Windstream posts $232 million first quarter loss

Communications and technology provider Windstream Holdings, Inc. reported a first quarter loss of $231.9 million, or $2.52 per share, compared to $5.3 million profit, or 5 cents per share, one year ago.

The Little Rock-based telecom recorded quarterly revenues of $1.373 billion during the first three months of 2016 compared to $1.418 billion in the previous year’s comparable quarter.

Windstream officials said there was a one-time non-cash charge of $182 million related to a decrease in market value of its investment holdings of CS&L, the spinoff company that manages some of Windstream’s former real estate assets for a fee. Following the spinoff of CS&L in April 2015, Windstream retained an approximate 20% equity stake in CS&L.

“The impairment charge reflects the cumulative unrealized loss in the market value of the CS&L stock from the date of the spinoff to March 31, 2016. Since the date of the impairment, the CS&L shares have continued to appreciate and were valued at approximately $686 million as of May 4, 2016,” Windstream noted in its earnings release. It also reiterated that it plans to “monetize the holdings” in the future and use the proceeds to further reduce corporate debt.

Windstream continues to push forward with its plan to pursue more high-speed consumer and business service customers as its traditional landline business erodes. CEO Tony Thomas said the company is on track with its efforts.

“Our first quarter achievements demonstrate solid progress on our 2016 priorities. We produced sequential revenue growth in our consumer business unit through our upgraded broadband network that now offers Internet speeds up to 1Gbps. We increased profitability in our Enterprise business unit by targeting middle-market business customers with advanced, customized solutions while reducing costs,” Thomas said.

Other highlights from the quarter include:

• Consumer and small business ILEC service revenues were $397 million, a decrease of 1 percent from the same period a year ago.
• Consumer service revenues were $312 million, an increase of approximately $1 million from the fourth quarter driven by growth in high-speed Internet bundle revenue.
• Carrier service revenues were $163 million, a decrease of 7 percent year-over-year, driven largely by declining legacy services offset in part by sales of Ethernet and Optical Wave services utilizing the company’s robust 100G fiber transport network.
• Enterprise service revenues were $491 million, an increase of 3 percent year-over-year.
• Small business CLEC service revenues were $129 million, a 12 percent decrease year-over-year.

During the quarter, Windstream completed a $75 million share repurchase plan approved by its board of directors in August 2015. In addition, on May 4, 2016, the board of directors declared a quarterly dividend of 15-cents per share payable July 15, 2016, to stockholders of record as of June 30, 2016.

Windstream shares (NASDAQ: WIN) closed trading on Wednesday at $9.31. The company’s stock has traded between a low of $4.42 and a high of $10.28 per share during the past year.