Windstream to bring 50 Mbps speeds to nearly 1M new locations

Windstream is accelerating its consumer DSL profile with plans to launch 50 Mbps speeds to nearly 1 million locations, including 380,000 existing customers.

Speaking to investors during the second quarter 2015 earnings call, Tony Thomas, CEO of Windstream, said that the introduction of 50 Mbps across its footprint will enhance customer ARPU (average revenue per user) and broadband share.

"This deployment provides a great opportunity to generate higher ARPU and increase market share," Thomas said.

Powering the new speed initiative is its ongoing deployment of VDSL2+ technology.  Upgrading its network with VDSL2+ bonding will enable it enhance Internet speeds for consumer and SMB (small and medium business) customers.

"We're investing in high speed Internet capabilities in our consumer and ILEC business to drive additional broadband revenue growth," said Bob Gunderman, CFO of Windstream, during the earnings call. "We have made significant progress with our VDSL2+ technology deployments to offer premium speeds throughout our footprint, which will provide the opportunity to provide higher ARPU and increase market share."

Gunderman added that the VDSL2+ roll out will enable it to drive customers to higher speed services.

"This represents an attractive opportunity for the consumer segment, particularly considering that roughly 80 percent, or about 900,000 of our current broadband customers subscribe to speeds less than 10 Mbps," Gunderman said.

With the VDSL2 network in place, the service provider launched its "Kinetic" IPTV service in its Nebraska market in April and plans to extend it to other select markets throughout the rest of 2015 and beyond.

In addition, Windstream has accepted $175 million in CAF II funding, which will enable it to shorten its copper loop lengths to expand broadband availability and improve speeds to over 400,000 rural locations.

"The annual support of over $175 million over the seven year period equates to over $1.2 billion, which is an incremental $500 million over Windstream's federal USF support," Thomas said. "We're very excited about the CAF II program, which will allow us to continue to serve rural locations that would be otherwise uneconomic to serve without universal service support."

Here's a breakdown of Windstream's key operating metrics:

Consumer: Consumer revenues were $314 million, up $2 million sequentially, but flat year-over-year.

ILEC, CLEC SMB: ILEC small business revenues in the second quarter were $108 million as it continues to invest in high-speed Internet capabilities to drive new broadband revenue growth.

In the CLEC and Small Business service segment, revenues were $146 million in the second quarter as the telco continued to focus on retention, selling incremental services to existing customers and cost reductions to deliver profitable revenue opportunities.

Carrier: Taking out legacy wireless TDM-based wireless services, carrier service revenues were $156 million, up year-over-year due to growth in Ethernet sales, wholesale revenues and improving sales on its expanded long-haul 100G express network.

Enterprise: Led by a demand for IP-based solutions and next generation data, enterprise service revenues were $485 million, up 3.5 percent from the same period a year ago. Data and integrated solution service revenues within Enterprise also grew approximately 7.3 percent.

Total company revenues were $1.4 billion and grew sequentially by $10 million in the second quarter.

Shares of Windstream were listed at $5.50, up 32 cents, or 6.18 percent in Thursday morning trading on the Nasdaq stock exchange.

For more:
- see the earnings release

Special report: Wireline telecom earnings in the second quarter of 2015

Related articles:
Windstream takes $175M in Connect America Funds, sets broadband expansion to 400K rural locations
Windstream reaches 200,000 users with VDSL2, sees further broadband growth opportunities
Frontier will use CAF II funding to expand broadband in acquired Verizon territories
Windstream accepts $60.4M in CAF I funds for rural broadband extension

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