Windstream sees gains in broadband, wireless backhaul in Q1

Windstream (Nasdaq: WIN) saw its share of ups and downs in Q1 2011 with revenue rising 21 percent to $1.02 billion, while net income declined 68 percent to $23.5 million from Q1 2010.

Despite the income losses, the service provider reported gains in both business service and consumer broadband revenue and reduced wireline voice losses.

During the quarter, business service revenue was $492 million, up 2.3 percent year-over-year, while consumer broadband was $116 million, an 11 percent increase over Q1 2010.   

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

  • Access Lines: Windstream reported that it lost 23,000 access lines during the quarter. Total access lines declined 3.6 percent year-over-year, which Windstream says were its lowest declines in units in the company's history. At the end of the quarter, Windstream had 3.3 million traditional voice access lines.
  • Broadband Services: During the quarter, Windstream added about 29,000 new broadband customers, bringing its total Internet customers to 1.3 million, a 6 percent year-over-year increase. Overall broadband penetration is now at 44 percent of Windstream's total voice lines. From a consumer perspective, Windstream added over 27,000 new DSL customers, a result that it attributes to a new advertising campaign targeting cable consumers.
  • Video services: The service provider added 7,000 new satellite video providers, bringing its total video customer base to 440,000 or 23 percent penetration of their primary consumer lines. One area of growth that Windstream will continue to bank on with its video and data bundles is selling services into the MDU market segment.
  • Business Services: What drove growth in Windstream's business unit were broadband data and advanced data and integrated solutions. Broadband business data customers grew 4 percent year-over-year, while advanced data and integrated products rose 2.5 percent year-over-year as a result of growth of integrated VoIP and data services, Ethernet Internet access and managed services.
  • Wholesale services: Ongoing declines in switched access revenues made a 12 percent, or $20 million dent, in Windstream's wholesale service. A big chunk of Windstream's wholesale losses can be attributed also to expected ongoing losses in voice and long-distance revenues, which declined 8 percent or $32 million year-over-year. However, the ongoing growth in integrated VOIP and data offerings to business customer's data in integrated solutions rose 7 percent or $22 million. Lastly, special access revenues rose 6 percent, or $8 million, due to circuit growth from increased demand for wireless backhaul.

Looking forward to the rest of 2011, the drive for Windstream will be on expanding its fiber to the cell tower drive in addition to expanding its data center capabilities and broadband speeds. During the quarter, Windstream expanded its data center operations in Charlotte, NC and upgraded its last mile network to deliver 12 Mbps DSL speeds to over 40 percent of its footprint and 24 Mbps in the majority of the markets where it has cable competition.

As the result of faster than expected growth in fiber-to-the-tower-based wireless backhaul and ongoing demand for data center services, Windstream plans to increase capital spending plan from $520 to $580 million to $570 to $630 million.

For more:
- see the release
- and the earnings call transcript

Special Report: Wireline in the first quarter of 2011

Related articles:
Windstream expands data center presence in Charlotte, NC
Verizon Wireless' ongoing LTE drive creates a lush wireline-based backhaul opportunity
Windstream takes hit on Q4 profit, but acquisitions drive up revenue 30%