Qwest's (NYSE: Q) Q3 landline losses offset by broadband gains

Qwest's (NYSE: Q) ongoing focus on broadband services enabled the service provider to beat analyst expectations in the third quarter.

Although the telco saw an 11 percent annual decline in its legacy voice business, strategic services revenue was up eight percent year over year versus a six percent increase in Q2 2010. Consolidated net operating for the quarter was $2.9 billion.

The service provider's profit was 11 cents a share versus 9 cents in Q3 2009, which was slightly ahead of the 9 cents a share analysts forecast.  

Here's a breakdown of the other Qwest key segment metrics:

  • Business Markets: Qwest's business markets revenue was flat year over year, but up two percent sequentially. The service provider attributed the two percent sequential increase to the ongoing demand for IP services and data integration sales. IP services growth helped drive strategic business growth revenues up nine percent year over year.
  • Mass Markets: In the Mass Markets segment, Qwest reported its fourth consecutive quarter of improved year-over-year revenue trends, a factor it attributes to increasing customer ARPU and cost management. During the quarter, consumer ARPU was $65, a 10 percent increase compared to the third quarter 2009. The star performer in Qwest's Mass Markets segment was again its Fiber to the Node (FTTN)-based broadband service. Although it lost 52,000 legacy ATM-based DSL subscribers, it added 92,000 FTTN subscribers. As of the end of Q3, Qwest had 2.9 million broadband subscribers.
  • Wholesale Markets: Qwest was able to narrow its Wholesale Markets revenue losses down to eight percent over the 10 percent loss it reported in Q2 2010. At the same time, Wholesale Markets income declined one percent from Q3 09, but up one percent from Q2 2010. One area that Qwest remains confident about on the wholesale side is wireless backhaul. To date, the service provider has connected over 1,000 cell sites to its fiber network, with plans to reach 2,000 sites by the end of the year. What may also help Qwest's wireless backhaul case going forward will be its new Adaptive Broadband wholesale product that examines a wireless operator's total wireless backhaul spend and provides a migration path from legacy T1 access to fiber-based IP/Ethernet technology.

Looking ahead into Q4 2010, Qwest expects to report a low-single digit annual rate of revenue decline in the fourth quarter and full year 2010 adjusted EBITDA of approximately $4.4 billion.

In related news, Qwest's soon-to-be parent company CenturyLink also reported its Q3 earnings today.

For more:
- see the earnings release
- Bloomberg has this article

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