Cincinnati Bell's Fox: We're growing strategic business revenues organically
Cincinnati Bell (NYSE: CBB) may be putting a greater emphasis on growing strategic business services such as Ethernet, but the telco can achieve its goals without making multimillion-dollar purchases, its chief financial officer told investors.
Speaking at the Bank of America Merrill Lynch Leveraged Finance Conference, Leigh Fox, CFO of Cincinnati Bell, said that business and consumer services make up 70 percent and 30 percent of its revenues, respectively.
"If I look at our competition and as people try to solve the legacy vs. strategic revenue issue and solve for the decline in the access line business, a lot of people are shifting to business, and you're looking at this shift in migration of total revenue share and this 70/30 seems to be the target range," Fox said. "A lot of our peers are getting there through acquisitions and we've have gotten there organically."
Outside of Cincinnati, the telco has been also serving a growing number of multinational enterprises on a national and even on an international basis, particularly in Europe and Asia.
"We're seeing good organic growth on the enterprise side," Fox said.
The effort to grow strategic revenue continues to pay off for Cincinnati Bell. During the third quarter, strategic business revenues were $38 million, up 11 percent year over year.
In addition to serving large enterprise customers, Fox said that its build out of its Fioptics fiber to the home (FTTH) network service for consumers could also have utility for small to medium businesses (SMBs).
"If you look at the needs of the small business for years it's really high speed and voice and I think we have had a declining relevant product," Fox said. "The relevancy of our DSL product has been declining over time so I think on the small business side we have 50 percent market share and there's upside there as we roll out Fioptics and focus on VoIP and higher speeds to the business."
While it did not break out how many businesses today are served by its last mile fiber-based broadband service, Fioptics was the clear star in its Q3 2013 revenue mix, rising 48 percent to $26 million.
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