Windstream to expand 100G network, add nearly 20K route fiber miles

Windstream is bullish on its 100G long-haul network prospects for both enterprise and carrier customers, so much so that it has set forth a plan to add more fiber routes and entrance points to the network by the end of the year.

Taking a leverage-and-extend approach with its existing fiber network, Tony Thomas, president, CEO and director of Windstream, told investors during the second-quarter earnings call that the company is currently enhancing its 100G long-haul network to gain more facilities based revenues.

"Within the Carrier unit we are expanding our 100-gig cable long-haul network to drive sales and improve efficiency," Thomas said during the earnings call, according to a Seeking Alpha transcript. "We are leveraging our existing fiber network to add high demand routes and connect existing routes and will have added almost 20,000 route miles and nearly 50 new carrier access points by the end of 2015."

Another area where the 100G and network expansion is going to help carrier revenues will be in the wireless backhaul arena.

Like other independent wireline-centric telcos such as Lumos, Windstream continues to work through the TDM-to-IP growing pains as more of its wireless customers shut down TDM circuits. To counteract the TDM grooming issue, Windstream is building up its IP-based wireless backhaul business, adding fiber to 5,000 new towers.

"We continue to grow wireless Ethernet revenue as the bandwidth needs increase across our 5,000 towers," said Thomas.

These efforts were reflected in its second-quarter 2015 carrier unit results. Excluding legacy wireless TDM, the Carrier business generated revenue of $156 million, up year-over-year due to growth in Ethernet sales, wholesale revenues and improving sales of its expanded long-haul express network.

Bob Gunderman, CFO of Windstream said during the earnings call that "the remaining $16 million of revenue is from legacy wireless TDM circuits," and that this "revenue just climbed significantly which was in line with our expectations due to wireless carrier migrations from TDM technology to fiber."

Gunderman expects that as wireless operators see consumer demand for higher speed data services like over the top video being touted by AT&T Mobility (NYSE: T), Verizon Wireless (NYSE: VZ) and others, Ethernet-based backhaul will rise, mitigating ongoing revenue pressure from TDM to IP migrations.

"As mobile data growth continues, we expect continued growth in wireless Ethernet revenue as bandwidth requirements necessitate regular migrations to higher speed tiers," Gunderman said. "We're also making progress on project WINterstate to expand our long -haul carrier network and increase sales opportunities. Investments in these key growth areas will mitigate pressure from TDM migrations in the back half of the year."

For more:
- see the Seeking Alpha earnings transcript (sub req.)

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