Windstream today may not see cable as a major competitor in the larger business space that it plays in today, but the pending multi-billion dollar merger between Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) could pose new challenges.
Speaking at the Goldman Sachs 23rd Annual Communacopia Conference, Jeff Gardner, CEO of Windstream, said that it's likely that given the size the new company will create, they could start penetrating larger business accounts.
"We obviously got to be on our watch of the cable companies," Gardner said. "They are doing well in a distinct part of the market, which is small business, mostly single-location, but I suspect that once Comcast and Time Warner get together, they are going to try to go up market and we need to increase our capabilities in our space."
Despite the potential threat that a combined Comcast and Time Warner could bring, Gardner added that "I think we have a big advantage there in terms of what we can do with multi-location deals and the full set of products we have."
Business services continue to be a hot seller for Windstream. During the second quarter, revenues grew 9 percent year-over-year to $749 million.
Gardner said that what makes the sales cycle in the business market a bit more challenging overall is that they are signing on a number of multi-site deals that have complex requirements.
"Our revenue is lagging a bit behind due to the fact that we're selling more complex products with longer installation intervals," Gardner said. "We're really finding a niche for that mid-sized customer of $5,000 to $10,000 a month in between with the cable companies are looking at and what the large global companies are providing."
One area of particular growth is its data center business, which has grown 28 percent year-over-year.
"What we're doing in that mid-sized market is a lot of managed services and a lot of cloud applications and seeing good success and good margins in that business," Gardner said.
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