TDS Telecom's Q1 wireline revenues rise to $279M amidst wholesale, business segment declines

TDS Telecom reported that while first-quarter wireline revenues rose 7 percent to $279 million due to an increase in residential broadband and IPTV services, it saw slight declines in its wholesale and business service segments.

Residential operating revenues were $75 million, up 3 percent year-over-year, while commercial and wholesale revenue declined 4 percent and 3 percent to $55.8 million and $45.2 million, respectively.

IPTV was a key performer in TDS Telecom's portfolio in the first quarter as the service provider added 2,200 new customers. However, it only added 200 new broadband customers and it lost 2,500 traditional POTS service customers.

In its ILEC markets, the service provider reported that 42 percent of its customers can get a 10 Mbps connection, while 12 percent can get a 25 Mbps connection and 83 percent can get 5 Mbps.

"In our wireline business our continual focus is on providing high speed data services and related products, which has led to growth in broadband and IPTV connections," said Vicki L. Villacrez, VP of finance and CFO, for TDS Telecom, during the earnings call. "Our IPTV product TDS TV is an important product that leverages our high speed network and has been launched in 18 markets enabling 142,000 service addresses or roughly 20 percent of our footprint."

Villacrez said that it will continue its targeted fiber-to-the-home (FTTH) deployment strategy with a goal of equipping 25 percent of the lines in its territory with fiber. It will also increase broadband and IPTV penetration in existing markets.

"We are very pleased with the success of our IPTV deployments and will continue to make fiber investments to achieve our goal of 25 percent," Villacrez said.

In the commercial segment, the growth managedIP connections were not enough to make up for broadband and voice losses in the hosted and managed services (HMS) segment, which declined 3 percent.

During the quarter, the service provider added 3,000 managedIP connections, while losing 5,700 business voice and 400 business broadband customers. "Our managedIP sales did not keep pace with decreases in legacy voice and broadband connections," Villacrez said.  

From an overall financial perspective, TDS Telecom's parent company Telephone and Data Systems reported total operating revenues of $1.3 billion for the first quarter of 2015, up from $1.2 billion in the same period a year ago.

The service provider said it had net income of $1.33. Losses, which were adjusted for non-recurring gains, came to 12 cents per share. These results fell short of Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for a loss of 10 cents per share.

Shares of TDS were listed at $28.09, up $1.38 or 5.17 percent, in Friday morning trading on the New York Stock Exchange.

For more:
- see the earnings release

Special Report: Wireline telecom earnings in the first quarter of 2015

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