Consolidated Communications has already beat its full year 2022 broadband net addition figure in 2023, with record-high fiber net additions offsetting DSL losses to fuel strong overall broadband growth.
The company raked in 12,337 consumer fiber subscribers in Q1, with that figure up 60% year on year. That momentum drove Consolidated to 2,404 overall broadband net additions in the quarter, allowing it to beat its 2022 total of 724 net additions.
CEO Bob Udell said the Q1 fiber net add figure was a quarterly record and noted the company is on track to see even stronger results in Q2 and Q3. In April alone, he said it gained nearly 6,000 fiber subscribers.
The net additions came as Consolidated continued to expand its fiber footprint, upgrading 54,000 locations in the quarter to surpass 1 million total passings across its territory. By the end of 2023, it is aiming to run fiber to 225,000 passings, increasing the percentage of its footprint served from 40% today to more than 50%.
Udell said Consolidated’s progress has been helped by its incumbent position in the markets it serves as well as its existing conduit capacity and pole access. He also pointed to a growing war chest of broadband funding from grants and public-private partnership deals. Since 2019, the company has bagged $150 million in support, and as of the end of Q1 was actively pursuing an additional $140 million – up $40 million from Q4 2022. Udell said that figure doesn’t include funding opportunities from the $42.5 billion Broadband Equity, Access and Deployment (BEAD) Program, which are expected to materialize over the next 12 months.
Last month, Consolidated received a buyout offer from Searchlight Capital Partners and British Columbia Investment Management Corporation (BCI) which is currently being considered by a special committee of independent directors.
While Udell declined to comment on that process or a timeline for completion of the committee’s review, he noted Consolidated has plenty of financial flexibility to continue its fiber build whether the deal goes through or not. He highlighted the operator’s recent moves to divest certain assets and boost broadband net additions, which he called “the best way to fund” its expansion. As of the end of Q1, Consolidated had $336 million in cash and short-term investments as well as $213 million in borrowing capacity.
Udell added the broadband funding it has secured and continues to seek will help stretch both its dollars and its footprint further. On that point, Udell said he believes Consolidated will be able to surpass its target of covering 70% of its footprint with fiber by mid-2026. However, he declined to speculate just how much beyond that bar it might go.
Financials
Total company revenue fell 8% year on year to $276.1 million, despite a 52% jump in consumer fiber revenue to $26.1 million. Overall broadband revenue rose 3.1% to $68 million, though commercial data services and carrier data transport revenue fell 8.2% and 1.7% respectively. Despite this, CFO Fred Graffam noted growth in dedicated internet access and SD-WAN connections and highlighted an opportunity to grow its commercial services as its fiber network expands and it upgrades its backbone.
The company posted a net loss of $47.7 million, but that marked a significant improvement from a loss of $125.3 million in the year-ago quarter.