Windstream tells shareholders wireline company is thriving

"I think we're really differentiating ourselves with this approach," Windstream President and CEO Jeff Gardner said to shareholders who gathered at a downtown hotel meeting room.

Little Rock-based Windstream was spun off from Alltel Corp. in July 2006 in a $4.9 billion deal that combined it with the former Valor Communications Group Inc. of Irving, Texas, creating the fifth-largest U.S. local phone company.

The new company is sustaining its rural focus, selling traditional landline and long distance phone service while emphasizing broadband Internet service and digital television.

The company, which is to issue its first quarter 2008 earnings Friday, has 3.2 million access lines scattered across 16 states, from New Mexico eastward. Windstream had $3.3 billion in revenue for 2007. The company has adopted the same strategy that Alltel had for many years -reliance on less populated areas for the company's foundation. Alltel, as a wireless company, went private last year.

Gardner said Windstream's plans include doubling broadband speed for its 871,000 Internet customers. Windstream has 196,000 digital TV customers through an agreement with Dish Network, the nation's No. 2 satellite provider.

In its first year, Windstream spun off a publishing unit for $507 million, money the company applied to pay down debt and repurchase shares. The company also bought Concord, N.C.-based CT Communications for $585 million, expanding Windstream's footprint.

"We are right where we hoped to be," Gardner said.

Gardner said the economic downturn hasn't held Windstream back.

"We really haven't seen any pressure in our business," Gardner said in an interview. "We've held up extremely well."

With fewer housing starts, there are fewer opportunities to bring in new customers, but with residential customers staying put, he said fewer customers have moving as an impetus to change service.

"Net-net, it's kind of a wash," Gardner said.

The company is working to bundle services as it strives to increase penetration.

"We're among the industry leaders in bundling, which is key," he said.

Though Windstream's most basic offering is traditional landline phone service, Gardner said the company is in good position to be profitable for many years.

"We're wired, but we're changing rapidly," he said.