EarthLink’s Eazor: Windstream deal enhances our on-net SD-WAN, UCaaS reach

Windstream Business

EarthLink says that by becoming part of Windstream, the combined company will have more power to pursue SD-WAN and UCaaS service opportunities that will run over more of its own network facilities.

RELATED: Windstream acquires EarthLink for $1.1B, creates 145K fiber route mile network

Joe Eazor, CEO of EarthLink, told investors during the joint call announcing its merger with Windstream that as one combined company, they could gain more revenue from existing business customers using more of its own on-net fiber connections.

This is due to Windstream’s efforts to build out more fiber to business locations as a means to cut $1 billion in costs it pays to other carriers to carry its last-mile traffic into business locations.

“If I just take specific customer examples, where we have perhaps the over-the-top SD-WAN or WAN solution and UCaaS, now we can, inside those same customers, offer on-net capabilities and a broader set of products to sell to an existing customer,” Eazor said. “Our share of wallet potential of any one customer on a combined company basis is more significant than either one of ours independently.”

Eazor added that EarthLink and Windstream together will have a “much broader suite of tools to go after new customers than, again, either one of us have had historically.”

Although EarthLink only launched its SD-WAN offering in September, the service provider is already reaping customer rewards. EarthLink signed multiple customers for SD-WAN, including a 400-restaurant contract with national restaurant chain TGI Friday's. EarthLink is providing a full suite of services to TGI Friday's including SD-WAN Concierge, MPLS, Cloud Express and Hosted Voice.

Louis Alterman, CFO of EarthLink, said that it is seeing more inquiries for SD-WAN from business customers.

“Our pipeline for this suite and offering is strong, and it's growing with customer interest across each of our targeted industry verticals,” Alterman said. “We've established a leadership position in leveraging this new capability to create value and win business.”

Despite the momentum it is having with SD-WAN, EarthLink’s overall unit revenue results were somewhat mixed.

Revenue from the enterprise and mid-market business unit was $98 million, up sequentially. EarthLink said the increase was partially due to $2.3 million in revenue from its acquisition of Boston Retail Partners. However, revenues in this segment declined year-over-year from $110 million in the same period a year ago.

Small business revenue declined 3.6 percent to $53.7 million, which EarthLink said was the smallest sequential decline since the third quarter of 2015. Alterman said that EarthLink’s small business bookings rose 21 percent year-over-year and it is “seeing improvements in key operating metrics like billing intervals and sales productivity.”

Meanwhile, carrier transport revenue was $35.6 million, up 1.4 percent sequentially from $35.1 million in the second quarter.

Alterman said that carrier transport results “remain high as we've signed new customers to transport service on our fiber footprint” while taking “our first orders for wholesale nationwide internet service.”

EarthLink reported that total revenue for the quarter was $235.1 million, down from $270.9 million in the same period a year ago.

Looking toward the total results for 2016, EarthLink said it is maintaining its revenue forecast of $950 million to $970 million, and maintaining adjusted EBITDA at $210 million to $220 million.