With the third quarter 2012 earnings season now complete, FierceTelecom is taking a look at the results of the top 10 ILECs.
All of their earnings and related results are in the accompanying chart.
As we do every quarter, we looked at three dominant themes:
Landline losses: Landline loss, as expected, is having a continual effect on the overall financial outlook of the major telcos. However, there weren't a lot of major surprises with the ongoing landline losses at the three largest telcos--AT&T (NYSE: T), Verizon and CenturyLink (NYSE: CTL)--continued to see expected declines. AT&T and Verizon reported that access lines declined 7.9 and 6.8 percent, ending the quarter with 31.9 and 22.8 million total lines, respectively. CenturyLink, however, reported that it reduced landline loss by 22 percent over Q3 2011.
Video and Broadband: One of the interesting trends seen in Q3 and previous quarters is that video services have become the tie that binds the residential customer from churning to cable. AT&T reported that it added almost 200,000 new U-verse TV subscribers and 613,000 new broadband Internet subscribers, while Verizon reported that FiOS produced about 66 percent of the telco's consumer wireline revenues. One of the trends it is seeing from its U-verse roll out is that broadband data Average Revenue Per User (ARPU) rose almost 10 percent year over year with the majority of U-verse subscribers signing up for a 12 Mbps or higher speed package.
Click here to compare Q3 ILEC results.
Likewise, CenturyLink reported that over 90 percent of its IPTV customers bundled TV service with broadband. But the IPTV bundling mentality wasn't just the case for the big three telcos alone as smaller independent telcos like Hawaiian Telcom (Nasdaq: HCOM) also saw continual gains in broadband and video during the quarter. During the quarter, Hawaiian Telcom also saw the growing effect of bundling broadband and TV services as HSI subscribers increased 3.8 percent year-over-year to 105,800 subscribers.
Business and wholesale: In the business and wholesale arenas, the ongoing theme is the migration from copper-based TDM to IP services. However, the other element that made the Q3 interesting for the largest telcos was the ongoing weakness in various international markets, particularly in Europe, and slower government agency spending.
AT&T and Verizon again reported that business revenue declined 2.6 percent and 3.6 percent year-over-year and sequentially in the quarter, respectively, as they both saw declines in legacy products (i.e., Frame Relay and ATM) being offset by continued growth in strategic business services such as conferencing, Ethernet and IP/VPN. Driven by strong MPLS and Ethernet sales, CenturyLink reported that Enterprise Markets strategic revenues increased 7.2 percent to $341 million over Q3 2011. Like the video service trend, other independent telcos, particularly Windstream (Nasdaq: WIN) and FairPoint (Nasdaq: FRP) are also finding utility in high-bandwidth retail data and wholesale Fiber to the Tower (FTTT) services. Windstream reported that business revenues rose 3 percent year-over-year to $906 million. Similarly, FairPoint reported that Ethernet services contributed about $10.7 million of revenue in Q3 2012, up from $10.2 million in Q2 2012 and $4.2 million in Q3 2011.
Access all of our earnings coverage for Q3 2012 here. And, as the Q4 season begins, tune in again for coverage of all of the action here at FierceTelecom.
Check out our Q3 chart here.