Q3 Performance Round-up: Tier 2 ILECs

While the majority of the attention these days is squarely focused on the large tier one telcos, tier two independents are facing similar challenges as their large RBOC counterparts.

Just like the tier ones, the largest tier two telcos (CenturyLink, Frontier and Windstream) are also facing ongoing voice line loss at the hands of tough cable competitors that saw their bundling strategy produce major payoffs.

To battle cable, Tier 2s are using a combination of mergers/acquisitions, bundled services and other video via partnerships with satellite or on their own.

High on the Tier 2 earnings list is broadband. Broadband growth was, of course, a tale of three carriers. While Frontier only added a little over 7,000 subscribers, while CenturyLink and Windstream saw twice that amount.

Another major factor in the Q3 09 Tier 2 results was ongoing merger/acquisition activity.

Just like their approach to broadband, the M&A strategies of these three operators couldn't be more different--they could be described as the very ambitious and the prudent.

Out of the three, Frontier is clearly the most ambitious. The Connecticut-based ILEC is in the process of purchasing Verizon's rural lines in 14 states, making it the largest Tier 2 carrier.

Taking a more prudent approach is Windstream, which just wrapped up its acquisition of the much-smaller ILEC D&E Communications and is now in the process of purchasing Lexcom and, most recently, CLEC NuVox. Then, there's the newly-minted CenturyLink which says it's on track with the integration of the former CenturyTel and EMBARQ.

Take a look at this chart below on the Q3 2009 performance of the tier twos and an accompanying commentary chronicling the Tier 2 Q3 results.


Tier 2 ILEC

Revenues Total
Access Lines

Access Lines

Broadband Additions Total Broadband Video Additions


CenturyLink $280.8M
7.1M 270,00 43,500 new subscribers 2,189,000 Satellite (not avail) Integrating
Frontier $526.8M 1.4M 30,43 7,500 new subscribers 621,300 7,200 (Satellite) Acquiring
Verizon's rural
Windstream $734M 2.93M
27,000 26,000 new subscribers 1,050,000 11,000 (Satellite) D&E Comm.,
Lexcom and NuVox

Click below to read our commentary on the companies....