Surewest fights line loss with broadband

Surewest Communications reported revenue and net income growth in the third quarter as broadband growth offset access line losses.

The West Coast competitive local exchange carrier reported $56.9 million in revenue for the third quarter, up 2% from a year earlier. Its net revenue was up 10% from a year earlier to $2.2 million.

The company’s total access lines were down less than 1% from a year earlier to 146,484, as its broadband lines grew 19% to 20,135, and its telecom lines dropped 3% from a year earlier to 126,349. Surewest attributed its access line loss to DSL penetration and wireless substitution. As a result of that line loss, revenue from the company’s “telecom” segment was down 2% from a year earlier (but up 3% sequentially) to $33.1 million.

The company’s broadband subscriber base grew 15% from a year earlier to 55,183. Voice revenue-generating units (RGUs) grew 20% from a year earlier to 17,729, data RGUs were up 16% to 52,777 and video RGUs were up 18% to 18,578.

The average monthly revenue Surewest received from its broadband customers in the third quarter (ARPU) was $76.12, up 3% from a year earlier. The company attributed part of that ARPU growth to a 33% increase in high-definition television (HDTV) subscribers during the third quarter. Surewest has been offering HDTV since late last year.

Surewest can now market its fiber-to-the-home service to 96,181 homes, 14% more than a year earlier. And it has penetrated 22.9% of that market, only slightly more than the 22.5% penetration it reported a year earlier.

Meanwhile, the company now has 52,393 wireless subscribers, down 3% from a year earlier. Its wireless contract churn was 3.28% in the quarter (up from 2.93% a year earlier). And its wireless ARPU was down 1% from a year earlier to $49.51.

“As we move away from pre-paid options, we lose that small segment of our customer base, but the long-term impact is positive to [earnings before interest, taxes, depreciation and amortization] and net income because of the high costs associated with maintaining pre-paid customers,” said Fred Arcuri, Surewest’s senior vice president and chief operating officer.