Consolidated Speeds FairPoint Integration
Consolidated Communications plans to invest heavily in fiber networks, targeting a half-million homes acquired in its purchase of FairPoint, with the intent of aggressively moving the combined company forward. (See Consolidated Snaps Up Fairpoint for $1.5B.)
And while Consolidated Communications Inc. executives faced some investment analyst skeptics on today's earnings call, CEO and President Bob Udell and CFO Steve Childers stuck to their guns on the company's strategy, pointing to other significant moves in recent days. Those include launching the Consolidated brand across all FairPoint Communications Inc. properties, offering DirecTV Now as an over-the-top video service and beefing up its commercial services with a new managed security offer.
Key to the plan is rapid consolidation of FairPoint, which Udell called a "transformational acquisition" in that it doubled his company's service footprint. Not all such major mergers have progressed smoothly for independent telcos, but Consolidated has initiated what it calls "fast-start" customer and network initiatives that Udell says have already reduced call center response times by 40% and sped call-handling as well.
The upbeat message lifted Consolidated's stock price by almost a dollar, or 6.4%, in trading during and after the call, despite the fact the company's revenues were down in the fourth quarter to $356.4 million from $374.5 million a year earlier and, separate of a one-time benefit from the massive corporate tax cut, the company posted a four-cent loss versus an 11-cent profit a year ago.
Udell said the planned upgrades in Northern New England will mean that half-a million homes will see increased broadband speeds, with 84% of those homes seeing speeds tripled, and 100,000 customers gaining access to gigabit service. In addition, Consolidated will more aggressively market those higher speeds, which have been proven to deliver higher average revenue per customer (ARPU), reduce churn and even win back some customers lost to competitors, he said.
This "fast-start" approach to absorbing FairPoint means Consolidated will gain its anticipate $55 million in cost synergies on or before the two-year timetable, even as it improves customer service, he added.
The Consolidated exec also pointed to new commercial offerings, saying the company will roll out "our suite of cloud services MPLS and SD-WAN in second quarter of the year." Commercial services were a bright spot, up 1.4% over last year.
Udell said the company is also adding resources to its small to mid-sized business sales effort and expanding its fiber tower footprint as well, adding sites in Maine, Minnesota and Illinois to reach more than 2,700 sites overall.
Adding DirecTV Now to its offer -- it already offers HBO Now -- might move more customers onto streaming and off capital-intensive content delivery, the Consolidated execs noted. They also called attention to the company's efforts to support streaming video and other real-time traffic by giving it prioritization for a better customer experience.
"Not all of our competitors do that," Udell noted. In addition, the Consolidated installation process involves checking the quality of the in-home WiFi signal, he said.
— Carol Wilson, Editor-at-Large, Light Reading