CenturyTel earning rise on strong broadband

CenturyTel today reported second-quarter revenue of $606.4 million, a slight increase from $603.6 million in second-quarter 2004. Net income also rose 2.2% to $85.1 million from $83.2 million in the same quarter last year.

Much of the growth was driven by a rise in revenue from data services, including DSL, and fiber transport. In the quarter, the company completed its previously announce acquisition of KMC Telecom, which gives it fiber routes in 16 markets. In terms of year-over-year growth, data service revenue grew 11.6% while fiber transport jumped 18.1%.

Glen Post, chairman and CEO of CenturyTel, said the quarter marked a further diversification of the company’s revenue stream. Like virtually all carriers, CenturyTel continues to lose access lines—25,200 in the second quarter—but is pushing is gaining ground in new markets.

The company continued to make progress in its DISH Network offering, though it didn’t provide specific numbers for that service other than to say it now offers the satellite TV service to about 850,000 homes in its local service territory. In the third quarter, CenturyTel plans to bundle that service with its other voice and data offerings.

“We’re pleased with the very early results on that,” Post told analysts on conference call this morning.

The company also expects to launch a wireless offering later this year. Last year, the company signed a resale agreement with Cingular Wireless, and it is currently negotiating with others to increase its coverage, Post said.

On the wireline front, Post said the company would do a soft launch of video service in part of its LaCrosse, Wis., territory this quarter. The company has been testing the offer and most recently completed a trial of all the business systems that need to be in place before rolling it out. Additionally, it is working with other independent telcos to try to contain costs on the video side.

One area that could have a significant impact on the company’s future is a decision on inter-carrier compensation. Post said he was happy to see a bill introduced earlier this week by Sen. John Ensign that would address the need for carriers to receive compensation for use of their networks by other providers, regardless of technology.

“It looks pretty favorable overall, but it’s hard to say how far it will go,” Post said.

Additionally, like many other independents, CenturyTel has been heartened by recent comments from FCC Chairman Kevin Martin indicating that a bill-and-keep system of compensation would not be viable.

“Those are encouraging words from our standpoint,” said Karen Puckett, president and COO of CenturyTel.