Suddenlink Communications reported strong first-quarter results Tuesday, with revenue up 6.8% and cash flow up 11.2% fueled by gains in basic video and advanced services customers.
Revenue at the St. Louis-based mid-sized operator rose to $411.1 million and earnings before interest, taxes, depreciation and amortization rose $147.4 million. Fueling the growth was 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; high-speed Internet subscribers rose by 34,800 and telephony customers increased by 21,800 and commercial business customers rose by 1,400 in the period.
The basic subscriber gain reverses a loss of 15,400 basic video 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 that the company continues to push ahead with its Project Imagine plant upgrade, and that the company has entered the second phase of the plan. That phase will include converting a number of cable systems to all-digital 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're proud of our first quarter results and continue to be very enthusiastic about our overall year-to-date performance. 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 DVR 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.