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Windstream Reports $232M 1Q Loss on Impairment Charge

2 min read

Windstream Holdings Inc. of Little Rock on Thursday reported a first-quarter loss of $232 million, or $2.52 per share, down from a net income of $5 million, or 5 cents per share, in the same quarter last year.

That’s also a decrease from the $140.5 million profit reported in the fourth quarter.

In a news release, the publicly traded telecommunications firm reported total first-quarter revenue of $1.37 billion, a slight decrease from $1.42 billion in the same quarter last year and from $1.4 billion in the fourth quarter.

Windstream said the first-quarter results include a non-cash impairment charge of $182 million related to a decrease in the market value of Windstream’s holdings of Communications Sales & Leasing Inc. of Little Rock, which spun off from Windstream in April 2015.

Windstream retained an approximate 20 percent equity stake in CS&L and the $182 million represents the loss in market value of CS&L stock from the date of the spinoff to March 31.

Windstream’s results were mixed against expectations. The first-quarter loss, adjusted for asset impairment costs and to extinguish debt, came to 23 cents per share, which beat Wall Street expectations of 54 cents, according to The Associated Press. But revenue fell short of the $1.38 billion analysts expected.

Windstream listed among its successes growth in its consumer business unit revenue from the fourth quarter. The revenue was $312 million, up $1 million form the fourth quarter of 2015.

Tony Thomas, president and CEO, said in the news release that the company’s upgraded network offering 1-gigibit internet speeds caused that growth.

The profitability of the company’s enterprise service also improved. Thomas said the company “targeted middle-market business customers with advanced, customized solutions while reducing costs.” Its enterprise contribution margin was 13.7 percent, or $71 million, an increase of 36 percent year-over-year.

Consumer and small business ILEC service revenue was $397 million, down 1 percent year-over-year. Carrier service revenue was $163 million, a decrease of 7 percent year-over-year. Enterprise service revenue was $491 million, an increase of 3 percent year-over-year. Small business CLEC service revenue was $129 million, a 12 percent decrease year-over-year.

Total service revenue was $1.34 billion in the first quarter, flat from the same period a year ago and the fourth quarter.

Looking ahead, the company expects total service revenue of $5.27 billion to $5.42 billion in 2016.

Adjusted capital expenditures are expected to be between $800 million and $850 million, which excludes about $200 million in expected investments to complete “Project Excel,” which Windstream said is a program funded by some of the proceeds from the sale of the its data center business, announced in October. The project aims to “upgrade and modernize” its broadband services by the end of the year — two years ahead of its previous schedule. 

“Our first quarter achievements demonstrate solid progress on our 2016 priorities…,” Thomas said. “Overall, we had a very productive quarter and are on track to achieve our goals for the year.”

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