Consolidated Communications broadband and backhaul initiatives help minimize Q1 voice service declines

Consolidated Communications (Nasdaq: CNSL), which is in the process of acquiring fellow ILEC SureWest (Nasdaq: SURW), saw its share of IP service growing pains as it reported first-quarter 2012 revenues of $93.4 million, down 1.4 percent year-over-year, from $95.4 million in Q1 2011.

Excluding a $0.7 million settlement from the National Exchange Carrier Association (NECA) in Q1 2011, the service provider's revenue declined by $1.3 million, or 1.4 percent year-over-year.

Operational revenue was $11.0 million, down from $16.9 million in Q1 2011. The telco attributed the decrease to both lower revenues and a $4.8 million transaction costs related to its pending acquisition of SureWest.

As seen with other traditional wireline ILECs, ongoing declines in local landline, network access and long distance voice revenues were somewhat offset by an uptick in data and Internet services as a result of its growing broadband and wireless backhaul service business.

During the quarter, the service provider lost 8,761 access lines, or 3.7 percent, in its traditional ILEC business. It ended the quarter with a total of 226,167 access lines. However, in the CLEC segment it reported a 9.9 percent increase in access line equivalents, ending the quarter with a total of 89,672 total lines.

Despite expected declines in its traditional ILEC voice-services business, it saw decent broadband and IPTV subscriber gains. Broadband Internet subscribers rose 4.4 percent year-over-year, to a total of 112,368 customers. It also added 981 new IPTV subscribers, up from 34,356 in Q4 2011. To date, it has penetrated 17 percent of the 211,670 homes it has passed with IPTV.

Looking at the rest of 2012, the service provider has maintained its full year guidance for capex spending and cash interest, excluding any expenses related to its SureWest acquisition. It has forecasted capital expenditures to be in the range of $42 million to $44 million and cash interest is expected to be in the range of $44 million to $46 million. 

Bob Currey, president and chief executive officer at Consolidated, said they "are pleased with the progress we have made so far with respect to both the approval process of our acquisition and our initial integration discussions."

Shares of Consolidated declined $0.05, or 0.27 percent, to $18.51 in mid-morning trading on the Nasdaq stock exchange.

For more:
- see the earnings release

Special Report: Wireline in the first quarter of 2012

Related articles:
Consolidated Communications' Q4 gets boost from business, broadband, wholesale revenue
SureWest, Consolidated name leaders of merger transition team
Consolidated Communications beefs up holdings by buying SureWest
Consolidated Launches Local VOD Publishing with CloverLeaf

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