Consolidated's Childers says 80 percent of revenue comes from business, broadband services

Consolidated Communications is seeing the fruits of its ongoing transformation from another Tier 2 provider of voice to a next-gen IP service provider, with a senior executive saying that 80 percent of its revenue comes from broadband and business services.

Speaking to investors during the Midwest IDEAS Investor Conference, Steve Childers, CFO of Consolidated, said that these segments have risen through a mix of organic network buildouts and targeted acquisitions like SureWest and Eventis.

"The revenue diversification we talked about in making that transition from voice revenues, we have really made a major shift," Childers said. "If you look at our 10K and our earnings release and collapse those and tie them to strategic revenue buckets, you can see that 80 percent of our revenues now comes from business and broadband."

Childers added that if "you look back to 2012 prior to when we acquired SureWest that number would have been 59 or 60 percent and significant growth on those customer channels both from organic growth and acquisition."

Evidence of these growth trends was seen in the second quarter where it reported gains in its consumer and commercial service revenues. Consumer revenues rose slightly to $54 million, while commercial revenue was $74.1 million, up 2.6 percent year-over-year.

To fuel new internal growth opportunities, the service provider has set capex guidance for 2015 to be between $128 to $132 million due to the success in the business and wholesale services segments.

A key component of the capital spending process will be to grow the commercial and carrier segments by continually expanding its fiber network to more buildings and wireless towers. In the second quarter, Consolidated added 224 route fiber miles and 36 new on-net fiber buildings, for example.

With its Enventis acquisition behind it, Consolidated reiterated that it will continue to look at new acquisition opportunities with a particular focus on bolt-on acquisitions of other regional fiber providers.  

Childers said that there are several acquisition opportunities of a mix of smaller companies, privately-owned and public companies.

"We think there are several opportunities -- both public companies and family privately-owned companies," Childers said. "The way the industry shifted we're not looking at ILEC access lines as much but rather fiber assets, cable overlay and changed the model of what we might look at."

Unlike other service providers, Consolidated has set its sights on purchasing well maintained assets. This strategy has enabled it to immediately integrate and expand the new network facilities into their fold to fuel further revenue growth.

"We basically have the same network set up in every state and we bought high quality assets," Childers said. "We're not like some companies that make a major acquisition and have to spend millions of dollars just to rehabilitate the network."

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