Windstream's plans to equip more of the buildings in its footprint with fiber to deliver business services over its own facilities to reduce dependency on wholesale services from AT&T (NYSE: T) and Verizon (NYSE: VZ) will benefit Dycom and other construction providers.
Tony Thomas, CEO of Windstream, told investors during the recent the 44th annual J.P. Morgan Global Technology, Media and Telecom Conference that it plans to expand its on-net fiber footprint in "seven more markets this year" by leveraging and extending its existing metro fiber network.
"It's clear in all these markets we have the metro fiber rings," Thomas said. "I think once again, one of the most underappreciated parts of Windstream is the breadth and depth of our metro fiber infrastructure. And really, all we're doing now is modernizing it and building last-mile laterals off of it and displacing other carriers and then taking that opportunity to sell to other tenants in these multi-dwelling large buildings."
Evidence of this trend is already taking place as the telco recently announced that it completed a last-mile fiber build in Richmond, Virginia area. This will enable the telco to offer services directly into more local data centers and commercial buildings. In addition to Richmond, Windstream made a similar effort in the Charlotte, North Carolina area in February.
"We have fantastic fiber, metro fiber in Richmond, Virginia," Thomas said. "And we'll be building out our own last-mile facilities. We've already announced Charlotte and Nashville."
However, Windstream's ongoing build out of its own last mile facilities will take time to have a large impact on its revenue base. Thomas said that this process "needs to get to a certain scale to be impactful, but that happens...over a three- to five-year period."
Windstream did not call out who would be assisting it in constructing the last mile facilities or what cities it plans to go to next, but Dycom reported in its third quarter report that it won a series of two-year engineering and construction services from the telco in seven states: Iowa, Missouri, Nebraska, Oklahoma, Arkansas, Texas, and Pennsylvania.
As Windstream builds out its fiber network to more buildings in new regoins, the telco could potentially leverage Dycom for these network initiatives.
In addition to conducting its own fiber builds, Windstream is conducting other measures such as capacity planning, network grooming with its third-party wholesale provider partners like AT&T to deliver "hundreds of millions of dollars" in interconnection cost savings.
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