Cincinnati Bell (NYSE: CBB) may be smaller than its larger ILEC counterparts like AT&T (NYSE: T), but it is currently in the midst of its own transition from another voice-centric telco to one that sells more consumer and business-based broadband services.
A key element of this journey is the ongoing buildout of the company's Fiber to the Home (FTTH)-based Fioptics service for consumers and small to medium-sized businesses (SMBs).
Speaking at the Bank of America Merrill Lynch Media, Communications & Entertainment Conference, Kurt Freyberger, chief financial officer of Cincinnati Bell, said it has set a goal of being "fiber-based, growth oriented and generating significant cash flow."
Fioptics, which can provide speeds of up to 100 Mbps, had a good showing in the second quarter. During this period it added 5,600 new Fioptics entertainment customers and 6,100 broadband subscribers. As seen at other telcos, Fioptics gains drove up the telco's Q2 2013 wireline revenue to $182 million.
"We have the ability to provide the fastest speeds with the FTTH product, and that word is getting around," Freyberger said. "What we're seeing is it's becoming easier for us to sell our product and is one of the reasons we had record net adds in terms of both the Fioptics high speed Internet and the entertainment product."
He added that "almost everyone is taking both and we're getting a 75 percent attach rate as we're selling."
With Fioptics penetrating 30 percent of the Cincinnati market, the telco says it has good momentum to grow the service subscriber base throughout the rest of 2013 and into 2014.
Whenever Cincinnati Bell overbuilds fiber in an existing neighborhood where it has deployed copper, Freyberger said penetration rates continue to grow.
"What we're seeing is actual construct to a neighborhood, in about a year's time, we are seeing about 20 percent penetration of the homes we passed, and within a two-year period we're at over 35 percent," he said.
While the initial focus for Fioptics is on the consumer market, the company is extending the service to the small and medium-sized business market as well. Such a scenario makes sense, as the telco recently combined the Small Office Home Office (SOHO) business space with consumer.
"Small business is combined with consumer because that's who we are marketing Fioptics to, so we're selecting the fiber routes where small businesses are as we're making those selections," Freyberger said. "What you're going to see is a higher focus on being able to serve the small business with our Fioptics service."
- see the webcast (reg. req.)
Cincinnati Bell integrates CBTS, Cincinnati Bell Business Markets, targets new business opportunities
Cincinnati Bell's 50 percent Fioptics revenue gains offset wireline voice line losses
Cincinnati Bell takes modest approach to Fioptics buildout
Cincinnati Bell's Fioptics revenue jumps 52 percent in Q1