Instead of relying on the prevailing breeze to deliver its services, Windstream makes use of more tangible connections, such as fiber optics and copper wire. The company provides communications and technology services to business and residential customers in the US through a network of fiber and from more than 20 data centers. Business services include multi-site networking, Internet access, cloud computing, colocation, online backup, and other managed services. Along with Internet and voice for its residential customers, it also offers video services. Call connection and backhaul services are offered to phone companies and wireless carriers.
Windstream serves business and residential customers across the US.
Sales and Marketing
The company's has more than 200 business sales offices throughout the US and more than 2,700 sales employees focused on meeting the needs of the company's business customers. Windstream's consumer sales and marketing strategy is focused on driving top line revenue performance through bundled product sales and value-added account revenue growth.
Windstream's revenues increased by 44% in 2012 thanks to a 72% increase in Business service revenues due to increasing demand for data services such as integrated data and voice services, multi-site networking, and data center services. It also saw a 29% increase in Wholesale service revenues, and increases in federal revenues primarily due to the implementation of the access recovery mechanism during the third quarter of 2012. (The ARM is additional federal universal service support available to help mitigate revenue losses from intercarrier compensation reform); and a 103% increase in other revenues including surcharge revenues, revenues from software, other miscellaneous services and consumer revenues generated in markets.
The company's net income marginally decreased by 1% in 2012 due to increases in depreciation expenses primarily caused by additions in property, plant, and equipment. Additionally, Windstream implemented new depreciation rates beginning in 2012 for certain subsidiaries, which resulted in a net increase of depreciation expense. There was also an increase in interest expense primarily due to interest incurred on notes issued by subsidiaries (specifically communications carrier PAETEC), an increase in income tax expense primarily due to an rise in income before taxes, and jump in Merger, Integration, and Restructuring Costs primarily due to the nationwide rebranding of the PAETEC markets and consulting fees related to integration activities.
Technology advances have made its consumer business prospects increasingly difficult, as wireless carriers have siphoned off wireline customers and cable companies have been able to effectively woo voice and Internet customers. The expanding need for data services from the enterprise customer side has become the company's new focus.
In 2011 Windstream planted a major stake in the ground towards that strategy with the acquisition of PAETEC Holding, based near Rochester, New York, for about $2.3 billion (giving PAETEC shareholders about 13% of Windstream) to further expand its Internet protocol (IP)-based communications services, cloud computing, and managed hosting services business. The deal extended Windstream's reach significantly, adding medium- and large-sized business customers in more than 20 states, about 37,000 miles of fiber to its network, and seven data centers. The combined company serves nearly half a million businesses, including most FORTUNE 500 companies.
In 2012, the company sold the energy business acquired as part of PAETEC, which sells electricity to business and residential customers, primarily in certain geographic regions in New York state, as a competitive electricity supplier for $6.1 million.