Cincinnati Bell has passed close to 78,000 new homes and businesses to reach 64 percent coverage of greater Cincinnati with its Fiber optics service, but the telco maintains it could surpass its FTTH network mark by the end of the year.
RELATED: Tracking wireline telecom earnings in Q3 2016
Ted Torbeck, CEO of Cincinnati Bell, told investors during the third quarter earnings call that the telco has put forth an effort to further deepen the FTTH footprint.
“Based on our current trajectory, it is likely this year's build could exceed 95,000 new addresses,” Torbeck said. “In order to capitalize on opportunities within our market, we will continue to accelerate our fiber builds through the end of the year and expect capital expenditures to be in the range of $280 million to $290 million in 2016.”
As it moves forward with its FTTH network initiative, Cincinnati Bell’s focus will continue to be on success-based builds.
“We are seeing tremendous success and that's why we are increasing the speed at which we are building out,” Torbeck said. “We are up about $15 million is what we are projecting, anywhere from $5 million to $15 million of incremental.”
Torbeck added that Cincinnati Bell is gaining additional savings by spending more on FTTH buildouts.
“We are seeing also good value in the savings that we are getting on this additional spend,” Torbeck said. “Some of that will be realized next year, but we are getting about 20 percent savings in the increased spend.”
Fiber optics was a clear driver in the telco Entertainment and Communications segment results as revenues for the quarter rose $8 million over the prior year and adjusted EBITDA increased $1 million. As its ongoing fiber expansion continues to drive favorable returns, strategic revenues rose 22 percent.
Broadband service overall continued to be a factor in the third quarter as total internet subscribers grew by more than 18,000 year-over-year to end the quarter with nearly 300,000 subscribers. Fiber optics internet subscribers totaled 186,000, adding 11,000 subscribers for the quarter with 36 percent penetration rates. Fiber optics internet ARPU was $47 for the quarter, which is up 9 percent compared to a year ago.
Driven by ongoing adoption of fiber-based services, Cincinnati Bell’s business revenues were $72 million for the quarter, up slightly from $71.6 in the same period a year ago.
Torbeck said business revenues results were “consistent with the prior year as we continue to transition customers from our legacy copper services to more strategic fiber offerings.”
He added that this “transition is designed to move our mid-major customers to VoIP platform customized to fit their business needs.”
Despite gains in the business and Entertainment and Communications segments, carrier revenue declined $3 million year-over-year because its wireless operators have realigned their focus on improving network efficiency.
From an overall financial perspective, Cincinnati Bell reported $312 million in consolidated revenue, up 4 percent, or $12 million, from the prior year. Cincinnati Bell said this increase was the result of an 18 percent growth in strategic products.
Operating income for the quarter totaled $26 million and Adjusted EBITDA remained strong at $78 million, an increase of $12 million resulting from 18 percent growth in strategic products.
Cincinnati Bell reaffirmed its previously stated financial guidance of $1.2 billion in total revenue.