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Cable Operators

Suddenlink Reverses Sub Loss

5/24/2010 9:52 AM Eastern

A return to basic subscriber
growth and strong performance in advanced
services helped drive an 11.2% increase
in cash flow at Suddenlink Communications
in the first quarter.

Revenue at the St. Louis-based midsized
operator rose 6.8% to $411.1
million and cash flow clocked
in at $147.4 million in the period,
fueled by a big gain in
revenue-generating units,
up 92,000 in the period — the
biggest quarterly gain in Suddenlink’s
history.

Basic-video customers were
up by 4,800; digital-video customers
rose by 30,600; highspeed
Internet subscribers
rose by 34,800; and telephony
customers increased by
21,800. Business customers
rose by 1,400 in the period.

The basic-subscriber gain
reverses a loss of 15,400 basicvideo
customers in the fourth quarter.

Advertising revenue increased by 10.4%,
mainly due to increases in national advertising.

The results are pretty much in line with
preliminary first-quarter results the company
issued in April, in conjunction with a $600
million bond offering. Suddenlink, which is
privately held, has public debt.

On a conference call with analysts, Suddenlink
CEO Jerry Kent said the company
continues to push ahead with its Project
Imagine plant upgrade and has entered the
its second phase. That phase will include
converting a number of cable systems to alldigital
plant. Suddenlink has already begun
to distribute digital adapters to customers
in 16 markets across five regions as part of
that plan.

“When completed, this effort will reclaim
significant bandwidth in the affected cable
systems, allowing us to add more high-definition
channels, further expand the availability
of our video-on-demand service
and complete additional channel bonding
to continue providing market
leading Internet speeds,
which enhances our competitive
position,” Kent said on
the call. “We believe we’re in
excellent position to continue
to see growth in RGUs, advertising
sales and commercial
business services in 2010.”

Already, Suddenlink customers
have been snapping
up HD and digital video recorder
services, highlighted
by the company’s rising penetration
rates in both services
in the period. Chief operating
officer Tom McMillin said
on the call that HD penetration
rose to 47.8% in the first quarter, up from
43.9% in the same period last year. Digital video
recorder penetration also rose in the period,
to 48.5% in the first quarter, compared to
44.5% in the prior year.

McMillin said Suddenlink is moving forward
on beefing up its direct sales force and
plans to have 100 sales agents knocking on
doors by mid-summer.

Suddenlink also provided more details
on its recent purchase of 8,200 subscribers
in Mississippi from Windjammer Communications.
Chief financial officer Mary Meduski
said Suddenlink agreed to pay about
$20.3 million for the Windjammer subscribers,
subject to adjustment at closing, which
is expected in the third quarter.

September