Indie telcos seeing business sector penetration pay off

The accelerating movement of independent telcos into the business services sector appears to be paying dividends, if trends evident in the fourth quarter earnings of several telcos are to be believed.

Super-regional and regional independents Windstream Communications, SureWest Communications, Frontier Communications and TDS are just some of the telcos that reported robust growth in their business services revenue. Though smaller telcos typically have not suffered as badly as larger ones from residential landline loss, the problem continues and the independents could use another channel to explore within their often-limited market boundaries.

Windstream is just one company that has pursued the business services channel through acquisitions, and while its purchases last year of Q-Comm and Hosted Solutions came with the usual integration costs, Windstream COO Brent Whittington called business services a key area of future investment for the telco. Q4 business service revenue was up about 2 percent year-over-year to $493 million.

Other Tier 2 and 3 telcos that acquired new leverage in the business services market include Frontier, which sealed its acquisition of Verizon lines last year, TDS, which acquired TEAM, and Cincinnati Bell, which bought CyrusOne.

TDS had recently launched a managed IP services in the business sector, and the company said this week in its quarterly earnings report that the number of stations addressed by the service nearly doubled in Q4 from 13,900 to 27,400.

SureWest, meanwhile, saw its number of small and medium-sized business customers in its Sacramento market decline with lingering effects from the tough economy, but broadband business services fared better. The telco’s broadband business revenues grew about 20 percent in Q4 2010, compared to Q4 2009, to about $12.4 million. The number of business broadband customers also increased 7 percent year-over-year to 7,800, and average revenue per user was up 12 percent to $535.

Frontier gained a large number of business customers as part of the properties it acquired from Verizon Communications, and while the telco’s financials are still dragging a bit from the deal, it ended Q4 2010 with 343,823 business customers, more than 200,000 above its figure at the end of 2009. Business revenue for Q4 was $591,380, well above Q4 2009’s $211,675.