Consolidated Bets on Fiber, Slows Buildout

Summary: Consolidated aimed to upgrade 70% of its network to fiber optic by 2025. But due to inflationary pressures and billions of dollars in federal funding to be allocated in 2025, the company is now delaying that target until mid-2026 and lowering its expansion target for the year ahead.

ICC News?On Tuesday, the executives of the US broadband and business communication service provider Consolidated Communications made optimistic predictions prospects of the company's fiber-based business while lowering expectations for the pace of its expansion.

Consolidated's newly appointed chief financial officer, Fred Graffam, said the company's strategic business areas, including consumer broadband, business, and carrier data transport, delivered healthy revenue growth, partly offset by corporate voice and video, among others. A decline in other services revenue. These strategic business areas will drive revenue and EBITDA growth through 2024 as the company leverages fiber optic infrastructure investments.

Consolidated officially launched its transformation strategy to an optical fiber provider in 2021, established a subsidiary Fidium Fiber, and plans to upgrade 70% of its copper wire infrastructure to gigabit optical fiber. In 2022, Fidium Fiber will add 40,100 new fiber users, doubling the number of new additions in 2021. The company has further built 400,000 recent fiber locations, bringing its coverage to over 1 million, accounting for 38% of its target market. Consolidated will have about 123,000 consumer fiber broadband subscribers by the end of 2022, a penetration rate of 12%.

Consolidated initially aimed to upgrade 70% of its network to fiber optic by 2025. But the company has pushed back that target to mid-2026 and lowered its expansion target for the year ahead. The move was partly expected. Recent reports suggest several service providers, including Consolidated, will reduce their fiber optic targets in 2023 due to inflationary pressures and billions of dollars in federal funding allocated in 2025. Earlier this month, financial analysts at Cowen lowered their estimate for Consolidated's 2023 fiber buildout to 350,000 from 400,000.

Consolidated stated that the company's goal this year is to "add at least 225,000 new fiber Locations." The company expects fiber subscribers to grow to more than 500,000 by 2026, a 25% completion rate of its 2 million goals.