Cincinnati Bell passes additional 25,800 homes with Fioptics service, sees increased cord cutting

Cincinnati Bell is making continued inroads with its Fioptics service, passing an additional 25,800 units with the service during the third-quarter. The service is now available to 408,000 addresses within greater Cincinnati.  

Ted Torbeck

Torbeck

Speaking to investors during the third-quarter earnings call, CEO Ted Torbeck said that the carrier plans to continue on the same buildout pace for Fioptics throughout the rest of 2015 and into 2016.

"We're clearly anticipating we'll keep it to the same level we're building in 2015," Torbeck said, "We're on target."

Fioptics continued to be the growth star in its service portfolio with revenues rising year-over-year to $49 million. It saw gains in both Fioptics video and broadband subscribers.

Over the past year, Cincinnati Bell added 21,000 new Fioptics video subscribers to end the period with a total of 108,800 customers. It added 11,200 new Fioptics Internet subscribers to reach a total of 281,300 subs, up 10,800 subscribers from a year ago.

Given the enhanced speeds of the Fioptics FTTH network, Cincinnati Bell continues to mull the idea of creating a set of video products that would pertain to cord cutters who want to use their broadband connection to get their video versus a linear TV option.

While he did not give any specific details, Torbeck said they are looking at various so-called skinny bundle video packages for the millennial generation.

"Our team is aggressively looking at different options like over the top and skinny bundles," Torbeck said. "We have a team that's actively looking at that but some of the older clientele is basically taking the triple play and it's generally the millennials we're seeing cut the cord."

As expected, the service provider did see its overall Internet subscriber base be impacted by the loss of 5,700 traditional DSL subscribers.

Similar to other telcos like Frontier, Torbeck said that broadband churn is part of the seasonal trends it sees during the third-quarter as more customers move outside of its territory.

"We were down year-over-year on churn and the third quarter is a high move quarter where people move a lot and it was to our expectations it wasn't greater, but better than what we thought it would be," Torbeck said. "I think that's a major driver in that it is seasonal and those are the months that most people move."

The service provider continued to see positive growth trends in strategic business services. Strategic business revenue was $44 million -- including $3 million of Fioptics revenue -- for the quarter, up $4 million year-over-year after excluding revenue for services provided to its wireless operations.

However, the IT Services and Hardware Segment results were a bit of a mixed bag with overall revenue declining 3 percent year-over-year to $117 million. While it reported that strategic managed and professional services revenue rose 31 percent to $46 million, hardware revenue was $69 million for the quarter, compared to $83 million in the third quarter of 2014.

"The IT Services and Hardware segment was down 3 percent from the prior year as the growth of managed and professional services revenue was offset by an anticipated decline in hardware sales," said Leigh Fox, CFO of Cincinnati Bell, during the earnings call.

For the year 2015, Cincinnati Bell has reiterated its revenue guidance of $1.1 billion and adjusted EBIDTA of $297 million.

The telco reported that consolidated revenue was $300 million, up $2 million from the prior year after excluding revenue from services provided to our wireless business which discontinued operations at the end of March.  Operating income for the quarter totaled $36 million and Adjusted EBITDA equaled $77 million. 

For more:
- see the earnings release
- hear the earnings webcast (reg req.)

Special report: Tracking wireline telecom earnings in Q3 2015

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