A Conversation with Jeff Gardner on Windstream's Growth, A Pivotal 2011

In 2006, Windstream Corp. was the small, wireline spinoff of Alltel Corp. of Little Rock, a regional wireless firm well on its way to being acquired by a national giant, Verizon Wireless.

Six years later, the company has transitioned from relying on older, less lucrative businesses -- residential wireline voice and long-distance -- to more profitable, growing services, including cloud computing, broadband and managed services.

And CEO Jeffrey Gardner has led the way.

This week, Arkansas Business published profiles of the state's 17 public company CEOs, featuring new interviews with top executives including Gardner, whose sees 2011 as a pivotal year -- the greatest yet -- for the growing company.

"It really gave me great pride that this group was one of the few companies to go from one that was declining to one that's growing," Gardner told Arkansas Business. "It took a tremendous amount of effort over five years of strategic execution. That's what I feel proudest about."

Small Start

In 2011, FierceTelecom called Gardner one of wireline's most powerful people.

But Windstream didn't start with that power. Gardner said the company's revenue started out declining by 5 percent each year, and investors predicted Windstream would pay its dividend for a while, then fizzle out.

What happened instead was innovation. Rather than relying only on land lines, Gardner brought Windstream into the realms of high-speed Internet services for businesses, rural broadband and managed data centers. Most recently, Windstream began a service called Merge that streams online videos through TV sets.

"Lots of companies pay dividends because they're not growing," Gardner said. "Our investors see not only an opportunity for growth, but the highest dividend in the S&P 500."

Windstream currently pays an annual dividend of $1 per share.

"It's very rewarding to see that we were able to go through that together, that from declining by 5 percent, we've gotten to where we want to be," Gardner said. "We go around, we talk to our investment analysts, and they say that we're a company that fights way above our weight class. Even though we're not the biggest telecom in the country, we're very influential."

It's also moving up in weight: Since 2006, the company has absorbed nine other businesses, including Valor Telecommunications Enterprises LLC, CT Communications, D&E Communications Inc., Lexcom, NuVox Inc., Iowa Telecommunication Services Inc., Hosted Solutions, Q-Comm Corp. and Paetec Holding Corp.

Into the Fortune 500

Of those, last year's $2.3 billion Paetec purchase proved the most notable, propelling Windstream into the Fortune 500.

The merger met some opposition from city groups in Rochester, N.Y., but was approved when Gardner agreed to continue the redevelopment of Midtown Tower, a venerable shopping mall in Rochester that was being turned into a headquarters for Paetec. The company broke ground on the development on Monday.

Gardner said the acquisition moved Windstream from its status as a regional company by adding $4.2 billion in revenue and granting thousands of miles of broadband cable across the country.

"I flew out there and I knew it was the right business to buy," Gardner said. "It said to the world, Windstream is really serious about getting into enterprise space. With that deal, we're a national player ... We're no small potatoes now. We're a Fortune 500 company selling to Fortune 500 companies."

Building Culture

Gardner said his leadership strategy at Windstream was to break down corporate barriers and push his workforce to better itself.

"From a leadership perspective, a big part of my job is to build that culture," he said. "The people I have working around me believe that stuff. These are not people who care about their titles, or if they have 2,000 or 3,000 people working for them. We're really just committed to making a difference every day."

Gardner said his team must have a sense of urgency as the telecom industry changes with each day. Now that Windstream has slowed down in acquisitions, Gardner said, he'll be focusing on execution of a business plan and integrating Paetec, as well as increasing the company's broadband reach.

In January, Windstream broke ground on a $340,000 broadband installation south of Harrison. The company is installing new broadband lines in 13 states using a $181.3 million grant fund from the American Recovery & Reinvestment Act of 2009.


More from Arkansas Business' 17 public company CEO profiles.

Gardner's 2011 executive compensation, annual meeting details.

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