FairPoint Communications (Nasdaq: FRP) reported in Q3 2013 that Ethernet services were once again a major contributor to its overall revenue mix, rising to $16.4 million as retail and wholesale circuits grew 57.8 percent year-over-year.
The telco expects the uptick in Ethernet product revenue to continue due to demand from both retail and wholesale customers such as regional banks, healthcare networks and wireless operators.
It added that the growth in Ethernet, IP-based services, and broadband will "initially offset and then exceed the losses expected from the company's legacy access products like residential voice."
Ethernet service sales also drove up its data and Internet services revenue 3.7 percent sequentially to $41.5 million, which FairPoint said was the third consecutive quarter where it saw an increase.
Besides Ethernet and IP data, the telco reported that broadband subscribers rose 3 percent year-over-year, to over 9,000 subscribers added during the last year. As of the end of September, broadband penetration reached 36.9 percent of its voice access lines. However, it lost 1,922 broadband subscribers in the third quarter, a factor it attributes to its efforts to improve the credit profile of its customer base.
Although legacy voice access lines declined year-over-year, it narrowed those losses to 7.3 percent from 7.7 percent in Q2 2103. It ended the quarter with a total of 895,490 access lines.
FairPoint said that the improvement was driven by a "slowdown in the rate of loss in business voice and wholesale access lines."
The telco has maintained its fiscal year 2013 guidance of $100 million to $110 million of unlevered free cash flow and adjusted EBITDA of $255 million to $265 million. It also expects capital expenditures to be about $130 million.
Shares of FairPoint were $9.55, up 29 cents, or 3.13 percent, in morning trading on the Nasdaq stock exchange.
- see the earnings release
Earnings summary: Wireline telecom earnings in the third quarter of 2013
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