it opened up Fidium service in five new states: California, Illinois, Minnesota, Pennsylvania and Texas.
The operator in Q2 entered an agreement to sell its assets in Washington state to Palisade Infrastructure for $73 million – a transaction that’s expected to close in the second half of 2024. Udell said the sale agreement resulted from “the ongoing review of our market portfolio and support[s] our commitment to focus fiber expansion in our core markets.”
CFO Fred Graffam added Consolidated’s Washington assets include networks in the Ellensburg and Yelm markets. Those networks had revenue of approximately $21 million in 2022. Consolidated intends to use the proceeds of the transaction to “bolster our liquidity and fund additional fiber expansion.”
Regarding the buyout offer Consolidated received earlier this year from Searchlight Capital Partners and British Columbia Investment Management Corporation (BCI), Udell said discussions are ongoing between the firms and a special committee of independent directors, “with no guarantee as to the outcome of such discussions.”
As for the industry-wide issue of lead-sheathed cables, which the Wall Street Journal uncovered last month, Udell commented “less than 1%” of Consolidated’s 100,000 mile copper network contains lead-covered cables and the company hasn’t sold lead-sheathed cables “for more than 50 years.”
“We operate in rural and smaller communities where infrastructure deployments historically happened at later dates,” he said.
Financials
Total company revenue fell 7.8% year on year to $275.2 million, however consumer fiber revenue jumped 54% to $29.6 million. Consumer broadband revenue increased 5.5% to $71.3 million, but revenues in commercial data services and carrier data transport declined 6.8% and 13.9%, respectively.
The company reported a net loss of $119 million, which included an impairment loss of $77.8 million in relation to the Washington assets sale.