Despite a marketing push by satellite firms in its territory, Suddenlink Communications managed a strong fourth quarter, fueled by growth in its triple play products.
Revenue for the period was up 5.9% to $398 million and adjusted cash flow rose 9.1% to $151 million for privately held Suddenlink. The St. Louis-based, mid-sized market MSO has public debt, which requires it to file its financial reports with the Securities and Exchange Commission. For the full year, revenue rose 7.5% to $1.6 billion and adjusted cash flow increased 11.8% to $561 million.
For the quarter, Suddenlink lost about 15,400 basic video customers, ending the year with about 1.24 million customers. On a conference call with analysts, CEO Jerry Kent said the declines were mostly due to a strong discounting push by major satellite operators late in the quarter that caught the MSO unaware. He added that is unlikely to happen again.
"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 significant discounting by our satellite and telephone competitors," Kent said on the call. He added that in the past, Suddenlink has focused its discounting efforts on high-speed data and phone services, leaving video prices relatively high. That will change.
"We have shifted some of our bundled discounting to our video product," Kent said.
While basic rolls were down, Suddenlink added 17,800 high-speed data customers in the quarter, 27,200 telephony customers and 14,300 digital video customers in the period.
Suddenlink's three-year, $230 million upgrade program dubbed Project Imagine-- another $120 million is earmarked for success-based capital over the period -- is nearing the end of its first phase. Chief operating officer Tom McMillin said that to date, the project 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; deployed DOCSIS 3.0 capability in 60% of customer homes; and roll out video on demand to 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, and phone and DOCSIS 3.0 will be available in 90% of its footprint.
On the conference call, Suddenlink chief financial officer Mary Meduski said the company expects capital expenditures to reach between $330 million and $335 million in 2010, including about $88 million in Project Imagine expenses. In the fourth quarter, Suddenlink spent about $34.9 million on the upgrade initiative.