Broadband Providers Continue to Battle for Customers
According to Leichtman Research Group the first quarter of 2013 yielded 1.1 million new broadband subscribers for the largest U.S. cable and telephone providers. The LRG study noted that these same U.S. cable and telephone providers have over 82.4 million subscribers, with the top five cable companies having more than half of that total.
First quarter 2013 total subscriber counts for the major cable and telephone companies were as follows:
Cable Companies
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Telephone Companies
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The rate of subscriber growth among telephone companies was not even close to the cable subscriber growth. While AT&T had almost five million more total subscribers than Time Warner, they only added 124,000 new subscribers - almost 20,000 less than TWC. In total, all seven telephone companies collectively added 315,305 new subscribers, compared to almost 800,000 for their cable counterparts.
Fast-forward to third-quarter 2013 and we find Frontier and Windstream, two of the telephone company broadband providers struggling for subscribers in the first-quarter still experiencing a decline in customers and profit.
Windstream reported third-quarter net income of $31 million, which was down 34% from the same quarter in 2012. Windstream's total business customers fell from 642,000 to 611,100 in the current quarter, while the number of voice lines dropped from 1.86 million to 1.75 million. Compounding the company's losses was a drop of 11,100 broadband customers in the current quarter. Total number of broadband customers was 1.18 million this quarter, compared to 1.21 million in the same quarter during 2012.
Windstream focused on the bright side however, pointing to growth in business and rural broadband customers. According to Jeff Gardner, president and CEO:
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It was not all bad news for Windstream. Business service revenue was almost $916 million, up slightly from the same quarter last year. Data and integrated services (including IP-based voice and data, dedicated Internet access and data center managed services was up 5%, at $407 million. While the number of broadband customers declined, Windstream still reported $119 million in revenue from consumer broadband customers, and average revenue per customer was up 6% from last year.
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In early 2013, Leichtman Research Group, Inc. (LRG) found that the seventeen largest cable and telephone providers in the US -- representing about 93% of the market -- acquired 1.1 million net additional high-speed Internet subscribers in the first quarter of 2013. These top broadband providers now account for over 82.4 million subscribers -- with top cable companies having over 47.5 million broadband subscribers, and top telephone companies having nearly 34.9 million subscribers.
Bruce Leichtman, President and Principal Analyst for Leichtman Research Group, Inc. reflected on the new research and comparisons from previous years:
Leichtman Report: Over 75% of U.S. Households Have Broadband at Home: 55% of American adults access the Internet on a Smartphone
"The first quarter of the year has proven to be the best quarter for net broadband adds in each of the past seven years, and from 2010-2012 net adds in the first quarter were greater than in the second and third quarters combined," said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. "2013 began with another strong first quarter. Net broadband additions in 1Q 2013 were about 500,000 more than in 4Q 2012.
Windstream CEO Jeff Gardner said the company's change in types of revenue demonstrated the company's successful transformation from the declining voice line market. Gardner noted that when Windstream started in 2006, one third of its revenue was from business services. Business services now represent 61% of its revenue.
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The three areas of focus in Winstream's new business strategy noted by Gardner include:
Gardner summed up the company's third-quarter results: "Windstream's going to get better."
First quarter 2013 total subscriber counts for the major cable and telephone companies were as follows:
Cable Companies
- Comcast- 19,799,000
- Time Warner (TWC) - 11,538,000
- Cox - 4,640,000
- Charter - 4,086,000
- Cablevision - 3,086,000
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Telephone Companies
- AT&T - 16,514,000
- Verizon - 8,894,000
- CenturyLink - 5,915,000
- Frontier - 1,752,000
- Windstream - 1,205,900
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The rate of subscriber growth among telephone companies was not even close to the cable subscriber growth. While AT&T had almost five million more total subscribers than Time Warner, they only added 124,000 new subscribers - almost 20,000 less than TWC. In total, all seven telephone companies collectively added 315,305 new subscribers, compared to almost 800,000 for their cable counterparts.
Fast-forward to third-quarter 2013 and we find Frontier and Windstream, two of the telephone company broadband providers struggling for subscribers in the first-quarter still experiencing a decline in customers and profit.
Windstream reported third-quarter net income of $31 million, which was down 34% from the same quarter in 2012. Windstream's total business customers fell from 642,000 to 611,100 in the current quarter, while the number of voice lines dropped from 1.86 million to 1.75 million. Compounding the company's losses was a drop of 11,100 broadband customers in the current quarter. Total number of broadband customers was 1.18 million this quarter, compared to 1.21 million in the same quarter during 2012.
Windstream focused on the bright side however, pointing to growth in business and rural broadband customers. According to Jeff Gardner, president and CEO:
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"Growth in business and consumer broadband revenues, combined with declining capital expenditures and lower cash interest expense, produced strong free cash flow during the quarter, We are confident that our strategy to transform Windstream into an enterprise-focused company enhances our growth opportunities and positions us for continued success."
"Windstream generates substantial free cash flow which supports our dividend. As we look forward, we will remain focused on creating and returning value to our shareholders."
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It was not all bad news for Windstream. Business service revenue was almost $916 million, up slightly from the same quarter last year. Data and integrated services (including IP-based voice and data, dedicated Internet access and data center managed services was up 5%, at $407 million. While the number of broadband customers declined, Windstream still reported $119 million in revenue from consumer broadband customers, and average revenue per customer was up 6% from last year.
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In early 2013, Leichtman Research Group, Inc. (LRG) found that the seventeen largest cable and telephone providers in the US -- representing about 93% of the market -- acquired 1.1 million net additional high-speed Internet subscribers in the first quarter of 2013. These top broadband providers now account for over 82.4 million subscribers -- with top cable companies having over 47.5 million broadband subscribers, and top telephone companies having nearly 34.9 million subscribers.
- Overall, broadband additions in 1Q 2013 amounted to 86% of those in 1Q 2012 -- with cable having 82% as many additions as a year ago, and Telcos 99% as many additions as a year ago
- The top cable companies added about 800,000 subscribers, representing 72% of the net broadband additions for the quarter versus the top telephone companies
- AT&T and Verizon added 919,000 fiber subscribers (via U-verse and FiOS) in 1Q 2013, while having a net loss of 696,000 DSL subscribers. U-verse and FiOS now account for 40% of the top telephone companies' broadband subscribers -- compared to 32% a year ago
- The top cable broadband providers have a 58% share of the overall market, with about 12.7 million more subscribers than the top telephone companies -- compared to 10.8 million more a year ago
Bruce Leichtman, President and Principal Analyst for Leichtman Research Group, Inc. reflected on the new research and comparisons from previous years:
Leichtman Report: Over 75% of U.S. Households Have Broadband at Home: 55% of American adults access the Internet on a Smartphone
"The first quarter of the year has proven to be the best quarter for net broadband adds in each of the past seven years, and from 2010-2012 net adds in the first quarter were greater than in the second and third quarters combined," said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. "2013 began with another strong first quarter. Net broadband additions in 1Q 2013 were about 500,000 more than in 4Q 2012.
Windstream CEO Jeff Gardner said the company's change in types of revenue demonstrated the company's successful transformation from the declining voice line market. Gardner noted that when Windstream started in 2006, one third of its revenue was from business services. Business services now represent 61% of its revenue.
"It is now a $3.8 billion annual revenue stream, We are continuing to evolve and improve the business and are focused on three key areas to advance our goals."
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The three areas of focus in Winstream's new business strategy noted by Gardner include:
- Advancing Windstream's business capability
- Investing in capital and strategic opportunities such as increasing the company's fiber footprint
- Implementing accounting strategies by refinancing and paying down existing debt
Gardner summed up the company's third-quarter results: "Windstream's going to get better."
