CenturyTel Lose Subscribers in First Quarter
MAY 6, 2010
Qwest Communications International
Inc., which announced a merger
last month, each reported that they continued to lose landline
subscribers in their first-quarter reports Wednesday.
earnings more than tripled, bolstered by CenturyTel last
summer's acquisition of Embarq, while Qwest's earnings slumped
82%, weighed down by a one-time health care charge.
CenturyTel-Qwest merger is just the latest in a string of deals
as regional players try to defend themselves against wireless
and cable operators, many of which offer bundled services. The
two companies both reported increased demand for their broadband
services, though that growth hasn't yet offset losses from
Qwest said in a call
with analysts that while the downward trends are beginning to
slow in some spots, traditional landlines are still disappearing
at rapid rates. Meanwhile, CenturyTel said its access lines
decreased 8.4% from a year earlier, while its high-speed
Internet subscriber base grew 8.9%.
CenturyTel, which has
grown by scooping other landline companies, reported a profit of
$252.6 million, or 84 cents a share, up from $67.2 million, or
67 cents, a year earlier. Excluding items such as
acquisition-related and tax impacts, per-share earnings rose to
93 cents from 82 cents.
Revenue soared to $1.8
billion amid the Embarq acquisition. The company in February
forecast per-share earnings between 84 cents and 88 cents on
revenue of $1.77 billion to $1.8 billion.
The telecom company also raised
its 2010 forecast, now projecting earnings of $3.20 to $3.30 a
share on a revenue decline of 6.5% to 7.5%. The company had
forecast earnings of $3.10 to $3.20 a share on a revenue decline
of 7.5% to 8.5%.
Qwest reported a
profit of $38 million, or 2 cents a share, down from $206
million, or 12 cents a share, a year earlier. The company booked
a charge of 8 cents a share in the quarter on the loss of a tax
subsidy for providing prescription-drug benefits for retirees
under Medicare in the recent health-care overhaul.
Revenue dropped 6.5%
to $2.97 billion.
declines outweighed growth in broadband and other Internet
services in all of Qwest's operating segments. Mass market unit
revenue fell 11% to $1.2 billion, while revenue in the wholesale
market segment declined 11% to $685 million. The business
markets segment, which Qwest sees as a potential growth
opportunity, saw revenue slide
0.2% to $999 million.
Qwest said it was
encouraged by flat revenue from small business customers. "It's
still not something to claim victory, but it's a change," Teresa
Taylor, executive vice president and operating chief, said in an
interview. The wholesale segment, though, is still "delicate."
The company closed out
the quarter with 9.7 million total access lines, down 11% from a
year earlier. Broadband subscribers increased 5.3% to 40,000.
Average revenue per user, a key metric for the industry, grew
There are "early signs
of increased customer activity" in the business market, while
revenue trends are improving in other areas, too, Ms.Taylor said
in a conference call, noting that proposal requests have picked
Qwest expects revenue
declines to slow to the low- to mid-single-digit range by the
to Melissa Korn at