In industry news, WinStar reports higher growth than expected:
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May 06, 1999 15:03
Winstar Reports On-net Building Penetration Jumps to 14 Percent
On-net Line Adds in First Quarter Exceed 40 Percent
Sixty Percent of New Customers Take Three-year,
Multiple-Services Contracts
WINSTAR COMMUNICATIONS, INC. (NASDAQ: WCII) today announced that on-net building penetration jumped to 14 percent across its network, significantly exceeding the company's long-term business plan target of 10 percent. The company also announced that it installed 65,000 lines during the first quarter. More than 40 percent of WinStar's line installations were on-net in the quarter, bringing the total customer base to 24 percent on-net, up from 20 percent at year-end 1998. In addition, approximately 30 percent of the lines installed during the quarter were data services that were also on the WinStar network. Cumulative lines increased 150 percent from first quarter 1998, to more than 380,000 lines.
WinStar's Millennium marketing program and its complete set of integrated business services - including voice, Internet, data and enhanced Web services such as hosting and e-commerce - all contributed to these results.
"This was a breakthrough quarter for WinStar in terms of on-net execution," said Nathan Kantor, president and chief operating officer of WinStar. "We increasingly drove traffic onto our network, delivered a broader set of services and added more new customer lines than expected to our base."
Building Penetration Increases; Business Plan Target Achieved Early
Building penetration levels - the percentage of customers that are on WinStar's network in buildings connected to the network - averaged 14 percent, with some of the company's Project Millennium buildings reaching a penetration rate of 50 percent and higher. This performance exceeds the company's long-term goal of 10 percent building penetration.
On-net Line Installations Increase; Data Lines Jump Significantly
WinStar realized strong line installations during the first quarter. The company installed 65,000 lines with a significant percentage of those lines on its own network which generate significant margins for the company.
40 percent of the lines added were on-net, up from less than 20 percent of the lines added during the first quarter of last year, and slightly less than 30 percent of the lines added during the fourth quarter of 1998. These lines, which are entirely on the WinStar network, generate the greatest return for the company.
WinStar's data lines added during the quarter - which are now serviced over the company's switches and its own network, and which also generate significant gross margins - exceeded 27 percent this quarter, up from slightly over 9 percent in the first quarter a year ago.
Project Millennium, Complete Set of Business Voice and Data Services Drive Long-term Commitments
The company's highly successful Project Millennium marketing program - which offered business customers up to a year of free local phone service when they signed a three-year contract - was designed to establish long-term relationships with new customers, increase traffic on the company's end-to-end broadband network, and create opportunities to sell incremental high-margin, bandwidth-intensive services.
In the quarter, more than 60 percent of new customers signed three-year agreements. In addition, 60 percent of newly added lines this quarter were for multiple services, up from 25 percent in the first quarter of 1998. In addition, one-call sales closings - when a WinStar sales representative closes a deal during the first visit - soared from 7 to 19 percent.
"The combination of reaching critical mass at the network level, delivering a comprehensive set of integrated voice and data services, and offering a compelling marketing plan has proven to be the right strategy for bringing more lines and customers on-net," added Kantor. "Our long-term contracts with customers give us the opportunity to sell high margin, enhanced services to those customers over time. We look forward to expanding our network presence, continuing to increase our service offerings, and to using similar marketing programs in the future to attract customers at an even faster pace, with increased margins, as we boost on-net penetration even further."
WinStar Communications, Inc. is a pioneer in providing business customers with broadband communications services, including local and long distance phone service, as well as high-speed data, Internet access and information services. WinStar provides these Wireless FiberSM services over its own end-to-end broadband network in more than 30 U.S. markets, using its licenses in the 28 and 38 GHz spectrum.
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