Consolidated’s CEO: We Are on Our Way to Becoming a Fiber First Broadband Company

Consolidated Communications has positioned itself to become a fiber-to-the-home (FTTH)-based broadband provider.

  • Consolidated Communications

Consolidated Communications has positioned itself to extend fiber-to-the-home (FTTH)-based broadband throughout its growing residential footprint, enabling to bring Gbps level speeds to more rural communities.

Last September, the service provider entered into an agreement with Searchlight Capital Partners, which agreed to invest $425 million in the company. By working with Searchlight, Consolidated will not only reduce its debt load, but also gain access to additional capital to accelerate its ongoing fiber deployment.

“With our strong balance sheet and strategic partner in Searchlight, we will upgrade 1.6 million fiber passing over the next five years,” said Bob Udell, CEO of Consolidated Communications during the provider’s fourth-quarter earnings call. “We're building on an excellent platform for the future. We are well on our way to becoming a fiber first broadband company.”

Consolidated continued to make progress with its fiber and broadband plans throughout the quarter and the year.

During the fourth quarter, Consolidated grew broadband revenue 2.8 percent, representing the seventh consecutive quarter of year-over-year broadband revenue growth. In 2020, the telco completed five fiber over builds across four communities passing just 2,000 locations with Federal CARES Support. in first quarter, it plans to complete fiber overbuilt across five additional communities, passing more than 8,000 locations.

“Our number one priority is accelerating our fiber build to scale and grow broadband services,” Udell said. “We are embarking on a 5-year investment initiative, where we will upgrade 1.6 million locations with fiber enabling, multi-gigabit speeds across more than 70 percent of our footprint.”

One of the additive effects of the fiber build is that it can be leveraged to address growing business and carrier service opportunities. Udell said that it has forecast 2 percent data transport revenue growth in 2021 and it will continue to target 90 percent plus of those new sales being on that fiber.

“Our second priority is leveraging our fiber assets to continue to grow commercial and carrier services,” he said. “That's a solid revenue source for us and a source of growth.”

Gigabit Adoption Rises

As Consolidated rolls out its FTTH network to more communities, the service provider is seeing more customers subscribe to 1 Gbps speed services.

“About one-third of sales are new connections on the network with the majority of all subscriptions at one 1 gig symmetrical,” Udell said. “These are an optimal test of our process, product and pricing for our larger fiber build plans and we're off to a fast start.”

The telco has positioned itself for further FTTH growth across its territories.

Since early January, Consolidated has built out nearly 400 miles of fiber. In 2021, it plans to will upgrade 300,000 passings, enabling fiber-based multi-gigabit speeds. A large portion of these builds will be in New England as well as parts of California, Texas, Illinois and Minnesota.

“This is the first step to extending fiber to more than 70 percent of our total passings,” Udell said. “To be clear, our plan is about more than just building fiber, our go-to-market strategy has been meticulously planned out. We will offer multi-gig symmetrical broadband speeds, simple plans, highly competitive pricing and a stellar customer experience, all to create a truly differentiated service offering.”

To complement its FTTH roll out, the service provider will also be extending Wi-Fi 6 capabilities to homes throughout its territories.

“We are placing a concentrated focus on delivering the best-in-home experience possible using the latest Wi-Fi 6 technology and advanced troubleshooting tools,” Udell said. “We will update you regularly on the new fiber product offerings and go-to-market plans throughout the year.”

Focus on Rural Partnerships

Given the cost challenges of building out fiber and broadband overall in rural areas, Consolidated continues to see demand for rural broadband networks and partnership opportunities.

Communities that represent 20,000 additional locations have accepted build out proposals from Consolidated with work slated to begin later this year, while several other towns are evaluating bids.

Udell said that its wide-reaching fiber network positions it to better address more rural broadband opportunities.

“Because of our dense fiber network proximity, we are well positioned to partner with rural communities to build fiber,” Udell said. “These were typically areas that would be difficult to justify financially.”

The service provider is seeing penetration rates growing where it has built out fiber in rural New Hampshire and New York. In Chesterfield, New Hampshire, an area where Consolidated has limited competition, it has reached 60 percent penetration with FTTH after one full year. Likewise, in rural New York, where its fiber build passes over 10,000 locations with significant cable overlap, it realized 32 percent penetration in two years.

Udell said “these take rates are consistent with our plan.”

Here’s a breakdown of Consolidated’s key metrics:

Commercial and Carrier: Commercial and Carrier revenue totaled $149.8 million in the fourth quarter. Data and transport revenue totaled $92.8 million, up 3.2 percent year-over-year. Steve Childers, CFO of Consolidated, said that data and transport growth “continues to be fueled by our investment in fiber network and success within the carrier and commercial channels.”

Consumer Broadband: Consumer revenue grew 2.8 percent, representing seven consecutive quarters of year over year growth. Notably, consumer broadband grew for the seventh consecutive quarter on a year-over-year basis, totaling $66.3 million, which represented a 2.8 percent increase versus a year ago. Childers said, “we expect to continue to grow data ARPU as we increase speed and upsell customers.”

Revenue: Consolidated’s total fourth-quarter revenue was $326.1 million, down 1.5 percent compared to the fourth of quarter 2019.

(To keep up with the Q4 broadband earnings, make sure to check out our new report From AT&T to Verizon: Sizing up Q4 Broadband 2020 Earnings)


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