Windstream sees growing acceptance of 50, 75, 100 Mbps broadband speeds

copper wiring legacy networks

Windstream may not be completely done with its Project Excel initiative, one that will bring higher speed broadband services of up to 100 Mbps over its existing copper network, but the service provider is seeing more customers take higher speeds.

Bob Gunderman, CFO of Windstream, told investors during the third quarter earnings call that customers are starting to choose the higher speeds in the markets where they are available.  

“We are starting to see a higher uptick in take rates for higher speeds in the excess of 50 percent,” Gunderman said. “We can see the benefits of the program starting to really impact the numbers on the of the consumer side so we’re optimistic of the benefits of Project Excel.”

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As of the end of the third quarter, Windstream completed 60 percent of its capital for Project Excel.

“We still have to do the test and turn up inside the walls of Windstream to get more facilities up and running for our customers,” Gunderman said. “We’re active in wrapping that up as quickly as we can and there’s a chance it could bleed over into the first quarter of 2017.”

In tandem with increasing broadband speeds for more consumers, Windstream continues to make progress with its IPTV roll out. The service provider filed a cable TV franchise agreement with the North Carolina Department of the Secretary of State to bring its Kinetic IPTV television service to more than 50,000 homes in August, for example.

North Carolina will be the fourth Kinetic TV market following successful launches during the last two years in Lincoln, Nebraska, Lexington, Kentucky, and Sugar Land, Texas.  

Gunderman said that the service provider is on track to complete these IPTV builds, but did not indicate if it would target other markets yet.

“We’re wrapping up some of the deployments for 2016,” Gunderman said. “It’s steady as she goes on our IPTV projects and we’ll continue to monitor our progress there and whether future deployments are going to be advantageous for us.”

Despite the long-term potential that the higher speed broadband connections will bring, Windstream reported that consumer and small business ILEC service revenues were $395 million, down 1 percent from the same period a year ago.

However, consumer service remained the bright spot out of the two segments with revenues rising $1 million sequentially to $312 million. Driven by broadband speed penetration gains across all tiers, improved modem rentals and sales of bundled services, consumer average revenue per household increased 2 percent sequentially and 6 percent year-over-year.

Consumer broadband connections were 1.06 million, down sequentially from 1.07 million in the second quarter. Windstream also saw varying results in its wholesale, enterprise and small business segments.

Wholesale service revenues were $155 million, down 8 percent year-over-year. Core wholesale and resale revenues were $145 million, down $4 million sequentially. Enterprise service revenues were $495 million, up $4 million sequentially. Enterprise contribution margin was $83 million, or 16 percent, an increase of $20 million, or 31 percent, year-over-year.

Small business CLEC service revenues were $119 million, down sequentially from $125 million in the second quarter. Through targeted price increases and incremental sales of additional services, average revenue per user increased 5 percent year-over-year.

From an overall financial standpoint, Windstream reported total revenues and sales of $1.34 billion and total service revenues of $1.32 billion in the third quarter compared to $1.50 billion and $1.45 billion respectively year-over-year. The company reported a net loss of $66 million or a loss of 72 cents per share compared to a loss of $7 million or a loss of 8 cents per share a year ago.

Windstream reaffirmed its previously provided service revenue guidance of $5.27 billion to $5.42 billion and adjusted OIBDAR of $1.90 billion to $1.95 billion. Adjusted capital expenditures are expected to be between $800 million and $850 million.

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