SureWest balances FTTH growth, profits

Strong revenue growth in SureWest Communications’ fiber-to-the-home (FTTH) business offset declining revenue from its voice and DSL group in the first quarter. The company’s net income was up 42% from a year earlier to $1.2 million.

The West Coast carrier’s operating revenue was up 1.7% from a year earlier to more than $54 million in the first quarter. Revenue from its “broadband” group--which includes its FTTH services--was up nearly 20% from a year earlier to almost $14 million. Wireless revenue was up 2.5% from a year earlier to nearly $9 million. And revenue from the “telecom” group--the company’s largest revenue source, which includes voice and DSL service--was down nearly 5% from a year earlier to nearly $32 million. The company attributed the decline mainly to access line loss and rate decreases.

However, the “telecom” group was more profitable than the “broadband” group in the first quarter. The telecom group’s net income was up 23% sequentially and 16% from a year earlier to $8.2 million. The broadband group, meanwhile, reported a first-quarter net loss of $5.1 million, 24% wider than a year ago and 42% wider than three months ago. The company attributed the larger net loss to depreciation expenses related to the continued buildout of its fiber network.

SureWest added about 924 FTTH subscribers in the first quarter, raising its total FTTH base nearly 5% sequentially (and 26% from a year earlier) to 20,963. It also increased the number of homes eligible to receive FTTH services to nearly 90,000. And at 29,306 subscribers, its DSL subscriber base is nearly 17% larger than it was a year ago.

The average monthly revenue per user (ARPU) in SureWest’s FTTH business continued its decline from $99.62 in 2005 to $99.12 in the first quarter, down 8.4% from a year earlier. The ARPU in the company’s DSL business is up 1.2% from a year earlier to $52.08.