Cincinnati Bell reaches 40% Fioptics penetration in mature markets, on track to slow build in 2017

Cincinnati Bell is seeing that in areas where it has been offering its FTTH-based Fioptics data and video services for a number of years, penetration rates continue to rise.  

Speaking to investors during the first quarter earnings call, CEO Ted Torbeck said that customer uptake of Internet and TV in its more established markets is robust.

"During the first pass in a neighborhood with Fioptics, we're usually just south of 20 percent penetration," Torbeck said. "As we mature, we're getting up in the 30 percent, but in our most mature market we're getting up to 40 percent on Internet and TV."

With much of the neighborhoods in its region built with fiber, Cincinnati Bell will be nearing the end of the FTTH build near the end of 2017. By that time, the service provider expects total Fioptics penetration to be between 60-70 percent.

"We expect more than likely to wind down, and when we say wind down, you'll see slowing of neighborhood builds," said Leigh Fox, CFO of Cincinnati Bell. "That should happen about in the third quarter of 2017."

Torbeck added that the ongoing focus for current and new FTTH builds will be based on where it sees the greatest demand.

"It's success-based and as we see returns not generating what we expect we'll slow it down significantly," Torbeck said.

Throughout the first quarter, Cincinnati Bell continued to expand the availability of Fioptics to more locations. The service is now available in 454,000 addresses, or 57 percent of Greater Cincinnati. During the quarter, it passed an additional 22,000 new addresses. What's more, Fioptics monthly ARPU for the quarter was up approximately 6 percent from 2015.

Excluding revenue from services provided to its discontinued wireless operations, Entertainment and Communications segment revenues was $190 million, up 3 percent year-over-year.

Within the Entertainment and Communications segment Fioptics was the star performer with revenues rising 37 percent year-over-year to $58 million. During the quarter the telco added nearly 11,000 new Fioptics Internet subscribers

The service provider also saw gains in strategic business and carrier services where revenues were $48 million for the quarter, up $6 million year-over-year.

Due to seasonal buying patterns, IT Services and Hardware Segment revenues dropped 5 percent year-over-year to $103 million. Telecom and IT hardware revenue was $48 million for the quarter, compared to $61 million in the first quarter of 2015.

Total consolidated revenue was $289 million, down $4 million from the prior year due to the cyclical nature of Telecom and IT hardware sales. Meanwhile, operating income for the quarter totaled $30 million and Adjusted EBITDA equaled $77 million. 

Looking towards the rest of 2016, Cincinnati Bell has reiterated its revenue guidance of $1.2 billion.

For more:
- see the earnings release

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