Windstream is aware that the pending Comcast-Time Warner Cable merger could potentially have implications in the competitive business market, but in the near-term the hybrid telco/CLEC says it will have the upper hand in the multi-site enterprise market where cable has little experience in serving.
Speaking to investors during the Sanford C. Bernstein Thirtieth Annual Strategic Decisions Conference, Jeff Gardner, CEO of Windstream, told investors that cable will continue to focus most of its attention on the small to medium (SMB) business space.
The customers that cable is chasing typically spend less than $750 a month. Unlike the larger enterprise space, SMB customers usually require a phone line and some data but not the managed services that Windstream provides.
"As far as Comcast-Time Warner, [it's] an enormous deal in our space, and yes, it will have implications," Gardner said, according to a Seeking Alpha transcript. "The good news is I don't really think it will change their focus in the short run. They will still be focused on the small business side. That's where both companies have been focused to date."
While Comcast will have a lot to do in terms of integration of operations and divesting assets if the merger is approved, it will have a greater set of assets, particularly a fiber network, to compete for larger business accounts. This means that Windstream will continue to sharpen its skills to deliver IP and managed services.
"They'll get better," Gardner said. "And so it's incumbent upon us to really focus over the next 15 to 24 months, as they are preoccupied with this large transaction and all the challenges that a big merger like that brings, to really continue to improve our game, to get better at that enterprise space so that we're well-positioned with our customers as they get better in this space."
Cable's presence in the business market should not be overlooked.
During the first quarter both Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) reported strong gains in their business revenues. Comcast Business Services revenues rose 23.9 percent to $917 million. Likewise, Time Warner Cable reported business revenues rose to $402 million due to increases in high-speed data and voice subscribers, organic growth in cell tower backhaul revenue and $29 million of revenue from its acquisition of DukeNet.
Besides competing for business dollars, Gardner said the other issue is how this mega-deal will affect its current wholesale relationship with Time Warner Cable. Windstream uses a mix of other telco and cable operator facilities to reach customers where it does not have its own network facilities.
"There are a couple of things that we need to be concerned about with this merger because as a competitive player, we rely on other partners to really offer our services to our customers," Gardner said. "And so today, Time Warner is a big partner for us, Comcast is not as involved in the wholesale side of the business so that's going to be an important issue for us to watch as this unfolds and I think it's important that, again I said, for all of us to be successful and serve our customers well, we have to work together."
- see the transcript (sub. req.)
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