Broadview Networks
Analysis of Windstream’s 2nd quarter results; enhanced SD-WAN solution
2Q-2017 Operating Results:
Windstream Holdings Inc. on August 3rd reported a $68 million 2nd quarter loss and said it would end its quarterly dividend to shareholders as part of a new capital allocation strategy.
The Little Rock, AR telecommunications and cloud service provider reported 2nd quarter revenue of $1.49 billion, which was up 10% from the same quarter last year. Operating income was $107 million, down 31% from $155 million in the same period a year ago. Its $68 million net loss, or a loss of 37 cents per share, compared with net income of $1.5 million, or 1 cent per share, a year ago.
“Windstream delivered solid second quarter results, highlighted by sequential growth in Adjusted OIBDAR,” CEO Tony Thomas said in the previously referenced press release.
“Our unique network assets and cloud-based applications have us well positioned to grow market share. Additionally, we continue to improve our cost structure and have significant opportunities to further drive down costs through reductions in network interconnection costs, upcoming synergies from the EarthLink and Broadview transactions (i.e. acquisitions) and initiatives to advance our organizational effectiveness,” Thomas added.
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Recent Acquisitions:
1. Windstream completed its purchase of EarthLink Holdings Corp. of Atlanta, GA in February. The company has said the $1.1 billion all-stock deal will expand Windstream’s U.S. nationwide fiber footprint and lead to enhanced products and services.
2. Windstream closed on its $225 million purchase of Broadview Networks Holdings Inc. of Rye Brook, New York last month. The private, cloud-based unified communications services provider to small and medium-sized businesses offers a suite of services under the OfficeSuite UC brand which will now be sold by Windstream’s sales force.
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Comment & Analysis:
Windstream is a leading rural local exchange carrier in the U.S. The company offers broadband Internet, private line, telephony and digital TV services to consumers primarily in rural areas. Windstream also provides advanced network communications such as cloud computing and managed services to enterprise (medium & large business) customers. The company also has business units for: ILEC consumer & small business, CLEC consumer & small business, and wholesale. They have recently entered the SD-WAN market via VeloCloud’s solution (see below).
From Windstream’s most recent SEC 10-K report filing:
Our vision is to provide a best-in-class customer experience through a world-class network. Our “network first” strategy entails leveraging our existing infrastructure and investing in the latest technologies to create significant value for both our customers and our shareholders.
Following the completion of the Merger with EarthLink, our business unit organizational structure will be focused on the following four core customer groups: ILEC Consumer and Small Business, Wholesale, Enterprise, and CLEC Consumer and Small Business, as further defined below. During the third quarter of 2016, we changed the name of our Carrier segment to Wholesale to better reflect our customer base and the products and services we are selling in the marketplace. Historically, we were solely focused on serving telecom companies based in the United States, but over the past year, we have expanded our focus to sell our products and services to nontraditional telecom companies, including content providers, data center operators and international carriers requiring voice and data transport services in the United States. This organizational structure aligns all aspects of the customer relationship (sales, service delivery, and customer service) to improve accountability to the customer and sharpen our operational focus.
Windstream’s local exchange business competitors include: wireless communications providers, cable television companies/MSOs, resellers of local exchange services, inter-exchange carriers, satellite transmission service providers, electric utilities, competitive access service providers.
Windstream has been losing access lines due to pricing pressure and fierce competition. The company is also under pressure with losses in the wholesale business. Being a local exchange carrier (both an ILEC and CLEC), Windstream remains exposed to stringent regulatory measures by the Federal Communications Commission (FCC) as well as state regulatory bodies and local public utility commissions.
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SD-WAN Offering:
In an earlier press release this month, Windstream touted its previously promoted SD WAN solution which now includes additional broadband flexibility, improved self-service monitoring and control options, and a new SD-WAN Concierge™ managed service that automatically optimizes application performance, lowers costs and simplifies network management. Windstream customers can also combine SD-WAN with Diverse Connect to achieve a 100 percent availability service level agreement (SLA).
“We introduced our SD-WAN service in January, and we have seen tremendous adoption in the first six months as customers find they benefit from a more tailored, flexible and controllable WAN experience,” said Joseph Harding, executive vice president and enterprise chief marketing officer at Windstream. “Following our merger with EarthLink, we are enhancing our SD-WAN solution as we work to integrate our offerings. The result is a powerful new solution that gives customers even greater network agility, scalability and performance, all while also reducing costs and virtually eliminating downtime.”
Windstream’s SD-WAN solution was said to utilize “cutting edge technology” (see Editor’s Note below) coupled with the customer’s application prioritization to dynamically route traffic over a combination of private and public networks to reach multiple locations. Customers maintain control over their network from a convenient centralized location rather than manage various individual routers and firewalls.
Windstream’s enhanced SD-WAN solution is available immediately to businesses in Windstream’s nationwide service area. Over the past six months, Windstream has partnered with customers in the retail, banking, professional services, healthcare, manufacturing and financial services industries, and the company expects demand to remain high for its industry leading solution.
In addition to SD-WAN, Windstream offers a full suite of advanced network communications and technology solutions like UCaaS and Diverse Connect along with voice and data services such as VoIP access, SIP trunking, MPLS, Wavelength, Ethernet and dedicated high-speed Internet. Windstream also offers managed services, cloud services and network security services designed to help businesses increase productivity and improve operational costs. For more information, visit windstreambusiness.com.
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Editor’s Note:
As we’ve repeatedly stated in these techblog posts (and elsewhere), there are no standards for SD-WANs which implies each network provider goes with a single vendor solution which won’t inter-operate with any other SD-WANs from other network providers. Earlier this year, Windstream selected VeloCloud’s SD WAN as the product powering their SD-WAN service.
Earlier this summer, Windstream joined the ONAP open source project (under Linux Foundation). The ONAP Project is focused on creating a harmonized and comprehensive framework for real-time, policy-driven software automation of virtual network functions. ONAP’s primary objective is to enable software, network, IT, and cloud providers and developers to rapidly create new services which can be monetized.
References:
http://abea-43pvyw.client.shareholder.com/investors/releasedetail.cfm?ReleaseID=1035855
http://investor.windstream.com/investors/releasedetail.cfm?ReleaseID=1035354
https://www.windstreambusiness.com/solutions/networking-solutions/sd-wan
https://www.windstreambusiness.com/resources/brochures/sd-wan-solutions
http://files.shareholder.com/downloads/ABEA-43PVYW/4941624088x0xS1282266-17-13/1585644/filing.pdf
https://techblog.comsoc.org/2017/07/01/windstream-joins-onap-open-source-telco-movement/