Windstream expects to return to broadband growth in 2017

Rural broadband
Windstream is confident that it can return to broadband growth in 2017.

As Windstream extends higher speed services via its existing copper and FTTH service in select markets, the service provider is confident that it can return to broadband growth in 2017.

Bob Gunderman, CFO of Windstream, told investors during the Bank of America Merrill Lynch 2016 Leveraged Finance Conference that delivering higher speeds will not only reduce churn but also increase customer ARPU.

“The subscriber changes that we want to make will help us get to growth,” Gunderman said. “When you think about our footprint, we have a very rural footprint where the competitive dynamics are not as difficult so as we bring more speed and stronger in those areas, our churn will improve and we’ll get a greater share in the marketplace.”

RELATED: Windstream sees growing acceptance of 50, 75, 100 Mbps broadband speeds

While the service provider would not specify how many customers it has on the higher 50 and 100 Mbps speeds it is offering via its Project Excel program, which is set on driving fiber into its remote terminal DSLAMs to deliver up to 100 Mbps, the service provider is seeing subscriber ARPU improve with customers that are buying the higher speeds.

As of the end of the third quarter, Windstream said it completed 40% of Project Excel.

Gunderman said it can drive ARPU higher as it migrates more of its lower speed customers onto new tiers that they could not get before.

“We made a lot of progress this year and last year on the ARPU gains and getting it the old-fashioned way by bringing a better speed profile into the marketplace and providing a higher value product to the consumer base,” Gunderman said. “We’re upping the speeds to not only our existing customer base and new customers are coming in at a higher ARPU because we’re selling higher speeds.”

In its larger markets like Lincoln, Nebraska; Lexington, Kentucky; and Sugarland, Texas, the service provider is rolling out 1 Gbps FTTH and IPTV services to more effectively battle local cable providers.

“Our biggest markets—Lincoln, Nebraska; Charlotte, North Carolina; Lexington, Kentucky; and Sugarland, Texas—are not huge markets, but still competitive for us,” Gunderman said. “In those areas we have insurgent market share and we’re going after the incumbent which is cable and be aggressive to grab that back.”

Gunderman added that “we’ve started to see some of the flow share in some of those locations, but we think we’ll continue to improve.”

Getting back to broadband growth will certainly be an ongoing challenge for Windstream as the telco has seen its broadband subscriber numbers decline in recent quarters.

In the third quarter, Windstream consumer broadband connections were 1.06 million, down sequentially from 1.07 million in the second quarter.

Windstream is hardly alone.

According to Leichtman Research Group, the largest telcos lost nearly 150,000 broadband subscribers in the third quarter, widening the loss of about 145,000 they saw in the same period a year ago.