Windstream taps Day to lead consumer and SMB division, sees broadband as growth driver

Windstream has named Sarah Day as president of its Consumer and Small Business (C/SMB) division.

Sarah Day

Day (Source: Windstream)

Set to go into effect on Jan. 1, Day will be tasked with leading, managing and developing the short- and long-term strategies of the C/SMB unit.

Day's role may be new, but she's hardly new to the company or the division.

She joined Windstream in 2008 and most recently served as the interim president of C/SMB. Earlier, she was senior vice president of C/SMB Marketing and Customer Care.

Windstream's consumer and C/SMB divisions are two areas where the telco is seeing new growth, part of which will be driven by its ongoing rollout of higher speed VDSL2 services under its Project Excel initiative and other builds.

While it's not abandoning its fellow CLEC SMB segment, Windstream expects higher speed broadband services will have a great impact on SMBs in its ILEC (incumbent local exchange carrier) territory where customers are served on its own wireline network versus Type 2 facilities it has to rent from other telcos like AT&T (NYSE: T).

"The story does change on-net because in the ILEC territory customers are served on-net and we don't have an underlying large interconnection costs we're paying to someone else," said Bob Gunderman, CFO of Windstream, during the recent Merrill Lynch 2015 Leveraged Finance Conference. "Once we win that customer it is very consumer-like in that regard and our ability to be aggressive on price if necessary we have a lot of room to do that and still have very good margins."

A key driver of growth in the C/SMB segment is broadband.

The service provider has upgraded its last mile network facilities, including existing fiber-fed remote DSLAMs, to deliver 50, 75 and 100 Mbps to 1 million locations. Through its $250 million Project Excel program, Windstream plans to enhance its last mile network by installing VDSL2 network equipment to support up to 100 Mbps in more of its rural markets.

Gunderman said that it's not immune to cable competitors like Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC), two MSOs that have been aggressively expanding their focus on serving business customers.

"Admittedly over the last few years cable has taken some share there, but we feel optimistic that the investments we're making both on the consumer side with these premium speed deployments will be very complementary to the ILEC SMB base as well," Gunderman said. "It is because we're really serving them off the same improved speed profile network that we're pushing forward for the consumer guys."

While the VDSL2 services are relatively new, the service provider has set a path for new growth, one that was illustrated in its third quarter earnings.

During that period, Windstream reported that consumer service revenue rose sequentially in the third quarter to $314 million with high speed Internet bundles rising slightly to $259.9 million. Meanwhile ILEC small business revenues were $107 million in the third quarter, remaining steady as growth in integrated voice and data services mitigated customer disconnects.

"I think we have begun to see the benefits of the speed investments we made, but frankly we're just in the beginnings of that," Gunderman said. "We launched about 1 million new locations in September and November for 50, 75 and 100 Mbps."

For more:
- see the release

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