Windstream’s CEO Tony Thomas says that by enacting a series of cost cutting measures and product development focused on mid-sized businesses, the provider will be able to profitably grow its enterprise service segment revenues.
“This is centered on being a strategic solutions based provider to mid-market enterprises, where we best leverage our network and our people to provide high value solutions which typically produce higher margins and lower churn,” Thomas said during the earnings call, according to a Seeking Alpha earnings transcript.
Cutting costs is another part of its strategy. The service provider is looking for ways to cut network operations costs by reducing its reliance on last mile facilities from large telcos such as AT&T and Verizon.
While Windstream is a traditional ILEC, it still has to rent special access, lower-speed TDM connections from other service providers to provision services for business customers outside of its traditional territory where it can’t make a business case to build out fiber to those locations.
“We're reducing network access costs through capacity management, network modernization and on-net market expansion,” Thomas said. “We have completed detailed audits for circuits in place and identified opportunities to provide network services in a more cost effective manner. For example, in certain locations, we were able to right-size leased circuits while still leaving ample capacity for network needs.”
In tandem with cutting wholesale rental access costs, the service provider is also expanding its fiber network to address business customers. As it builds out fiber into more metro networks, Windstream will transfer customers off of leased circuits and onto its own fiber network.
“We also expanded our fiber footprint in several key cities, including Charlotte, Richmond, and Nashville to enable us to bring more traffic on to our own network, and turn down leased circuits,” Thomas said. “These are just a few of the examples of how we are driving substantial savings through network optimization.”
These actions will help position it to address one of its business customers’ largest needs: more bandwidth. Windstream is fulfilling that desire by expanding its Ethernet portfolio.
“We see our customers continuing to buy faster speeds,” Thomas said. “That's a transition from TDM to Ethernet, and that's also a transition from lower Ethernet bandwidth speeds to higher Ethernet bandwidth speeds.”
Besides Ethernet, Windstream is seeing more of its customers migrate to cloud services like Unified Communications as a Service (UCaaS). “It's a cloud-based contact center tool and it's a real asset that Windstream has that differentiates us from those in which we compete and we're continuing to see strong demand for that with very large opportunities,” Thomas said.
It appears that Windstream’s efforts are starting to pay off as the telco reported second quarter enterprise revenues were $491 million, up 3 percent year-over-year.
- read the Seeking Alpha earnings transcript (reg. req.)
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