Telecommunications provider Windstream Corp. (WIN) reported Monday a 24% decline in profit for the third quarter, reflecting lower revenues as well as one-time costs. Total lines dropped about 5.2% in the quarter, however, the company noted that the line loss in the quarter was the lowest since its formation in 2006.
The Little Rock, Arkansas-based high-speed Internet services provider's third-quarter net income was $80 million, down from prior year's net income of $105.9 million. On a per share basis, earnings fell 25% to $0.18 from $0.24 per share last year.
The company noted that certain one time items reduced the latest quarter's earnings by about $0.06 per share. The items comprised of $15 million in non-cash pension expense, $5 million in restructuring charges related to a workforce reduction announced on September 30, $5 million in non-cash amortization of wireline franchise rights, and $1 million in merger and integration costs.
In September, Windstream had said that it plans to eliminate approximately 350 positions by the year end, to offset revenue pressure in the residential voice business and to better align the company to focus on broadband and business enterprise opportunities.
On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.21 per share for the quarter. Analysts' estimates typically exclude special items.
Total quarterly revenues and sales declined 8% to $734.3 million from $794.1 million in the same quarter last year, and missed thirteen Wall Street analysts' consensus estimate of $747.03 million.
On a pro forma basis, excluding the disposed out of territory product distribution operations, merger and integration costs related to the pending acquisitions, and the non-cash impairment charge for acquired assets held for sale, revenues and sales for the quarter was $726.1 million, down 6% from $772.3 million in the previous year.
In the quarter, service revenues, on a reported basis, dropped 5% to $704.9 million from last year's $741.9 million, and product sales plunged 44% to $29.4 million from $52.2 million a year ago.
Operating income was $225.4 million, down 17% from prior year's $270.6 million. Operating income before depreciation and amortization, or OIBDA, fell 10% to $360.3 million from $399.7 million in the year ago quarter. Excluding the incremental non-cash pension expense and restructuring expense, OIBDA was approximately $391 million, down 2.5% from a year ago, resulting in an OIBDA margin of about 54%.
During the quarter, Windstream, an S&P 500 company, which provides phone, high-speed Internet and high-definition digital TV services to customers in 16 states, added about 26 thousand new high-speed Internet customers, bringing its total broadband customer base to approximately 1.05 million customers, up 9% from 962.7 thousand customers last year. Overall broadband penetration is now 36% of total access lines and residential broadband penetration is approximately 53% of primary residential lines.
The company said it added more than 11 thousand new digital TV customers, and the total customer base at the end of the quarter was about 323 thousand, up 28% from last year.
Meanwhile, total access lines declined by approximately 27 thousand, and total lines at the end of the quarter were 2.93 million, a decline of about 5.2% from 3.09 million a year ago. Average service revenue per customer per month was $79.99, slightly higher than last year's $79.63.
Jeff Gardner, president and chief executive officer, stated, "Our marketing efforts and promotions resonated very well in the quarter, resulting in solid broadband customer growth and our lowest line loss since we formed the company in 2006. We remain focused on improving the trends in our business and continue to demonstrate that we can sustain our cash flows."
In its preceding second quarter, Windstream reported a decline in net income to $90.8 million or $0.21 per share from $102.0 million or $0.23 per share last year, hurt by higher amortization expense, merger and integration costs and incremental pension expenses. The company's revenues and sales for the quarter declined 6% to $752.9 million from $799.9 million last year.
Among others in the sector, Verizon Communications Inc. (VZ), the No. 1 mobile carrier in the U.S., recently reported a decline in third-quarter profit to $2.89 billion or $0.41 per share from last year's $3.19 billion or $0.59 per share, reflecting higher merger and restructuring costs. Operating revenues grew 10.2% to $27.3 billion from $24.8 billion in the previous year. On a pro forma basis, operating revenue growth was 0.6%.
AT&T Inc.(T), the second-largest wireless provider in the U.S. and the exclusive provider of Apple Inc.'s (AAPL) iPhones in the nation, reported a 1.2% decline in its third-quarter profit to $3.19 billion or $0.54 per share, on continued weakness in the wireline business. Total operating revenues fell 1.6% to $30.86 billion. The company noted that growth in wireless and advanced wireline data services in large part offset declines in voice, legacy data and print advertising products.
In late October, Sprint Nextel Corp. (S), the third-largest wireless provider in the U.S., reported a wider net loss for its third quarter, hurt by lower revenues mainly from its wireless segment due to subscriber losses. Third-quarter net loss was $478 million or $0.17 per share, wider than net loss of $326 million or $0.11 per share last year. The Overland Park, Kansas-based telecommunication company's net operating revenues for the quarter declined 9% to $8.04 billion from $8.82 billion in the same quarter last year, mainly due to lower contribution from post-paid wireless service revenues as well as wireline voice and legacy data revenues, partially offset by higher prepaid wireless service and equipment revenues.
For the nine months of fiscal 2009, Windstream's net income fell 22% to $259 million from $331.6 million a year ago, and earnings per share dropped 20% to $0.59 from last year's $0.74. Total revenues and sales declined 6% to $2.24 billion from $2.39 billion in 2008. Proforma revenues and sales were $2.20 billion, down 6% from $2.34 billion last year.
Further, Windstream announced that the Pennsylvania Public Utilities Commission has approved the company's acquisition of D&E Communications Inc. (DECC). Windstream said it expects to close the transaction this week.
Last Friday, D&E Communications said that it has received approval from the Pennsylvania Public Utility Commission for the proposed merger. It was in May that Windstream agreed to acquire D&E Communications for about $330 million, in addition to the assumption of estimated net debt of about $171 million.
According to the terms of the deal, D&E Communications shareholders will get 0.650 shares of Windstream stock and $5 in cash per each D&E share. The transaction also includes six wireless licenses for 700 MHz spectrum covering a population of approximately 1.3 million in central Pennsylvania, the company said.
On November 3, Windstream said it has signed a definitive agreement to acquire NuVox, Inc., a Greenville, South Carolina-based local exchange carrier, in a transaction valued at around $643 million. The deal is expected to close in the first half of 2010, subject to certain conditions, including necessary approvals from federal and state regulators. The acquisition of privately-held NuVox is seen to advance Windstream's strategy to grow its broadband and business revenues, which would represent more than half of total revenue after the transaction closes.
In September, Windstream signed a definitive agreement to acquire Lexcom, Inc. for about $141 million in cash. The acquisition is expected to close in the fourth quarter of 2009.
WIN closed Friday's regular trading session at $10.28, up $0.10, on a volume of 4.16 million shares. In the past 52 weeks, shares have been trading in a range of $6.28 to $10.39.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.