Covad unveils VoIP plans, posts narrower loss

At its earnings call, Covad Communications today announced it will deploy voice-over-IP services across its SDSL network starting mid-2004. The carrier also announced 38,000 new line additions and reported a narrower loss for the third quarter.

Covad CEO Charlie Hoffman announced that the carrier planned to trail a voice-over-IP network with a partner by the first half of 2004, and begin a systematic rollout across its nationwide network throughout the rest of the year. Hoffmann said Covad would partner with a voice carrier to handle switching and termination, but it would deploy its own voice-over-IP platform. Covad will announce vendors later in the year, he said.

Covad’s 38,000 new lines represent an 8% increase since the second quarter, bringing Covad’s total to 491,000 lines in service. Hoffman said Covad would break the 500,000-line mark this month. While new line adds and churn (rose from 3.4% to 3.9% over the quarter) have been lower than anticipated, Hoffman said he expects both to improve significantly over the next few quarters as Covad’s new wholesale line-splitting agreements kick in. Over the summer Covad announced new partnerships with AT&T, MCI, Z-Tel and VarTec to provide the DSL component of their bundled service offers. The only carrier to provision any significant number of lines during the third quarter however was AT&T, which has launched DSL trials in five states. By the end of the fourth quarter, however, Covad will have a good portion of MCI’s lines running, Hoffman said.

"By the end of the first quarter, we’ll have full line-splitting capability across our entire network," Hoffman said. "It’s a gradual process, but eventually line-splitting will become a sustaining part of our business."

Covad posted a loss of $25.1 million down 51% from the $51.7 million loss reported the same quarter last year. Revenues were $100.5 million, up 4.5% over last year’s third quarter.