Windstream, which is progressing through chapter 11 bankruptcy, reported a $2.3 billion loss, and $133.7 million drop in revenue and sales for the first quarter of 2019 compared to the same quarter in 2018.
Revenue and sales totaled nearly $1.32 billion, down from $1.45 billion for the year-ago quarter. The communications giant reported a $121 million net loss in the year-ago quarter. Despite it all, the company beat Wall Street’s expectations.
“Windstream began the year with another solid quarter, demonstrating the company’s continued momentum in the marketplaces we serve,” said Tony Thomas, Windstream’s president and CEO. “We stand alone among major U.S. telecom service providers with 14 consecutive months of consumer broadband subscriber growth through April, as well as our strongest quarterly broadband growth since 2011. We were pleased to deliver sequential revenue and average revenue per user (ARPU) growth in our consumer business as a result. We also continued to see strong customer adoption of our enterprise strategic products and services and remain the largest SD-WAN service provider in the country.”
Enterprise strategic sales continued to accelerate, representing more than 55 percent of total enterprise sales during the first quarter. Sales of strategic products and services, including SD-WAN, UCaaS and OfficeSuiteUC, now represent an annualized run rate of $250 million in revenue and are growing at 44 percent year-over-year.
Service revenue was $1.3 billion in the quarter, down from $1.43 billion a year ago. Consumer and small business service revenues were $454 million, a 4 percent decrease from the year-ago quarter.
Enterprise service revenue was $680 million, a 7 percent decrease from a year ago. Wholesale service revenue was $169 million, down 8 percent.
Windstream also provided an update on the chapter 11 process, saying it’s evaluating all options regarding its master lease with Uniti Group, including renegotiation, recharacterization and rejection of the agreement. The lease provides access to Uniti’s network and assets that Windstream relies on for its operations.
“We believe the lease payment under the master lease is significantly above market,” Thomas said. “In fact, given the prescriptive valuation process outlined in the lease, we estimate payment could be reduced by 80% or more if the lease were to be renewed in 2030 because of the significant decline in the value of copper facilities, which comprised 54 percent of the initial value of the lease in 2015. Overall we are pleased with the progress of the chapter 11 reorganization process. Windstream intends to move through the court-supervised process as quickly and efficiently as possible and will emerge a healthier and stronger company.”