Qwest 3Q uneven with falling data, video net adds offset by FTTN, wireless gains

Wednesday, October 28, 2009

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Qwest Communications International Inc.’s third quarter held an equal share of victories and defeats – while voice line loss continued and net DSL and video additions dropped sharply, it did see traction for its new fiber-to-the-node service as well as a boom in wireless customers.

For the quarter, Qwest lost 194,000 primary residential lines, virtually flat compared to the 196,000 lost in the second quarter but better than the 205,000 lost in the third quarter 2008. In additional lines, it lost another 25,000, up from 21,000 lost in the second quarter but an improvement from the 30,000 lost in the third quarter last year.

At the end of September, Qwest held on to 5.3 million primary and 459,000 additional residential lines. Elsewhere, it also lost 58,000 business lines and 27,000 wholesale lines.

In data, the Bell operator gained 28,000 new digital subscriber line customers, down from 34,000 additions in the second quarter less than half the 61,000 added in the prior third quarter.

But Qwest did continue to gain traction with its fiber-to-the-node service, adding 71,000 customers there. The disparity between that number and the net DSL adds reflects the fact that existing customers moved up to the Quantum service offering up to 20 Mbps downstream – and in some limited rollouts using VDSL2 technology, 40 Mbps.

Qwest extended the FTTN technology to pass an additional 500,000 homes in the quarter. In all, the additions brought Qwest’s DSL subscriber base to just shy of 3 million at the close of the quarter.

Qwest also added another 9,000 DirecTV satellite customers, a significant stumble compared to the 21,000 added in the second quarter and 39,000 added in the third quarter last year. Nevertheless, that did raise Qwest’s video subscriber count to 862,000.

In contrast to the data and voice trends, the telco’s recent wireless service partner switch from Sprint Nextel to Verizon Wireless also put it back on course with strong net subscriber gains. Qwest added 23,000 new Verizon Wireless subscribers, up strongly from the 16,000 added in the second quarter and 45,000 lost in the third quarter 2008.

But as in the second quarter, revenue proved a weak spot. Qwest’s total revenue intake for the third quarter was $3.05 billion, down from $3.09 billion in the second quarter and $3.38 billion in the third quarter a year ago. Net income totaled $136 million, also down from $212 million in the second quarter and ?? the $151 million mark in the prior third quarter.

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