Cincinnati Bell's Torbeck: We'll spend $80M-85M on FTTH this year
Cincinnati Bell's CEO Ted Torbeck told investors that the telco will continue to focus on transforming itself into a fiber-based broadband company, with plans to spend between $80 million to $85 million on rolling out fiber to the home (FTTH) throughout Cincinnati.
Speaking at the Stephens Spring Investment Conference, Torbeck said the telco will focus 75 percent of its attention on fiber to the home (FTTH) and the remaining 25 percent will be on traditional copper.
"Now that we have some history behind us, we have very clear indications that a lot of the metrics change with fiber to the home to churn, ARPU and penetration," Torbeck said. "We are changing the model a little and move more towards fiber to the home."
Today, Cincinnati Bell reaches its broadband consumers via three methods: 60 percent are served with FTTH while 40 percent are served over a hybrid fiber to the node (FTTN) architecture and copper to the home.
Torbeck said that it seeing the fruits of its labor pay off with FTTH subscriber penetration continuing to rise.
During the first quarter, the telco reported that it added 5,900 new Fioptics high-speed Internet and 3,300 Fioptics video subscribers, to end with a total of 91,600 and 77,500 subscribers, respectively.
"So far we have been very successful and we're showing first pass penetration somewhere around the high teens to 20 percent," Torbeck said. "On average we're about 30 percent penetration so we're very pleased with Fioptics and the penetration we're getting there."
From a total fiber connection perspective, the telco has lit about 4,000 buildings in Cincinnati. About 520 of those buildings are multi-dwelling units, which enables it to sell fiber-based services to a mix of business and residential customers.
Having reached over 36 percent of the city covered with fiber, Torbeck said the company has "tremendous room for growth."
"What we're contemplating now is should we accelerate that growth," Torbeck said. "Not to spend more over a period of time, but look at what we can accelerate in the immediate future to build out quicker."
Finding more smart ways to spend its capital to ramp up its FTTH rollout couldn't come at a better time. In particular, it will enable the company to more effectively deal with the looming threat of Charter Communications (NASDAQ: CHTR), which will enter the Cincinnati market by purchasing assets from Comcast (NASDAQ: CMCSA) after it completes its acquisition of Time Warner Cable (NYSE: TWC).
"Our competition in Cincinnati will be Charter," Torbeck said. "We're taking the approach that they will be a tougher competitor than Time Warner Cable was so we're looking at what we can do faster for when they do come."
One element that could give Cincinnati Bell a differentiator over Charter is its new 1 Gbps FTTH service. Like its larger ILEC counterparts AT&T (NYSE: T) and CenturyLink (NYSE: CTL), Cincinnati Bell will begin offering the higher speed service to customers later this month.
One of the first customers of the 1 Gbps service will be consumer marketing and branding accelerator The Brandery. In April, Cincinnati Bell announced that it would start offering the service to the company beginning in late June just as The Brandery's fifth class of startups begins work.
"We're teaming with two companies in Cincinnati--The Brandery and Cintrifuse--which are two companies that support startup companies and are excited to get Gigabit service," Torbeck said.
Torbeck added that the company has "piloted Gigabit service in residential and we expect to have full implementation later this fall for Gigabit to the residential customers."
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