Windstream is moving forward with its broadband expansion efforts, bringing 25 Mbps and higher speed services via its Project Excel initiative.
Tony Thomas, CEO of Windstream told investors during its fourth-quarter earnings call that the service provider penetration of higher speeds ramped with plans to extend it even further by the end of the year.
“We increased our penetration of broadband speeds of 25 Mbps and greater by another 300 basis points sequentially to 24%,” Thomas said. “In 2017, we more than doubled the penetration of those higher-speed tiers.”
Thomas added that “by the end of 2018, we expect the penetration of those higher-speed tiers of 25 Mbps or greater to be 36%.”
In its more rural areas, Windstream connected an additional 74,000 customers with 10/1 Mbps and higher speeds by leveraging funds from the FCC’s CAF-II program.
Thomas said that reaching this amount of rural customers, “keeps us on or ahead of schedule for all of the programs deadlines and goals.”
But even with its broadband network expansion efforts, Windstream still shed over 10,800 broadband subscribers during the quarter, ending the period with a little over 1 million subscribers.
Improving installation, activation timelines
As it looks to going to expand higher-speed broadband into more parts of its territory, Windstream plans to use various techniques that will improve network installation timelines and service activation.
In 2017, Windstream set a goal to use new planning and deployment technologies that it said will accelerate the rollout of 100 Mbps and higher speeds via its VDSL2 network infrastructure.
Following a pilot of these techniques in the fourth quarter, Thomas said Windstream will accelerate the use of these new methods.
“We set a goal to deploy 100 Mbps VDSL2 services in 30 days,” Thomas said. “We have now through a combination of planning and software defined networking solutions are achieving these goals.”
Besides developing new deployment methods, the service provider is working to reduce network rollout costs.
“The other goal we had was to reduce the cost of broadband deployment in half and we’ll also achieve that goal,” Thomas said. “We’ll accelerate our ability to have faster speeds while minimizing the capital to bring faster speeds to more customers.”
Segment declines ramped
Despite the efforts to ramp up next-gen services like VDSL2-based band and SD-WAN, Windstream saw declines across its consumer, wholesale and business services segments.
Like earlier quarters, the service provider continues to see challenges with ongoing declines in its legacy service businesses while next-gen services like SD-WAN and broadband continue to rise.
Here’s a breakdown of Windstream’s key metrics:
ILEC Consumer and Small Business: Segment revenues were $476 million in the fourth quarter, down 4% year-over-year. Contribution margin was $282 million or 59% in the fourth quarter and $1.13 billion or 57% for the year.
Enterprise: Revenues were $760 million in the fourth quarter, a decrease of less than 1% year-over-year. Contribution margin for the Enterprise segment was $164 million or 21% in the fourth quarter and $593 million or 20% for the year.
Wholesale: As it continues to see legacy declines from customers migrating from TDM to packet services, Windstream’s wholesale revenues declined 8% year-over-year to $190 million. Contribution margin was $135 million or 71% in the fourth quarter and $540 million or 69% for the year.
CLEC Consumer: Service revenues, which primarily consist of EarthLink’s consumer Internet business, were $51 million in the fourth quarter, down 5% year-over-year, and $206 million for the year.
Financials: For the fourth quarter, total revenues and sales were $1.5 billion and total service revenues were $1.48 billion compared to $1.31 billion and $1.29 billion respectively year-over-year. During the quarter, the company recorded a $1.8 billion non-cash goodwill impairment charge related to its ILEC Consumer & Small Business and Wholesale segments, resulting in an operating loss of $1.8 billion compared to operating income of $74 million in the same period a year ago.