CenturyLink (NYSE: CTL) has continued to follow a pattern that's become as familiar to telcos as it's become alien to incumbent cable operators: It added 10,000 subscribers to its Prism TV service during the fourth quarter and now has 115,000 IPTV subs throughout its footprint. Cable operators, on the other hand, continue to lose video customers, grasping at the reduced numbers of subscribers leaving as positive news.
"Our Prism TV service continues to perform well and represents a very compelling entertainment alternative to cable TV service in the markets where it is currently available," said Glen Post, CenturyLink's president-CEO, in a conference call with analysts after fourth quarter earnings were announced. "Of the 45,000 new subscribers we have added over the past 12 months, over 50 percent were new subscribers or new customers to CenturyLink."
Post further reported that the carrier has an 11 percent penetration rate across the eight markets where the service is available and that CenturyLink "continued to enhance our IPTV features by introducing new functionality and applications, including expansion of our TV Everywhere capabilities, our video-on-demand library and a successful trial of wireless set-top boxes."
IPTV, in fact, could be seen as the star of the company's residential business since the carrier experience better than 90 percent broadband pull-through with Prism TV sales to new customers, Post added.
The service rollout still has a ways to go--especially as it involves legacy Qwest markets. While CenturyLink said last year that it would be launching in Phoenix (and it did start a soft launch), a total launch is just now happening in that market. Post also promised that a second Qwest market would be launched "in mid-2013."
The company is not skimping on the service launches, Post said, noting that CenturyLink will spend $100 million to $150 million in service launches, and maintenance capital expense is expected to be about 20 to 25 percent of total cap ex levels.
It's a focus that should preclude any potential acquisitions throughout the year, added CFO Stewart Ewing, who said the service provider believes it has "a lot of opportunities for organic growth with our broadband expansion and fiber-to-the-tower work… and our Prism TV services" and "is very comfortable."
"We do not need to make an acquisition in order to grow the company, to grow revenues and margins," he said, adding such an acquisition is not out of the question "but we don't see a need to go out and acquire."
Commentary: The little things still make a big difference
CenturyLink's IPTV, business services offset legacy declines; Q4 earnings down 1.5% to $4.58 billion
CenturyLink to 'soft launch' Prism TV in Phoenix next year