Suddenlink Takes Sub Hit, Counters With Video Discounts3/30/2010 7:21 AM Eastern
took a hit in its basic subscriber rolls in
the fourth quarter, with losses nearly
three times those of the prior year.
But the midsized MSO has devised a
plan of attack that will include tweaking
its discounting strategy and moving forward
with an ambitious upgrade plan it
thinks should more than level the playing
field with its larger satellite and telco
St. Louis-based Suddenlink, which has
about 1.24 million customers in midsized
markets in about eight states, lost about
15,400 basic video customers in the fourth
quarter, nearly three times the 5,800 it lost
in the same period in 2008.
On a conference call with analysts last
week — the privately held company has
public debt, which requires it to file financial reports with the Securities and
Exchange Commission — CEO Jerry Kent
said the losses were due mainly to heavy
discounting by satellite providers. The
company will combat that by discounting
its video prices, he said.
“While we are generally pleased with
this performance, given the economic
environment, I must admit that I believe
we can do a better job of responding to
signifi cant discounting by our satellite
and telephone competitors,” Kent said on
the call. He said that in the past, Suddenlink
has focused its discounting efforts
on high-speed data and phone services,
leaving video prices relatively high.
Now, “we have shifted some of our
bundled discounting to our video product,”
While basic rolls were down, Suddenlink
added 17,800 high-speed data customers,
27,200 telephony customers and
14,300 digital video customers in the period.
Suddenlink launched its upgrade plan
— dubbed “Project Imagine” — in the
fourth quarter and is nearing the end
of the first phase of the program. The
$350 million initiative — $230 million
for infrastructure and $120 million for
customer-premises equipment and success-
based capital — is expected to be
completed by 2012.
Chief operating officer Tom McMillin
said that to date, Project Imagine
has allowed Suddenlink to boost Internet
speeds for 600,000 high-speed data
customers in 50 systems to between 1.5
Megabits per second and 20 Mbps; deploy
DOCSIS 3.0 capability in 60% of customer
homes; and launch video on demand in
60% of its homes.
When the project is finished in 2012,
HD capacity will average about 90 HD
channels and be available in 97% of Suddenlink
homes, with phone and DOCSIS
3.0 available in 90% of its footprint.
Revenue for the period was up 5.9% to
$398 million and cash flow rose 9.1% to
$151 million for privately held Suddenlink.
For the full year, revenue rose 7.5%
to $1.6 billion and adjusted cash flow increased
11.8% to $561 million. Also, Suddenlink
generated about $89 million in
free cash flow for the year, up 78% from
$50 million in the prior year.
Although Suddenlink is flush with cash
— it had $257 million of cash and cash
equivalents on hand at the end of the
quarter and has not yet drawn on its $200
million revolving credit line — Kent said
the MSO will take a cautious approach to
acquisitions, adding, “we are not going
to be in a position to stretch strategically
nor stretch our balance sheet in order to
reach growth for growth’s sake.”