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Windstream CEO Jeff Gardner told a cable news audience Tuesday that the rural phone company already supplies broadband to 100 percent of its service areas where the service is “economically feasible” to provide. Any additional expansion will only come with the assistance of the federal government’s broadband stimulus program.
“We’re in 23 states — mostly rural markets, so broadband reach is incredibly important to us,” Gardner said on CNBC’s Fast Money program. “We’re getting to 90 percent of our customers today; in fact, we’ve built out to every customer that’s economically feasible, so the broadband plan that has been announced by the administration is critical to us getting to that last 10 percent.”
In 2006, when Windstream was created from the spun-off landlines Alltel used to own, broadband and business customers represented 35 percent of Windstream’s revenue. Today that number has jumped to 53 percent.
That’s not surprising to many telecom analysts who suggest broadband will be key to the survival of rural landline phone companies, especially those adjacent to larger communities where cell phone providers extend coverage.
Windstream has applied for $238 million in broadband stimulus money and claims it is in the best position to spend that money to extend broadband to its most rural customers. It also has a captive customer base in many areas, where no cable competition exists and wireless service is spotty.
Gardner promotes the results of their de facto monopoly, noting that while Verizon and AT&T lose up to 11 percent of their landline customers each year in certain areas, Windstream has lost just three percent.
Still, many think landline phone companies are ultimately a dying business and a real bad investment. Except Gardner admits the most important reason why people buy stock in his company is the huge dividend payout.
“Most importantly, what people buy our stock for is our dividend,” he said. “We pay $1 dividend — an 8.5 percent yield, so our cash flow is something our investors are always tuned into.”
One of the show hosts acknowledged the huge dividend, but suggested that may be troublesome down the road.
“The dividend is interesting, but it’s getting to the point of where it might be a little too interesting, if you know what I mean,” said Guy Adami.
Adami may be referring to the practice of paying out a larger dividend than a company earns in revenue, something that can rapidly spiral a company into bankruptcy.
http://www.phillipdampier.com/video/CNBC Windstream CEO Jeff Gardner 7-27-10.flvWindstream CEO Jeff Gardner appeared on CNBC’s Fast Money program to talk up Windstream’s prospects for broadband, especially if the government delivers on the company’s request for $238 million in stimulus funds to extend service to its most rural customers. (4 minutes)
Other stories of interest:
- When Broadband Fails… Emergency Officials Disconnected by Windstream Service Outage in Chama, New Mexico
- Windstream Suffers Major Landline Failure in Nebraska; Several Counties Lose Phone, 911 Service
- CenturyLink Opposing Broadband Stimulus Applications That Might Overlap Its Person County, NC Limited Service Area
- Windstream Prepares for Investigation Into Major Nebraska Service Outage
- Windstream Announces 9.4% Dividend – Big Payout Preserves Stock Value, But Employees May Pay With Their Jobs
Just had a chat with someone important at Windstream…a few interesting things came up. Will post a few key points that apply to anyone interested on my blog tomorrow (my name links there). Nothing earth-shattering but nice to hear from the horse’s mouth.
…and here’s the link I promised: http://yanntx.info/2010/08/windstream-soundbytes/