Regional telco Consolidated Communications is moving full steam ahead with its fiber deployment plans. During the firm’s first quarter earnings call with investors, CEO Bob Udell said the company added 45,800 new fiber locations in the first quarter, which he noted was 20 times the number of fiber locations Consolidated added in all of 2020. With the additional fiber locations, Consolidated now covers about 12% of its footprint with 1-Gig fiber, which is an increase from 10% at year-end 2020.
To help fund the company’s aggressive fiber strategy, SearchLight Capital Partners last fall committed to investing an aggregate of $425 million in the company. That deal is expected to close later this year after receiving approvals from the FCC and state agencies. Searchlight’s investment is intended to reduce Consolidated’s net debt by $235 million and provide additional capital to accelerate the company’s fiber deployment. Consolidated has said that it plans to cover 70% of its footprint, or 1.6 million fiber locations, with gigabit broadband services by 2025.
Consolidated reported a total revenue of $324.8 million for the quarter, which is a slight decline of 0.3% compared to the first quarter of 2020.
The company’s shining star is its broadband business. Broadband revenue was $65.8 million, which was a 2.6% increase year over year. During the first quarter Consolidated added 2,024 data and internet customers bringing its total data and internet customer base to 794,224. This was a 2.4% increase year over year and the eighth consecutive quarter of year over year growth in this segment.
Because of its increased focus on its fiber expansion, the company’s cap ex was $76 million for the quarter. Udell said that capital expenditures for the year will be in the $400 million to $420 million range. Interestingly, Udell said that currently the average cost per home passed is around $350 but he believes that will increase to $500 per home as Consolidated expands fiber to harder-to-reach areas that require digging or putting the fiber underground as opposed to aerial fiber deployments.
Udell also said that while the company was able to expand its fiber to nearly 46,000 locations in the first quarter, it is planning to reach 70,000 locations in the second quarter.
No supply chain worries
And while many companies are warning of possible supply chain constraints during their first quarter earnings calls, Udell said that so far Consolidated hasn’t been impacted by any supply chain issues. “There’s a chance someone will delay or not deliver. But because of the scale of our build and our relationships, we are feeling good,” he said.
Consolidated’s data and transport business was steady in the quarter with revenues of $90.3 million, a slight increase of 0.9% year over year. Consolidated said its on-net buildings are now at 13,910, which is an increase of 11% year over year and up from 13,564 at year-end 2020.
Not surprisingly, Consolidated experienced a decline in its voice and video customers during the quarter. Video connections totaled 73,986 down from 76,041 in the previous quarter. And voice connections totaled just 768,083 down from 779,590 at year end 2020.
As Consolidated ramps up its fiber footprint, the company has big aspirations for its market penetration. Udell said that 81% of Consolidated’s addressable market overlaps with one cable competitor and in 3% or 4% of its footprint it has two or more broadband competitors. Udell said that the company believes that it can achieved a 35% or more penetration rate in areas where it as a 1-Gig offering and that figure could rise to a 42% penetration rate as the service matures. He said the company’s expectations are to have a 40% plus penetration rate.