Cincinnati Bell passes additional 22K addresses with fiber-based Fioptics service

Cincinnati Bell's strategy to become a fiber-based broadband company continued to bear fruit in the first quarter as the service provider passed an additional 22,600 addresses with its Fioptics fiber-to-the-premises (FTTP) service.

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"Consumer strategic revenue increased 34 percent compared to the prior year, demonstrating the continued demand for faster data speeds and further supports our decision to accelerate the expansion of our Fioptics network," said Ted Torbeck, CEO and president of Cincinnati Bell, during the earnings call.

Fioptics is now available to 357,600 addresses, or approximately 44 percent of Greater Cincinnati.

The fiber-based broadband service was again a key element in Cincinnati Bell's revenue mix in the first quarter, rising 36 percent year-over-year to $42 million.

Torbeck noted that penetration rates "remained consistent even as we aggressively expanded our Fioptics coverage."

During the quarter, the telco added 9,400 new Fioptics broadband subscribers, ending the period with a total of 123,100 Fioptcs Internet subscribers. At the end of the first quarter, Cincinnati Bell had a total of 272,700 Internet subscribers, a figure that includes both Fioptics and legacy DSL customers.

"Our total Internet subscriber count, which includes legacy DSL customers, increased sequentially even as our competitor recorded the highest subscriber net additions since 2007," Torbeck said. "Regardless of the competition, we think fiber is a superior asset with long-term relevancy and our goal is to get Fioptics into the hands as of many customers as soon as possible."

Cincinnati Bell also saw a similar uptick in its Fioptics video line. As of the end of the quarter, it  had a total of 95,800 video subscribers, up 18,300 from the same period a year ago.

As expected, Cincinnati Bell saw inevitable declines in its traditional legacy voice revenues, which dropped to $47.4 million, down from $53.1 million in the first quarter of 2014. At the same time, long distance and VoIP revenues were $27.2 million, up year-over-year from $26.9 million.

On the consumer voice side, the telco attributes the loss in traditional landline voice subscribers to two factors: shutting down their wireless network and Time Warner Cable's offer of a $300 credit for new customers.

Likewise, business voice churn rose 7 percent in the first quarter, but Torbeck said that was attributable to "customers transferring to VoIP."

The migration from TDM-based voice to VoIP and cloud services creates new opportunities for Cincinnati Bell to pursue in the small to medium business (SMB) space.

"One of the moves we made is on the commercial SMB marketplace," Torbeck said. "With the migration of companies from TDM to VoIP, we lose 30-40 points of margin, but this gives us a product line and bundle that we can fill that hole with so we think there's a big opportunity in that marketplace."

Torbeck added that IP services "are applicable in other markets like Columbus, Louisville and Indianapolis."   

On the business services side, strategic business revenue was $43 million (including $2 million of Fioptics revenue) for the quarter, up 10 percent compared to the prior year.

For the year 2015, Cincinnati Bell has forecast revenue of $1.1 billion and adjusted EBITDA of $297 million.

The company's consolidated revenue for the first quarter was $293 million, up $11 million from 2014, while net income was $49 million, including income from discontinued operations.

Shares of Cincinnati Bell closed at $3.39, up 5 cents or 1.50 percent, in Thursday trading on the New York Stock Exchange. 

For more:
- see the earnings release

Special Report: Wireline telecom earnings in the first quarter of 2015

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