Windstream saw its ninth month of broadband growth in November, said CFO Bob Gunderman at a financial conference yesterday.  Gunderman attributed the Windstream broadband growth to “the investment we made back into the consumer broadband network.”

As of a couple of years ago, Windstream — like some other incumbent local telecom providers – was losing broadband subscribers as consumers wanted faster internet speeds than the company could provide. But Windstream claims the picture changed when the company made an investment of between $200 million and $300 million to upgrade broadband speeds through what it called Project Excel.

Windstream Broadband Growth
Project Excel focused on VDSL2 technology, which involves bringing fiber to a neighborhood node to boost the speeds that can be delivered over the copper link to the home to 100 Mbps. At a time when carriers in major metro markets are bringing fiber to the home to support gigabit speeds, these upgrades might not seem to have a lot of pizazz. But even where gigabit speeds are available, most people don’t take them – at least not yet. And upgrading to 100 Mbps throughout 15% of its customer footprint has certainly given Windstream a big boost.


As of the end of first quarter 2019, Windstream expects to have 100 Mbps service available to 30% of its customers. Churn is down between 13% and 15%, and gross additions are up about 15%, Gunderman said.

Nowadays, Windstream is keeping its broadband capital expenditures lower than they were during Project Excel, but the November data that Gunderman revealed today suggests that hasn’t been a problem.

“Now what we’re doing on broadband is incremental speed augmentation wherever we can with more sustainable capex,” he said.

Perhaps Windstream’s VDSL2-focused strategy wouldn’t work in major metro areas, where major cable companies increasingly are offering gigabit service. But considering that Windstream’s largest markets are Lincoln, Nebraska and Lexington, Kentucky, it’s a strategy that works for them – at least for now.

Windstream also expects to see a boost in broadband take rates as a result of the build-outs it is doing through the Connect America Fund program.

“We haven’t seen a material impact” from the CAF program because “we are still in the construction phase,” Gunderman said. But in 2019, he said, CAF build-outs will be a “more consequential driver” of broadband growth.

Gunderman made his comments at the Bank of America Merrill Lynch Leveraged Finance Conference, which was also webcast.

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