Covad total lines rise, net loss narrows

On the heels of a big line-sharing contract win with AT&T, Covad Communications today reported a 9% increase in total DSL lines for the second quarter and a narrower loss.

Covad added 36,000 subscriber lines between April and June, bringing its total subscriber base to more than 453,000. In addition, Covad reported a loss of $27.3 million, down 33.1% from the second quarter of 2002, off of lowered revenue. Covad took in $92.4 million in Q2 revenues, down 6.9% from last year, but up 1.7% over the first quarter.

The AT&T win to provide ADSL as part of a service bundle in AT&T’s local markets represented a big win for Covad and marks Covad’s intent to concentrate on line-splitting in the wholesale market. The FCC’s triennial review is expected to prevent Covad from leasing only the data path on a copper loop, which is forcing Covad to alter its previous business model.

“We’re negotiating with several other companies about line-splitting deals,” CEO Charlie Hoffman said. “We expect to make more announcements in the coming weeks.”

Covad now has about 264,000 consumer lines in service, which represents about 58% of its total lines--a dramatic shift from its original business model which focused on wholesale symmetrical DSL lines marketed to small businesses. In addition, Covad plans expects to add an additional 50,000 to 55,000 DSL lines by the end of third quarter.