Independent telcos Consolidated Communications and Uniti Group are showing signs of strength and optimism – Consolidated with its broadband buildout and Uniti with its enterprise sales efforts – according to an industry update from Cowen’s Technology, Media and Telecom research team.
Cowen analysts met with Consolidated executives Bob Udell, president and CEO, and Steve Childers, CFO, during last week’s Cowen TMT Conference, and noted that the telco’s management is “feeling good” about the potential for its fiber-to-the-home network upgrades to reach about 300,000 customers this year. The company had 46,000 fiber upgrades in the first quarter of this year, and is one track to meet its second quarter target of 70,000. It’s also optimistic about hitting the 400,000 mark next year, Cowen reported.
After investing $425 million in Consolidated last fall, Searchlight Capital has been an influential partner for the telco “sometimes meeting bi-weekly to review KPIs, program status updates, and constantly evaluating where to accelerate the build,” although Consolidated does have final say on those deployment decisions.
Cowen noted that Consolidated paved the way for this fiber upgrade by investing over the last decade-and-a-half in regional fiber-fed nodes. While it’s Cowen’s view that the telco remains conservative in its customer penetration estimates – 35% penetration in the third year of its upgrades, while AT&T “typically targets 50% after 3 years” – analysts reported that Consolidated executives believe that it higher broadband speeds, a local “hometown” marketing effort, and pricing below the competition will allow the fiber upgrade to sell itself to customers over time.
Meanwhile, Cowen analysts also met with Uniti Group representatives during the conference. Uniti said its enterprise customers did not appear to delay their decision-making during the Covid-19 pandemic, and that services bookings “have been largely unphased.” In fact, some Uniti enterprise customers with one or two products “used the opportunity during the pandemic to augment security, bandwidth, and/or unified communications (to help the remote work environment),” Cowen analysts stated in their report.
Uniti, which was spun off from Windstream in 2017, also told Cowen it is expecting an “increase in bookings trajectory (no exact figures provided), noting new services (managed services such as managed security/firewall, Wi-Fi, router), a new platform to provide market intelligence on the ground, and the late-2020 sales realignment.”
Cowen also reported that Uniti is adding services to its SD-WAN, Ethernet and other communications offerings as it looks to sell more around solutions than circuits. This focus also is key to Uniti’s plans to move further up-market, selling into customers needing more than 25 Mbps.