Tuesday, March 06, 2018

Telco Revenue Pressure

"At the end of fourth-quarter 2017, Telephone & Data Systems had 567,700 residential wireline connections compared with 585,400 in the year-ago quarter. The company exited the reported quarter with 310,100 commercial wireline connections, down 5.9% year over year. Total cable connections were 315,100, up 7.8% year over year."

As of Dec 31, 2017, Frontier Communications had 3,938,000 high-speed broadband subscribers, down 7.8% and 961,000 video customers, down 16.1% year over year.

Cable is up for broadband and voice. (Everyone is losing TV subscribers, even DISH. The cost being the number 1 reason.)

Altice ARPU is $140, which is pretty good.

Windstream, AT&T and CenturyLink face declines in legacy wireline revenues. "Barclays says that overall wireline providers have collectively seen challenges throughout 2017. Barclays said, "While ongoing declines in legacy services such as voice and low-bandwidth data services are not new, the combination of accelerated legacy losses and weaker than expected growth in strategic initiatives have continued to pressure the sector."

Barclays added that these issues "coupled with the prospect for continued competition from higher capacity network operators (i.e. cable and fiber providers), debt-laden capital structures and the specter of technology disruption (e.g. SD-WAN) suggests that these structural challenges are unlikely to abate anytime soon."

The reasons there has been so much consolidation are the following: (1) the pie is full; (2) sales is harder and harder; (3) price pressure means contracts are renewed for less; (4) year over year decreasing revenues coupled with growing debt means consolidate to fix the balance sheet (short term thinking).

Consolidated bought Fairpoint (2 RLECs merging). They are facing pricing pressure from cellcos as it brings fiber to 2700 towers. 5G means more fiber is needed for all those small cells that will be erected, but pricing pressure will ramp up since there isn't an ROI on $750 per small cell.

Gary Kim writes Historic Change in Telco Business Thinking. They have to start battling, since every dollar that cable makes in business is a dollar taken right from the coffers of the telco.

What does this mean for your business?
What does the competitive landscape look like?

During this webinar, we will discuss SD-WAN briefly as well as what the competition is offering BUT more important: where does the opportunity lies? Join me for a Q&A presentation on March 9, 2018 at Noon Eastern time.

Just $10 on March 9th at Noon Eastern time: REGISTER HERE.

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