Little Rock-based Windstream posts $1.8B loss

Graphs showing information about Windstream's Fourth quarter
Graphs showing information about Windstream's Fourth quarter

Windstream Holdings lost $1.8 billion in the fourth quarter last year, down from an $87 million loss in the fourth quarter of 2016, the Little Rock telecommunications company said Thursday.

The company recorded what it described as a one-time "noncash goodwill impairment charge" of $1.8 billion that led to the loss for the quarter. The write-down was in Windstream's local telephone exchange business, the traditional business line for the spinoff of Alltel Corp. when it was formed in 2006.

For the quarter, Windstream lost $10.26 per share when including the one-time charge. Excluding the charge, Windstream earned 3 cents per share, better than the average loss of 35 cents projected by 11 analysts who were surveyed by Thomson Reuters.

Windstream shares fell 19 cents to close Thursday at $1.30 in trading on the Nasdaq exchange. Windstream traded as low as $1.29 during the day, only a penny above its 52-week low. More than 6 million shares were traded, 2.5 times its average volume.

"The write-down was primarily due to changes in long-term cash flow projections, driven by recent operational results and future assumptions," Chris King, vice president of investor relations, said in Windstream's conference call with analysts.

Given the nature of the landline telephone business, the write-down was not to be unexpected, said Bob Williams, senior vice president and managing director of Simmons First Investment Group Inc. in Little Rock.

Windstream had revenue of $1.5 billion for the fourth quarter, up from $1.3 billion in revenue in 2016.

For the year, Windstream reported a net loss of $2.1 billion, including the fourth-quarter write-down, compared with a loss of $384 million in 2016. The company had revenue of $5.9 billion for 2017, up from $5.4 billion in 2016.

Looking at the quarter, Windstream saw a decline in adjusted revenue for every business line, Williams said.

Adjusted revenue was down 4 percent in the quarter in the consumer and small-business segment, down less than 1 percent in the enterprise segment, down 8 percent in the wholesale segment and down 5 percent in what is the EarthLink consumer Internet business.

Bob Gunderman, the firm's chief financial officer, said during the conference call that Windstream still has fiber-optic assets worth trying to monetize.

"We've been very active in discussions around that opportunity," Gunderman said. "We continue to dialogue with multiple parties about potential transactions. While nothing has been announced at this point, we still remain optimistic about our opportunities with some of that fiber portfolio."

It is more likely that there will be smaller transactions on a more regular basis rather than a very large transaction with one party, Gunderman said.

"But again, the interest level remains high and we continue to remain optimistic about our opportunities there," Gunderman said.

In 2017, Windstream completed its acquisitions of EarthLink and Broadview Network Holdings Inc.

In a statement, Tony Thomas, Windstream's chief executive officer, said 2017 was a very productive year for Windstream.

"We delivered improved financial and operating results for almost all [measurements] across the business," Thomas said.

This year, Windstream plans to launch faster, more cost-effective broadband techniques, Thomas said.

Last year, Windstream extended the maturity of billions of dollars it has borrowed by pushing almost $2 billion in maturities out about two years, significantly reducing the amount Windstream owes on its loans until 2020.

This year, Windstream expects to continue to make the most effective use of its balance sheet, Thomas said. In 2018, the company faces a one-time charge of about $20 million attributed to litigation costs, Gunderman said.

Business on 02/23/2018

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