Windstream isn’t the company it used to be. Once upon a time, it mostly served smaller rural markets as Alltel. But a string of acquisitions since 2000, mostly of business-focused companies, has created a company with a surprisingly different profile.
In the fourth quarter of 2011, for example, total revenues were $1.6 billion. Business service revenues were $888 million, or 56 percent of total. Add consumer broadband revenues and 67 percent of total revenue comes from business customers and consumer broadband.
Still, 59 percent of consumer revenue is generated by voice services. Of total retail revenue, voice sold to business and consumer customers represents about 33 percent of total revenue.
Voice contributes about 14 percent of wholesale revenue of about $240 million in the quarter.
Windstream Corp. defines itself as “a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide.
Frontier Communications likewise says it is “a provider of voice, broadband, satellite video, wireless Internet data access, data security solutions, bundled offerings, specialized bundles for small businesses and home offices, and advanced business communications for medium and large businesses in 27 states.”
Note that neither company describes itself as a provider of communications services to consumers.
To some extent, those statements are as much “aspirational” as a description of where each firm gets most of its revenue right now.
At December 31, 2011, Frontier had 3,103,800 residential customers and 309,900 business customers.
Business revenue tells the story, though. For the six-month period ending Dec. 31, 2011, Frontier earned $692 million in business customer revenue, and $544 million in consumer revenue.
That is not to say a “typical” independent or rural telco will have an opportunity to create that sort of revenue distribution. Both Frontier and Windstream benefit from a presence in some mid-sized markets as well as rural areas, so the opportunity to sell services to businesses is greater.
But results at both firms show a strategy that will work for the larger independents, namely an out-of-region emphasis on business customers and revenue, compared to in-region customers.
