Consolidated Communications is running about one quarter ahead of where it had expected to be on its fiber build-out, particularly in its New England markets, where good weather has allowed faster progress and combined with the company’s efficient management of its supply chain to produce better results.
And the ability to accelerate its pace will continue to pay off, according to Bob Udell, president and CEO at Consolidated Communications, who spoke at the Wells Fargo Streaming and Connectivity Day this week.
“Our build rate gives us a lot of flexibility in managing our supply chain position, and if we can move faster than others it helps us in the RFP response process as well,” he said. “We've had better weather than anticipated in the Northern New England markets, which has allowed us to work some ahead [especially] underground work and things that require more permitting and things. We usually have to work three, six months ahead when you're planning for weather, so we're doing some pre-work for 2023 now and so we're just in a perfect position to ensure that we can meet our 1.6 million build goal [fiber upgrades] by the end of 2025.”
At the same time, Consolidated continues to pursue and earn government funding that it can integrate into its build-out roadmap, and potentially leverage to eventually help it surpass that goal of 1.6 million fiber upgrades.
“We received roughly $67 million in broadband grant funding up until 2022, and we've been awarded $20 million in funding so far this year, and it could keep growing to over $50 million in the next year,” Udell said. “So we're integrating that into our plan, and I think it will enable us to go above that 1.6 million. At this stage, I can't really speculate how much.”
Regarding its supply chain management, Consolidated has overcome what had been an earlier shortage of “multi-gig CPE,” Udell said, and by sharing more details of its five-year build plan with it supply chain partners it has gotten a supportive response from them, including suppliers “setting up production just for our needs to meet fiber and material supply requirements. We've been able to overcome all the obstacles and challenges associated with fiber build materials, and I think we continue to feel highly confident we can meet or exceed our 400,000 fiber upgrade targets this year.”
That all means that Consolidated can expand fiber to more areas that otherwise would not get it, move from 1-Gig service to 2-Gig service for more customers, and should be able to achieve more revenue on all of its fiber sooner rather than later. It could use the boost. The company last month reported a revenue dip of almost 8% for its most recent quarter. However, the consumer fiber segment of its revenue actually jumped by 22% so it clearly behooves Consolidated to ramp up from the fiber build where and when it can to quicken the migration from legacy broadband to fiber.
Some of the recent revenue decline came from Consolidated’s commercial segment, but Udell also sees the potential for fiber-driven growth there as well. He described his attitude as “cautiously optimistic” that a return to commercial activity that declined during the pandemic will boost the channel and give especially smaller and medium-sized businesses that have yet to be exposed to fiber more of an opportunity to evaluate it.