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Windstream’s Consumer and Small Business Segment: Plans for 2016

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Windstream’s consumer and small business segment

Windstream Holdings’ (WIN) consumer and SMB (small business) ILEC (incumbent local exchange carrier) revenue continued to decline YoY (year-over-year) during 1Q16. This stream decreased ~1.4% YoY to reach ~$0.4 billion for the quarter. According to chief financial officer Bob Gunderman, “Our 2016 priorities are to grow Consumer & SMB ILEC segment revenue.”

He added, “We’re going to do that through the significant investments that we’ve made throughout 2015 and 2016 around probably more speed into our network for the benefits of Consumer & ILEC SMB customers. In the fourth quarter of last year, we rolled out a million locations for premium speeds, 50 meg and above, and so we’re really just out of the gate with starting to sell those services to both Consumer & SMB ILEC and encouraged by our progress to this point.”

He spoke about this at the recent Barclays High Yield Bond & Syndicated Loan Conference.

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Expanding unit contribution of Windstream’s consumers

During 1Q16, the wireline player’s consumer service revenue declined by ~0.2% YoY to ~$0.31 billion. Meanwhile, the unit revenue of its consumers continued to expand. The wireline telecom company’s average revenue per household served increased ~5.7% YoY during the quarter. According to the company, one of the factors that positively impacted this metric was the adoption of higher Internet speed plans.

For a diversified exposure to stocks of players in the US wireline telecom industry, you could consider the SPDR S&P 500 ETF (SPY). The ETF had a ~2.7% exposure to AT&T (T), Verizon (VZ), CenturyLink (CTL), Level 3 Communications (LVLT), and Frontier Communications (FTR) at the end of May 2016.

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