Citing increased competitive pressure across the space, regional telecom provider Cincinnati Bell said it has officially begun to look at strategic alternatives for its wireless business.
The company reported that during the fourth quarter of 2012, its wireless business posted a 17% dip in revenues compared with the same quarter of 2011, falling to $56.8 million. For the full year, wireless revenues dropped 13% to $241.8 million.
Cincinnati Bell blamed the revenue shortfall on customer losses across its postpaid platform where it lost 19,000 subscribers during the fourth quarter and lost 61,000 total customers for the full year. Driving that defection was an increase in churn, which surged to 3.2% during the fourth quarter.
The company noted that it saw increased competitive pressure during the holiday season and from an increase in compelling LTE devices from competitors.
The company did manage to trim operational costs for its wireless business by 55% during Q4 and 31% for the full year, which helped boost segment income from a loss of $39.8 million during the fourth quarter of 2011 to a return of $7.7 million in 2012, while full-year income improved from $3.3 million in 2011 to $51.2 million in 2012.
However, Cincinnati Bell CEO Theodore Torbeck noted that maintaining those cost controls would prove challenging going forward.
“Our wireless business faces intense competitive pressures from the national players,” Torbeck said during an analyst briefing. “While our team has done a great job taking out cost to substantially offset subscriber declines over the past three years, it is becoming more and more difficult for us to fully offset these revenue declines with cost reductions. … We are reviewing all options available to us, and for now, we’ll continue to manage this business with a focus on cash flow.”
Those cost controls look to include holding off on deploying LTE technology across its network. Torbeck explained that while the company would continue trialing the technology, it has yet to decide on the depth of a deployment plan.
“What is critically important to us in this decision is that the business case for any LTE investment must meet the substantial investment returns we expect from our fiber deployment,” Torbeck added.
Cincinnati Bell’s current “4G” branded offering runs across its HSPA+ deployment and provides nationwide coverage through a roaming agreement with AT&T Mobility.
Analysts noted that Cincinnati Bell controls 50 megahertz of total spectrum in the Cincinnati area and 40 megahertz in Dayton, Ohio, with those assets spread between the 1.7/2.1 GHz and 1.9 GHz band.
One area of focus company management said it would continue with was on the deployment of fiber for its wireless backhaul projects. Cincinnati Bell said it generated approximately $80 million in revenues from its fiber deployments and that those “projects are very attractive given their long-term committed nature and solid returns.”
Cincinnati Bell’s stock (CBB) was trading down nearly 3% early Thursday.
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