Windstream Reports Billion-Dollar Losses for 4Q, Fiscal Year

Windstream Reports Billion-Dollar Losses for 4Q, Fiscal Year

Windstream Holdings Inc. of Little Rock on Thursday reported net losses in its fourth quarter and fiscal year.

The publicly traded telecommunications firm (NYSE: WIN) reported a fourth-quarter net loss of $1.84 billion, or a loss of $10.26 per share, compared to a net loss of $87 million, or 94 cents per share, in the same quarter last year.

Windstream spokesman David Avery told Arkansas Business the company recorded a $1.8 billion non-cash "goodwill accounting charge" during the quarter that was related to its ILEC Consumer & Small Business and Wholesale segments. That was the "primary driver" of the net loss for the quarter, he said. 

Chris King, vice president of investor relations, said in the company's earnings call Thursday morning that the charge "was primarily due to changes in longterm, cash-flow projections driven by recent operational results and future assumptions as well as changes in cost of capital assumptions."

Avery added, "This charge is non-cash, so it has no effect on our liquidity nor is it indicative of our operating performance."

Quarterly revenue was $1.5 billion, up from $1.31 billion a year ago.

For the fiscal year, the company reported a net loss of $2.1 billion, or a loss of $12.52 per share, compared to a net loss of $384 million, or $4.11 per share, in the previous year.

Total 2017 revenue was $5.85 billion, up from $5.39 billion in the previous fiscal year.

"2017 was a very productive year for Windstream. We delivered improved financial and operating results for almost all metrics across the business and positioned the company for growth," Tony Thomas, president and CEO, said in a news release. "We continued to see growing demand for our SD-WAN service and strategic enterprise products, as well as increased customer adoption of faster broadband speeds as a result of our significant network investments."

He added that, "For 2018, we are focused on advancing our industry-leading Enterprise and Wholesale service capabilities and launching faster, more cost-effective broadband deployment techniques. We will further simplify our business and transform customer-facing and internal tools and drive revenue improvements through enhanced sales and improved customer retention. We also will continue our work to optimize our balance sheet."

The company reported that its total service revenue for the quarter was $1.48 billion, up from $1.29 billion last year, or 15 percent.

Windstream said its 2017 achievements included:

  • Completing its merger with EarthLink Holdings Corp. of Atlanta and $227.5 million all-cash acquisition of Broadview Networks Holdings Inc.;
  • Launching SD-WAN Concierge and OfficeSuite across entire company footprint;
  • Expanding Enterprise contribution margin percentage;
  • Exiting 2017 at highest adjusted OIBDAR margin level since pre-EarthLink acquisition;
  • Achieving the 12th consecutive quarter of consumer average-revenue-per-user (ARPU) growth;
  • Significantly improving the maturity profile of its balance sheet; and
  • Ending the year with synergy plans on schedule and ramping into 2018.

During the earnings call, CFO Bob Gunderman said Windstream had been actively discussing selling the fiber assets it owns outright.

He also said the company was "exploring strategic alternatives" with its consumer CLEC business that is largely comprised of its EarthLink consumer business and looking for opportunities to monetize that segment.

During the call, Thomas added that Windstream has the opportunity to partner with its spinoff, Uniti Group Inc. of Little Rock, to monetize underused assets and said that would remain an opportunity for both companies in the future.

He also said Windstream expects adjusted OIBDAR growth year-over-year in 2019, and "we are well underway in pivoting the company from a telecom reseller to a cloud application connectivity provider in our Enterprise segment and from a phone and Internet provider to a premium broadband and entertainment provider in our ILEC Consumer and SMB segment."