Consolidated Communications' Q4 gets boost from business, broadband, wholesale revenue

Consolidated Communications' (Nasdaq: CNSL) success in selling business and wholesale revenue drove up the ILEC's Q4 earnings 16.2 percent to $7.9 million, up from $6.8 million in Q4 2010. Adjusted net income remained flat at $8.2 million, or 28 cents per share.

Revenue for the quarter increased slightly to $93.7 million from $93.3 million in the same period a year ago, surpassing analyst estimates of 22 cents a share and $91.9 million.

The ILEC, which is in the process of purchasing SureWest Communications (Nasdaq: SURW), attributes its Q4 and overall 2011 growth to its ongoing focus on wholesale and business services, in addition to offering residential customers triple-play bundles of voice, video and video services.

As of the end of 2011, Consolidated had 34,356 IPTV subscribers, up from 32,981 it reported in the previous quarter, maintaining a flat penetration rate of 16 percent of the 211,670 IPTV homes it passed. Likewise, broadband showed signs of life as the telco added 4,526 new subscribers during the quarter.

"The company is positioned to meet the growing demand for broadband and network services across all customer segments," said Chief Executive Officer Bob Currey in the earnings release. "The acquisition of SureWest, which we announced on Feb. 6, expands on these opportunities and we are excited about the prospects for the combined company."

Like other ILECs, Consolidated showed signs of IP service growing pains as 2011 total revenue declined to $374.3 million, down from $383.4 million in 2010.

Not surprisingly, the decline was a result of declining local voice access lines. As of the end of 2011 Consolidated had 227,992 total access lines, a 3.9 percent decline over 2010.

While Consolidated's acquisition of SureWest does not give it overlapping coverage, the deal will provide it with an enhanced broadband subscriber base in addition to a growing business and wholesale segment that's been fueled by a strong demand for fiber-based wireless backhaul.

Looking toward the rest of 2012, Consolidated forecast--excluding expenses related to the SureWest acquisition--capital spending to be between  $42 million and $44 million.

Shares of Consolidated declined 0.63 percent $18.89 in midday trading.

For more:
- see the release
- here's FierceIPTV's take

Special report: Wireline in the fourth quarter 2011

Related articles:
SureWest, Consolidated name leaders of merger transition team
Consolidated Communications beefs up holdings by buying SureWest
SureWest's broadband services drive 3% revenue rise in Q4 2011

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