Suddenlink Communications reported strong earnings growth in the second quarter, results that its chairman and CEO Jerry Kent said will help it move forward in plans to offer customers higher-speed data service and maintain its competitive edge.
Suddenlink said it plans to increase capital spending by about $230 million beginning in the second half of this year and through 2017 to significantly enhance its high speed data network and ultimately position the company to offer speeds of up to 1 gigabit per second.
Internally known as "Operation GigaSpeed," this initiative will include expenditures to upgrade data network headend equipment, replace any remaining deployed DOCSIS 2.0 customer premises equipment with DOCSIS 3.0 equipment, and complete our all-digital video conversion.
“We expect to complete these enhancements in a phased, market-by-market approach, focusing first on our largest and most competitive markets,” Suddenlink said in a statement.
Once fully phased in, the plan calls for Suddenlink’s flagship Internet speed to increase from 15 Megabits per second to 200 Mbps and its top speed to rise from over 100 Mbps to 1 Gbps in nearly 90% of its service areas. Suddenlink expects to invest approximately $35 million of the total capital expenditures related to Operation GigaSpeed in the second half of 2014, with the remainder invested during 2015, 2016 and 2017.
"Our positive momentum continued in the second quarter. Customer relationships grew at a record pace in the trailing 12 months. Net gains accelerated for our market-leading Internet services. And revenue, EBITDA and cash flow were up significantly year over year," Kent said in a statement. "These results put us in excellent position to make strategic investments that will enable one Gigabit speeds and thereby retain our competitive advantage in Internet services."
Revenue for the small market operator rose 5.9% to $579.9 million and cash flow, before one-time charges, was up 6.2% to $226.1 million in the period. Suddenlink lost about 18,700 basic video customers in the period, an improvement over the 23,100 it lost in second quarter last year. High speed data additions also improved – Suddenlink added 200 HSD subscribers in the period versus a loss of 8,700 last year.
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