Windstream's Q2 earnings get boost from broadband, video subscriber additions

Windstream (Nasdaq: WIN) may be suffering the industrywide woes of traditional wireline voice line loss, but the independent ILEC's gains in broadband and video more than made up for it with a higher than expected Q2 profit.

During the second quarter, Windstream reported revenues of $1.03 billion, an almost 1 percent year-over-year increase over Q2 2010. The service provider's net profit was $93.2 million, or 18 cents per share, up from $79 million, or 17 cents per share, it reported in the same period last year.

Financial analysts polled by Thomson Reuters I/B/E/S had forecast earnings of 19 cents a share, excluding items, on revenue of $1.02 billion.

Here's a breakout of the company's key metrics:

  • Access Lines: Windstream lost about 3.6 percent, or 30,100 access lines, in Q2. At the end of the quarter, Windstream had 3.26 million total access lines.
  • Broadband Services: In the second quarter, the service provider added about 4,800 new DSL customers, bringing its total broadband subscriber base to about 1.34 million--a 5 percent year-over-year increase. 64 percent of its primary residential lines are now capable of delivering DSL service.
  • Video services: At the end of Q2, Windstream reported it added 3,500 new video subscribers, which was slightly less than the 7,000 subscribers it added in Q1 2011. As of the end of the quarter, Windstream had about 443,500 video customers, a 5 percent increase over Q2 2010.
  • Business/Wholesale Services: The service provider's ongoing bet to advance business services and wholesale continued to pay off in Q2 2011. Sales of its business channel's advanced data and integrated solution sales, which consist of network connections that deliver voice and data services, increased 2 percent year-over-year. At the same time, special access circuit sales were up 9 percent, a factor that it said was largely driven by a growing demand from wireless operators for new wireless backhaul services.

Looking beyond the second quarter, the challenge Windstream has to face is not only maintaining its broadband and video growth, but completing its proposed acquisition of CLEC PAETEC (Nasdaq: PAET).

While protests of large deals like the Windstream/PAETEC union aren't uncommon, a report emerged that two legal firms--Boston-based Kyros & Pressly LLP and San Diego-based Robbins Umeda LLP--are investigating whether PAETEC's sale to Windstream provides the best value for its shareholders.

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

Special Report: Wireline in the second quarter 2011

Related articles:
Windstream's $2.3B PAETEC buy enhances its business service foothold
Windstream continues M&A roll with $2.3B PAETEC acquisition
6 large telcos put broadband, USF reform proposals on the table
Windstream ups business service presence in GA, data center capabilities in NC

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