Q3 2019 Earnings Call - Pre-Recorded
Pointing windstreams third quarter 2019 earnings conference call.
Joining me on the call today, our Tony Thomas Our Chief Executive Officer and.
Good morning, everyone and thanks for joining Windstreams third quarter 2019 earnings conference call joining.
Joining me on the call today, our Tony Thomas Our Chief Executive Officer, and to Bob Gunderman, Our Chief Financial Officer, and Treasurer to accompany today's call. We have posted a presentation slides earnings release and supplemental schedule on our Investor Relations website.
Today's discussion includes statements about expected future events and financial results that are forward looking and subject to risks and uncertainties. A discussion of factors that may affect future results is contained in windstreams filings with the SEC, which are available on our website.
Let me now I'll turn it over to Tony Thomas.
Thanks, Chris and good morning, everyone and thank you for joining us today.
Before I begin discussing windstreams operational performance I want to briefly provide an update on our restructuring process.
Windstream remains focused on securing result that maximizes value for all of the company's stakeholders.
As part of this process Windstream continues to work to modify our arrangement with unity.
As discussed on last quarter's call to increase the likelihood of an optimal results Windstream is pursuing both litigation against and negotiations with unity.
We are hopeful this process will lead to a mutually satisfactory agreement between Windstream UTI and our other key stakeholders.
Absent an acceptable negotiated resolution windstream as compared to pursue its litigation claims to conclusion.
Trials currently scheduled to begin in the first week of March.
Pursuant to a competency alley agreement associated with the ongoing mediation, we are unable to provide any additional information regarding the discussions with unity at this time.
Setting aside the unity related matters in the third quarter, we once again delivered broadband customer growth in our kinetic business unit and grew sales of our enterprise strategic products I.
Im proud of the continued focus of our team and appreciate the support of all our stakeholders as we work through the reorganization process.
Turning to our operations.
Our team remains laser focused on serving our customers in achieving our priorities for the year.
Getting on slide four we deliver 423 million in adjusted EBITDAR in the quarter. Our consolidated adjusted open our margin of 33.3% has increased 20 basis points year over year as our cash expenses fell by 8.2% year over year, continuing our focus of taking costs.
Cost out of the business.
For the sixth consecutive quarter and now 20 consecutive month through October 2019, we recorded consumer broadband growth, adding approximately 5700 subscribers during the quarter.
Up from 1900 net adds a quarter ago.
Year to date through September we have added approximately 19000 broadband subscribers, 826% increase year over year.
In the enterprise business unit, we continued to see strong growth in our strategic products. We remain the largest SD Wan service provider in the country in terms of customers and location served and our strategic revenues grew by 41% in the quarter.
On slide five I wanted to take a minute to review our 2019 operational priorities, which we discussed on our fourth quarter call in February and our progress towards them.
First we set the goal of consistent customer excellence.
Our customer satisfaction survey results as well as our continued success on gaining consumer broadband market share illustrate the progress we are seeing.
Second we had a priority to be a software development powerhouse, our Gartner Magic Quadrant Award for office suite as well as numerous other awards and accolades for our Ucas at SD Lan products demonstrate our progress here.
In addition to marketplaces, recognizing our software abilities as our strategic revenues continued to grow impressively.
Helping to offset continued weakness in our core and legacy enterprise revenues.
Lastly, we set a fourth priority of aggressive cost management and once again with an 8.2% decline cash costs year over year, we continued to deliver on that necessary goal and today's telecom landscape.
Turning to slide six.
Kinetic segment continues to rapidly expand its broadband capabilities.
We have more than doubled the availability of 100, Meg speeds across our footprint over the past several months today, 41% of our households can receive 100 may or greater speeds and 2015, not a single household could 70% of our households have access to speed of 25, Meg or greater which were.
Presents a nine percentage point improvement since the beginning of the year and over 2 million homes, which represents half of our ILEC footprint have access to speeds of 50, Meg or greater our kinetic capital expenditure program continues to be focused on these speed upgrade capabilities across our ILEC footprint.
Slide seven highlight some of the result for these network improvements, which contributed to approximately 5700, new subscriber additions in the third quarter, representing the sixth consecutive quarter of consumer broadband growth a strength across our consumer broadband metrics shows that our network investments are paying off project.
Excel, which was completed in the first half of 2017, along with targeted initiatives that are ongoing are extending faster broadband speeds across our pilot footprint and our customers are responding.
We expect to add approximately 25000 broadband subscribers during 2019, reflecting our continued momentum in the marketplace.
Slide eight outlines our customers growing demand for our increasing broadband speed capabilities. As you can see the percentage of our broadband subscriber base, taking faster speed tiers continues to improve dramatically as of September 51% of our broadband subscriber base now enjoy speeds of 25, Meg or faster. The first time, we across the full.
As a percent threshold and a 400 basis points sequentially.
As a reminder, this metric was approximately 10% at the beginning of 2017. Additionally, we have enabled one get capability to over 100000 commercial locations across our ILEC footprint.
Turning to slide nine I wanted to touch on our progress related to our fixed wireless efforts.
In mid June we were awarded 146 licenses in the 24 gigahertz and 28 gigahertz spectrum bands. Following auctions conducted by the FCC, which covers approximately 5 million households, including 2 million in our ILEC footprint and 3 million homes adjacent to our ILEC footprint.
We spent $26.6 million for the spectrum, which we used to deliver speeds of up to one gigabit per second.
Importantly, the spectrum and the associated electronics and equipment will be entirely and wholly owned by Windstream.
We are currently conducting extensive fixed wireless trials and three different spectrum bands across our footprint and I'm pleased to report that all trials have met or exceeded our expectations from both a throughput and a cost perspective.
We remain very excited about this opportunity going forward.
On slide 10, I wanted to touch on a couple of exciting product launches from our kinetic team during the quarter kinetic My Fi is our premium in home Wi Fi product, which includes a my Fi extender designed to fill coverage area gaps within the home as well as a best in class Gateway, a new Wi Fi management applications part of our my when.
For kinetic customers. The App includes information on network service status connected device lists signal strength and much more notably we currently have a 4.8 ratings for the App in both the App store as well as Google play.
We believe these products helped contribute to a best in class customer experience for our kinetic consumer customers.
In addition in late October we launched office suite for SMB customers and our kinetic elect territory now our Gartner Magic Quadrant Award winning Ucas flagship product is available across our kinetic footprint for small and medium sized businesses as well.