Windstream Holdings Inc. of Little Rock, still working through Chapter 11 bankruptcy, reported Wednesday a first-quarter net loss of $2.3 billion, or $54.26 per share.
That’s more that the net loss of $121 million, or $3.25 per share, the publicly traded telecommunications company reported for the first quarter of 2018.
Revenue was $1.32 billion, down 9% from $1.41 billion in the same quarter last year.
The company said results include a $2.3 billion non-cash goodwill impairment charge in its Consumer and Small Business, Enterprise and Wholesale segments. The charge came as the company filed Chapter 11 reorganization and adopted new lease accounting standards by the Financial Accounting Standards Board.
Windstream, whose stock is now trading over the counter after being delisted from the Nasdaq exchange, touted adding 11,400 Kinetic broadband subscribers and growing that customer base for the fourth consecutive quarter.
“Windstream began the year with another solid quarter, demonstrating the company’s continued momentum in the marketplaces we serve,” President and CEO Tony Thomas said in a news release. “We stand alone among major U.S. telecom service providers with 14 consecutive months of consumer broadband subscriber growth through April, as well as our strongest quarterly broadband growth since 2011. We were pleased to deliver sequential revenue and ARPU growth in our consumer business as a result.
“We also continued to see strong customer adoption of our Enterprise strategic products and services and remain the largest SD-WAN service provider in the country.”
Windstream’s bankruptcy filing came after a federal court ruled that the company’s 2015 fiber and copper assets spinoff ran afoul of bond covenants. The ruling exposed Windstream to a $310 million judgment.
In pre-recorded remarks made available via webcast Wednesday morning, Thomas said it was too early to provide a timeframe for emerging from bankruptcy. He noted that the bankruptcy court approved the company’s request for $1 billion in debtor-in-possession financing, allowing the company to continue to operating.
“Our Chapter 11 reorganization process continues, and we are pleased with the progress thus far,” he said. “Windstream will emerge from our current restructuring a healthier and stronger company. More than ever, we are excited about the opportunities that lie ahead.”
Thomas also talked about the company’s lease agreements with its real estate investment trust spinoff, publicly traded Uniti Group Inc. of Little Rock, indicating that Windstream might renegotiate those agreements.
“Windstream believes that the current rent under the Uniti master lease is significantly above market,” Thomas said. “In the context of its Chapter 11 cases, Windstream is evaluating all options regarding the Uniti lease, including renegotiation, recharacterization, unwinding the lease, as well as an outright rejection of the lease. More details will emerge as the Chapter 11 process evolves.”
In its earnings release last week, Uniti said it made an accounting change regarding its master lease with Windstream.
“Going forward, until there is more certainty regarding the master lease, the company will recognize revenue from the master lease on a cash basis,” the company said in a news release.
Uniti said its 2019 outlook “assumes the Windstream lease continues in full force and effect, and that Windstream continues to make all lease payments on time.”
Windstream said Consumer and Small Business service revenue was $454 million in the first quarter, down 4% year-over-year. The segment’s income was $272 million, compared to $282 million a year ago.
Enterprise service revenue was $680 million, down 7% year-over-year, and income was $153 million compared to $146 million in the first quarter of 2018.
Wholesale service revenue was $169 million, down 8% year-over-year, and income was $114 million compared to $128 million.