What Can Investors Expect from Windstream Going Forward?
Windstream’s Internet customers in 1Q16
In the previous part of this series, we learned that Windstream Holdings’ (WIN) consumer and SMB (small business) ILEC (incumbent local exchange carrier) revenue continued its declining trend in 1Q16. This revenue stream decreased ~1.4% YoY (or year-over-year) to ~$0.4 billion for the quarter. During the quarter, the wireline player’s consumer revenue declined by ~0.4% YoY to ~$0.31 billion. The company continued to lose high-speed Internet customers during 1Q16.
As we can see in the above chart, the wireline player’s high-speed Internet customers fell ~3.6% YoY to reach ~1.1 million by the end of 1Q16. During the quarter, on a net basis, the wireline company lost ~3,100 high-speed Internet customers. This net customer loss figure was at ~14,500 in 4Q15.
Expanding unit contribution of Windstream’s consumers
On the positive side, the unit revenue of consumers continued to increase in 1Q16. The wireline player’s consumer average revenue per household served increased ~5.7% YoY during the quarter.
In regards to the improvement in the metric, CFO Bob Gunderman said, “This improvement was enabled by speed penetration gains across all tiers, improved modem rental attachment rates, and continued sales of bundle adders. In addition, we are seeing attractive adoption rates of premium Internet speeds, both from new and existing customers. For customers activating new service, premium speed attachment rates are approximately 35% of gross additions.”
For diversified exposure to stocks of players in the US wireline telecom industry, you can consider the SPDR S&P 500 ETF (SPY). The ETF held a total of ~2.7% of its holdings in AT&T (T), Verizon (VZ), CenturyLink (CTL), Frontier Communications (FTR), and Level 3 Communications (LVLT) at the end of April 2016.
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