Windstream weighs potential sale of certain fiber assets, consumer CLEC assets

As Windstream moves forward with its next-generation service plans focused on consumer broadband and SD-WAN services for businesses, the service provider is considering potential sales of some of its fiber assets and its consumer CLEC business lines.

Bob Gunderman, CFO of Windstream, told investors during the company’s fourth-quarter earnings call that the service provider sees potential in selling some of the assets in its network.

Bob Gunderman

“We believe we still have significant asset value to monetize within our fiber assets that we own outright, and we've been very active in discussions around that opportunity,” Gunderman said during the earnings call, according to a Seeking Alpha earnings transcript. “We continue to dialogue with multiple parties about potential transactions. And while nothing has been completed or announced at this point, we remain optimistic about our opportunities to monetize some of that fiber portfolio.”

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While he would not provide any specific details about what sorts of assets could be sold, Gunderman said that the service provider would be divesting portions of the fiber network.

Today, Windstream’s fiber network consists of 150,000 fiber route miles nationwide and 16,000 lit fiber on-net buildings.

“The opportunities will more likely be smaller transactions on a maybe a more regular basis rather than a very large transaction, for example, with one party,” Gundermand said. “But again, the interest lever remains high, and we continue to be optimistic about our opportunities there.

But the fiber assets are only one element Windstream is considering selling off. The service provider is also weighing options for the CLEC Consumer business that came from its purchase of EarthLink.

In 2017, the consumer segment, which mainly consists of EarthLink’s former consumer business, generated service revenue of $51 million, down 5% year over year, and $206 million for the year. The consumer CLEC segment had a contribution margin of $28 million or approximately 54%.

Like the fiber assets, the service provider has not made any decisions about the consumer CLEC business yet, but it wants to keep its options open.

“We are also exploring strategic alternatives with our Consumer CLEC business which is largely comprised of our EarthLink consumer business,” Gunderman said. “And while no final decisions have been made on the strategic opportunities with that segment, we continue to be opportunistic and looking for opportunities to optimize the overall business of Windstream with potential monetization of that segment.”