Suddenlink reports robust Q3, plans to add TiVo Mini next year
Bucking the trend of cable operators losing basic video subscribers, Suddenlink Communications actually added a total of 200 in the third quarter en route to chalking up some solid financial results.
"Our third-quarter performance adds to our long track record of successful operating results, with pro forma revenue growth of 6.1 percent, adjusted EBITDA growth of 7.6 percent and ARPU growth of 9.6 percent," said Suddenlink Chairman and CEO Jerry Kent. "We are well positioned to build on this track record as we continue to improve customer satisfaction ratings and near completion of the company's acquisition by management and new investors."
On July 19, Canadian Pension Plan Investment Board (CPPIB), BC Partners and Jerry Kent – along with members of his management team – announced they were buying the nation’s seventh-largest cable operator for $6.6 billion. In today’s earnings report, Suddenlink said it expected the deal to close this month.
Suddenlink reported third-quarter revenues of $511.9 million. Suddenlink’s free cash flow of $35.1 million in the third quarter grew $19.9 million compared to the third quarter of 2011, when it was $15.2 million, an increase of 131 percent. Free cash flow for the nine months ended Sept. 30 of $79.7 million represented an increase of $69.8 million compared to the first nine months of last year.
After becoming the first cable operator in the nation to launch TiVo Stream last month in Lubbock, Texas, Kent said Suddenlink hoped to add the TiVo Mini box to its product line early next year. According to published reports, the TiVo Mini is an IP set-top box that doesn’t require the more expensive CableCards.
“We’re building on our partnership with TiVo. I’m really excited about our deployment of a terrific new service with them,” Kent said on the earnings call. “When paired with the TiVo Premiere DVR from Suddenlink, TiVo Stream lets customers stream TV channels to other devices in the home, such as iPhones and iPads, and transfer DVR recordings to those devices for viewing outside of the home.
“Early next year, we hope to add TiVo Mini to this suite of services. TiVo Mini is a companion device of the TiVo Premiere that provides customers with an even more economical whole-home DVR solution.”
The cable operator’s total average monthly revenue per basic video customer (ARPU) for the third quarter was $138.86, an increase of 9.6 compared to the third quarter of the prior year.
Advertising revenues increased 22 percent, thanks to higher national and local advertising sales revenue, primarily due to increased political advertising, as well as increased automotive advertising.
On the business services front, commercial revenue grew 16 percent versus the third quarter of 2011, including 22 percent year-over-year growth in its commercial high-speed data and telephone revenues on a combined basis.
In addition to the 200 basic video customers, Suddenlink’s digital video subscribers increased by 24,900 during the quarter. Over the past 12 months, basic video customers decreased by approximately 38,000, or 3 percent, while digital video customers increased by 79,000, or 11 percent.
Data customers increased by 17,400 during the third quarter of 2012 and increased 59,600, or 6.4 percent, during the trailing 12 months.
During the third quarter, commercial high-speed data customers increased by approximately 1,100. During the trailing 12 months, commercial high-speed data customers increased by approximately 4,600, or 10 percent.
Suddenlink’s voice customers grew by 7,100 subscribers during the third quarter, and 43,700, or 10 percent, over the past 12 months.
“We have a competitive advantage in the areas we operate, and we intend to enhance that position,” Kent said. “For example, we’ve continued increasing the speeds of our most popular Internet services at no additional charge to our customers. Generally, our 20 Mbps customers now get 30 Mbps, our 10 Mbps now get 15 Mbps, and we’ve doubled speeds for our entry level customers.”
In regard to Hurricane Sandy, Kent said Suddenlink did sustain some plant damage in two cable systems in West Virginia, but overall, the impact was less than storm damage in July.