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CenturyLink's Ewing: We expect to pass 300,000 additional homes with Prism TV

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CenturyLink (NYSE: CTL) continues to be bullish about its Prism TV product and has set a goal of extending the service to more homes this year, particularly in the markets it entered through its acquisition of Qwest.  

Speaking to investors during the 42nd Annual J.P. Morgan Global Technology, Media and Telecom Conference, Stewart Ewing, CFO and EVP of CenturyLink, said the company expects "to add about 300,000 homes this year that are qualified to receive the Prism service."

Ewing added that "our approach is that we're going to see how we do for the next quarter or two in the Qwest markets and assuming we have good penetration we'll look at rolling out the service out in other markets."

Today, CenturyLink passes about 2 million homes with the Prism IPTV service. About 800,000 customers were activated in 2013 mainly in four markets: Phoenix, Colorado Springs, Omaha and Denver suburb Highlands Ranch.

The rollout of the Prism service in the Qwest markets has been varied.

While the Phoenix market rollout has gone a bit slower, Ewing said that it completed three of the five phases of its IPTV network build in that city as of the end of 2013. It expects to complete the remaining two segments of the Phoenix market buildout sometime later this year.

Interestingly, subscriber uptake for Prism TV has been positive, particularly in Omaha, where it has built out its 1 Gbps-capable fiber to the home (FTTH) network.

"The market acceptance is pretty good, especially in the Omaha area where we built fiber to the home and offer a Gigabit service, we have had good acceptance for our Internet product and our Prism TV," Ewing said. "Even outside the 45,000 homes where we have gone fiber to the home, there seems to somewhat of a halo effect when you can provide a really high speed service in a part of community, the other parts of the community that you don't have fiber built to seem to latch onto that and create more interest in our product."    

Evidence of CenturyLink's IPTV success was seen in the first quarter when it added about 24,000 Prism TV customers, increasing penetration of the more than 2 million addressable homes to nearly 10 percent.

The telco added nearly 66,000 high-speed Internet customers, ending the period with more than 6 million customers in service.

Prism has also been driving more subscribers to purchase CenturyLink's broadband products. It gets about a 95 percent-plus attachment rate of its broadband service to the Prism TV offering.

"The way we view Prism is more of a service we can provide when we have at least 20 to 25 megs available," Ewing said. "It's a service that we can provide to our customers over the high speed connection so it's just another application."

One of the lingering questions that CenturyLink now faces is what effect will AT&T's pending acquisition of DirecTV have on its own IPTV expansion plans? The telco resells DirecTV service to customers in areas where it currently has not built out the Prism service.

Echoing similar sentiments made by DirecTV (NASDAQ: DTV) during the conference call announcing its pact with AT&T (NYSE: T), CenturyLink does not anticipate any change in its current relationship.

"I don't see any reason why we can't continue to work together in a relationship comparable to what we had in the past," he said. "We're a natural complement to their service where we don't have a video product that's transported over our network." 

Ewing added that the pending deal also won't change its current Prism rollout plans. "I don't think it pushes us any faster because the areas that we would build our Prism TV product are really going to be the densely populated urban areas where the cost to get to higher bandwidth service is less expensive on a home passed basis," Ewing said.

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