Cincinnati Bell has recently won a 1,100-site wireless tower backhaul contract, a deal that further solidifies the regional provider’s status as a dominant wholesale player.
Andy Kaiser, CFO of Cincinnati Bell, told investors during the UBS 45th Annual Global Media and Communications Conference that the tower win gives it an advantage over potential competitors in Cincinnati’s tower backhaul race.
“From a backhaul perspective, we just landed a new contract that puts us effectively at 100% of the towers in Cincinnati that we’re providing backhaul service,” Kaiser said.
As the city's incumbent telco, Cincinnati Bell is not immune to revenue pressures on the carrier business side, particularly as more of its customers transition off TDM and copper to fiber and IP circuits.
During the third quarter, Cincinnati Bell reported that carrier revenue declined 10% year-over-year to $23 million. Within this sector, the company had $10 million in strategic and $13 million in legacy revenues.
Small cell interest rising
While Cincinnati Bell has not revealed its small cell backhaul customer, the service provider confirmed it has a contract to build 260 sites.
Cincinnati Bell may have sold off its wireless business to Verizon, but it retained a lot of the existing wireless engineering talent that helped them pursue small cell deals.
“We have a small cell deployment with a larger carrier and we have deployed to about 230-235 sites,” Kaiser said.
The service provider is also talking to other wireless operators, but could not reveal who those providers are.
“We are in discussion with other providers as folks prepare for 5G and the ongoing evolution of wireless,” Kaiser said. “There’s a significant opportunity there.”
Hawaii opportunities abound
Cincinnati Bell, which is in the process of acquiring Hawaiian Telcom, sees potential to replicate and expand its wireless backhaul and small cell revenue opportunities in Hawaii.
The service provider will have a well-established base to build on. However, like other providers, Hawaiian Telcom’s third quarter results mirrored the struggles Cincinnati Bell had with legacy migrations.
“In Hawaii, we met with carriers who said they like working with Hawaiian Telcom," Kaiser said. "There definitely should be opportunities for small cells and additional macro backhaul circuits."
Hawaiian Telcom’s third-quarter wholesale revenue was $12.6 million, down $0.9 million compared to third quarter 2016. Revenue from high-bandwidth, multiyear contract wholesale services including Ethernet, trans-Pacific fiber circuit capacity and optical transport services rose 24.8% year-over-year and now represents 35% of total wholesale revenue, up from 23% in the same period two years ago.
The service provider noted in its third-quarter earnings call that this revenue growth was offset by the revenue decline from certain wholesale customers disconnecting low-bandwidth legacy circuits on month-to-month service.
Scott Barber, CEO of Hawaiian Telcom, said that the telco continues to get inquiries for small cell backhaul.
“We're also seeing increased activity for small cell solutions and as a potential justification projects for wireless carriers and are currently working on a number of RFPs,” Barber said during the third quarter earnings call, according to a Seeking Alpha transcript. “We believe these are solid growth opportunities for the wholesale channel.”