Suddenlink Reverses Sub Loss

Advanced Services Growth Drives First-Quarter Results

By Mike Farrell -- Multichannel News, 5/24/2010 12:01:00 AM

A return to basic subscriber growth and strong performance in advanced services helped drive an 11.2% increase in cash flow at Suddenlink Communications in the first quarter.

Revenue at the St. Louis-based midsized operator rose 6.8% to $411.1 million and cash flow clocked in at $147.4 million in the period, fueled by a big gain in revenue-generating units, up 92,000 in the period — the biggest quarterly gain in Suddenlink’s history.

Basic-video customers were up by 4,800; digital-video customers rose by 30,600; highspeed Internet subscribers rose by 34,800; and telephony customers increased by 21,800. Business customers rose by 1,400 in the period.

The basic-subscriber gain reverses a loss of 15,400 basicvideo customers in the fourth quarter.

Advertising revenue increased by 10.4%, mainly due to increases in national advertising.

The results are pretty much in line with preliminary first-quarter results the company issued in April, in conjunction with a $600 million bond offering. Suddenlink, which is privately held, has public debt.

On a conference call with analysts, Suddenlink CEO Jerry Kent said the company continues to push ahead with its Project Imagine plant upgrade and has entered the its second phase. That phase will include converting a number of cable systems to alldigital plant. Suddenlink has already begun to distribute digital adapters to customers in 16 markets across five regions as part of that plan.

“When completed, this effort will reclaim significant bandwidth in the affected cable systems, allowing us to add more high-definition channels, further expand the availability of our video-on-demand service and complete additional channel bonding to continue providing market leading Internet speeds, which enhances our competitive position,” Kent said on the call. “We believe we’re in excellent position to continue to see growth in RGUs, advertising sales and commercial business services in 2010.”

Already, Suddenlink customers have been snapping up HD and digital video recorder services, highlighted by the company’s rising penetration rates in both services in the period. Chief operating officer Tom McMillin said on the call that HD penetration rose to 47.8% in the first quarter, up from 43.9% in the same period last year. Digital video recorder penetration also rose in the period, to 48.5% in the first quarter, compared to 44.5% in the prior year.

McMillin said Suddenlink is moving forward on beefing up its direct sales force and plans to have 100 sales agents knocking on doors by mid-summer.

Suddenlink also provided more details on its recent purchase of 8,200 subscribers in Mississippi from Windjammer Communications. Chief financial officer Mary Meduski said Suddenlink agreed to pay about $20.3 million for the Windjammer subscribers, subject to adjustment at closing, which is expected in the third quarter.