The top 12 wireline providers in Q1 2016: Sizing up AT&T, Lumos Networks, and more

dark fiber

With the first quarter 2016 earnings season now complete, FierceTelecom is taking a look at the results of the top U.S. ILECs.

If there were two themes to describe the first quarter of 2016 for the top 12 wireline service providers it would be transition and transformation. With the earnings season now complete, FierceTelecom is taking a look at the results of the top 12 U.S. incumbents and how they are taking charge of changing times. These themes are predicated on a few factors related to the service providers' technology strategies and realigning their asset portfolios.

At the top of the heap is AT&T (NYSE: T). The service provider continued to expand its FTTH and FTTB footprints into new markets while realigning its video service focus on its new DirecTV satellite business. A key initiative that AT&T continues to drive from a technology perspective is transforming more of its network functions onto software. John Donovan, chief strategy officer and group president for AT&T Technology and Operations, said the telco is on track to reach 30 percent of its goal to put more functions onto software by the end of 2016.

Fellow Tier 1 telco Verizon (NYSE: VZ) made two key business moves during the first quarter. By selling its wireline assets in California, Florida and Texas to Frontier, Verizon limited its wireline network footprint to the Northeast. Also of note is Verizon's proposed acquisition to XO's fiber network for $1.8 billion. This deal is transformational for Verizon in that it will give the ILEC an arsenal of lit and dark fiber facilities to achieve two goals: expand Ethernet services for businesses, and add a new backhaul asset for its burgeoning small cell wireless network.

But not everything is hunky dory at Verizon. Since the middle of April, the telco has been weathering a strike by its 36,000-person wireline workforce represented by the Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW). The two sides have yet to come to an agreement on various issues related to health care, pension and outsourcing work.

Over at CenturyLink (NYSE: CTL), the key concern amongst financial analysts is twofold: what decision it will make with its data center business and the challenges of closing the legacy and next-generation revenue gap. During the first quarter, CenturyLink reported that business segment revenues were $2.6 billion, down 3.4 percent from the first quarter of 2015, primarily due to declines in legacy services, low-bandwidth data services and data integration revenue, for example.

"The 'good' part of CTL's revenue (Strategic Services) is growing at a slower rate than its legacy revenue declines. In addition, the declining revenue is higher margin than the growth revenue," said Jennifer Fritzsche, senior analyst for Wells Fargo, in a research note.

For Frontier Communications, the Verizon asset acquisition immediately doubled the telco's footprint. Frontier gained 3.7 million voice connections; about 2.2 million broadband customers, including about 1.6 million FiOS Internet customers; and approximately 1.2 million FiOS Video customers. However, since formally cutting over customers onto its own systems in April, customers in all three states have complained of service outages and network issues.

Frontier's customer issues in California and Florida have prompted lawmakers to call the telco to task. California's Utilities and Commerce Committee have scheduled a hearing for May 18 to address service issues. Likewise, Florida's Attorney General Pam Bondi has asked the telco in a letter to remedy network problems and issue refunds to affected customers.

No less compelling are the transitions taking place at Windstream and Lumos.

Windstream has been making progress on a few fronts: enhancing its last mile consumer network, building fiber to more business buildings, and opening more long haul routes for its wholesale business. The service provider rolled out GPON-based broadband in four markets and IPTV service in three markets as well as expanded the availability of 75 and 100 Mbps copper-based services over VDSL to more customers in its region.

Lumos reiterated its desire to separate its fiber and rural ILEC businesses into separate units for a potential sale or spinoff. The service provider completed the first phase of Project Clarity, which is the separation of its RLEC customers from its fiber-based customers.

In this report, we break down the numbers in our quarterly chart, which summarizes how the top 12 ILECs performed in terms of revenue, access line losses, and subscriber additions.

Also, take a few minutes to review our earnings summary for the wireline industry in the first quarter of 2016. It's an opportunity to review results of the most influential wireline service providers and vendors in this segment, with links to our complete coverage of each company. And, when the Q2 season begins, tune in again for coverage of all of the earnings action here at FierceTelecom.

Take a look at the metrics below to see which of the top 12 ILEC service providers slipped and which managed to rise.

Carrier

Total revenue

Broadband adds/drops

Total wireline broadband subs

Video adds/drops

AT&T

$40.5B 186K* 14.3M 328K*

Verizon

$32.2B 98K FiOS** 9.2M 36K

CenturyLink

$4.4B 7.8K 6.1M 16.9K

Frontier

$1.35B 24.6K 2.29M lost 10.3K

Windstream

$1.37B lost 3K 1.09M lost 27.9K

Consolidated Communications

$188.8M 3.5K 460K lost 3.4K

FairPoint Communications

$206.8M 193 311K n/a

Cincinnati Bell

$289M 11K*** 292.4K 5.6K

TDS Telecom

$1.24B lost 300 229.1K 12.7K

Hawaiian Telecom

$98.8M lost 182 92.8K 7.4K

Shentel

$21.3M 100 13.6K 760*****

Lumos Networks

$50.8M 200 FTTP 7,849 lost 64
* IP-based U-verse subs
** lost DSL subs
** Ethernet revenue
*** Fioptics subs (lost DSL)
**** includes wireless backhaul revenue
***** cable subs

 

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The top 12 wireline providers in Q1 2016: Sizing up AT&T, Lumos Networks, and more