Consolidated Communications Holdings Stock

Consolidated Communications Holdings, Inc., through its subsidiaries, operates as a broadband and business communications provider.

The company provides a wide range of communication solutions to consumer, commercial and carrier channels across a service area in over 20 states. The company generates the majority of its consolidated operating revenues primarily from monthly subscriptions to its broadband, data and transport services (collectively broadband services) marketed to residential and business customers.

During the year ended 2022, the company upgraded approximately 403,000 homes and small businesses, and in 2021, the company launched Fidium Fiber, its new Gigabit consumer fiber internet product. The company plans to upgrade at least 225,000 passings in 2023 and expand Fidium Fiber further into its footprint, as well as to small business customers.

On September 13, 2022, the company completed the sale of all of its limited partnership interests in GTE Mobilnet of South Texas Limited Partnership (Mobilnet South Partnership), GTE Mobilnet of Texas RSA #17 Limited Partnership (RSA #17), Pittsburgh SMSA Limited Partnership (Pittsburgh SMSA), Pennsylvania RSA No. 6(I) Limited Partnership (RSA 6(I)) and Pennsylvania RSA No. 6(II) Limited Partnership (RSA 6(II)) to Cellco Partnership (Cellco). Cellco is the general partner for each of the five wireless partnerships and is an indirect, wholly-owned subsidiary of Verizon Communications, Inc.

The company completed the sale of substantially all of the assets of its non-core, rural ILEC business located in Ohio (the Ohio operations) and its business located in the Kansas City market (the Kansas City operations) on January 31, 2022 and November 30, 2022, respectively. The sale of substantially all of the net assets of the company’s Kansas City operations and Ohio operations resulted in a reduction of approximately 3,325 fiber consumer data connections, 14,505 DSL/Copper consumer data connections and 14,800 video connections in 2022. The company focuses on expanding its fiber broadband services and upgrading data speeds in order to offer a highly competitive fiber product.

Consumer

Broadband Services

Broadband services include revenues from residential customers for subscriptions to the company’s data products. The company offers high-speed Internet access at speeds of up to 2 Gbps, depending on the network facilities that are available, the level of service selected and the location. The company’s data service plans also include wireless internet access, email and internet security and protection. The company’s fiber internet product offers symmetrical speeds from 50 Mbps to 2 Gbps over the latest WiFi 6 technology with no data caps. Customers have the ability to view and manage their WiFi network through the company’s Attune WiFi app, which enables customers to create individual profiles, turn on parental controls, manage devices and provide guest access. The company’s Voice over Internet Protocol (VoIP) digital phone service is also available in certain markets as an alternative to the traditional telephone line. The company offers multiple voice service plans with options for unlimited local and long distance calls and customizable calling features and voicemail, including voicemail to email options.

Video Services

Depending on geographic market availability, the company’s video services range from limited basic service to advanced digital television, which includes several plans, each with hundreds of local, national and music channels including premium and Pay-Per-View channels, as well as video on-demand service. Certain customers may also subscribe to its advanced video services, which consist of high-definition television, digital video recorders (DVR) and/or a whole home DVR. The company’s Whole Home DVR allows customers the ability to watch recorded shows on any television in the home, record multiple shows simultaneously and utilize an intuitive on-screen guide and user interface. The company’s video subscribers can also watch their favorite shows, movies and livestreams on any device. In addition, the company offers several on-demand streaming TV services, which provide endless entertainment options. As the consumer demand for streaming services increases, the company continues to de-emphasize its linear video services and transition customers to streaming TV packages offered through its streaming partnerships.

Voice Services

The company offers several different basic local phone service packages and long-distance calling plans, including unlimited flat-rate calling plans. The plans include options for voicemail and other custom calling features, such as caller ID, call forwarding and call waiting. The number of local access lines in service directly affects the recurring revenue it generates from end users and continues to be impacted by the industry-wide decline in access lines. The company expects to continue to experience erosion in voice connections due to competition from alternative technologies, including its own competing VoIP product.

Commercial

Data Services

The company provides a variety of business communication solutions to commercial customers of all sizes, including voice and data services over its advanced fiber network. The services the company offers include scalable high-speed broadband Internet access, SIP trunking and VoIP phone services, which range from basic service plans to virtual hosted systems. The company’s hosted VoIP package utilizes soft switching technology and enables its customers to have the flexibility of employing new telephone advances and features without investing in a new telephone system. The package bundles local service, calling features, Internet protocol (IP) business telephones and unified messaging, which integrates multiple messaging technologies into a single system and allows the customer to receive and listen to voice messages through email.

In addition to Internet and VoIP services, the company offers a variety of commercial data connectivity services in select markets, including Ethernet services; private line data services; software defined wide area network (SD-WAN), a software-based network technology that provides a simplified management and automation of wide area network connections; and multi-protocol label switching. The company’s networking services include point-to-point and multi-point deployments from 2.5 Mbps to 10 Gbps to accommodate the growth patterns of its business customers. The company offers a suite of cloud-based services, which includes a hosted unified communications solution that replaces the customer’s on-site phone systems and data networks, managed network security services and data protection services. Data center and disaster recovery solutions provide a reliable and local colocation option for commercial customers.

Voice Services

Voice services include basic local phone and long-distance service packages for business customers. The plans include options for voicemail, conference calling, linking multiple office locations and other custom calling features such as caller ID, call forwarding, speed dialing and call waiting. Services can be charged at a fixed monthly rate or a measured rate or can be bundled with selected services at a discounted rate.

Other

Other services include business equipment sales and related hardware and maintenance support, video services and other miscellaneous revenues, including 911 service revenues. The company is a full service 911 provider and have installed and maintain a turn-key, state of the art statewide next-generation emergency 911 system located in Maine. These systems have processed several million calls relying on the caller's location information for routing. Next-generation emergency 911 systems are an improvement over traditional 911 and are expected to provide the foundation to handle future communication modes, such as texting and video.

Carrier

The company provides high-speed fiber data transmission services to regional and national interexchange and wireless carriers, including Ethernet, cellular backhaul, dark fiber and colocation services. The demand for backhaul services continues to grow as wireless carriers are faced with escalating consumer and commercial demands for wireless data. Voice services include basic local phone service packages with customized features for resell by wholesale customers. The plans include options for voicemail, conference calling, linking multiple office locations and other custom calling features.

Subsidies

Subsidies consist of both federal and state funding designed to promote widely available, quality broadband services at affordable prices with higher data speeds in rural areas and for low-income consumers across the country. Some subsidies are funded by end user surcharges to which telecommunications providers, including local, long-distance and wireless carriers, contribute on a monthly basis, while others are components of broader economic stimulus or recovery legislation. Certain subsidies are allocated and distributed to participating carriers monthly based upon their respective costs for providing local service. In other cases, subsidies are awarded to carriers periodically over a predetermined number of years to support their deployment of high-speed broadband infrastructure in underserved or unserved areas. Similar to access charges, subsidies are regulated by the federal and state regulatory commissions.

Network Access Services

Network access services include interstate and intrastate switched access, network special access and end user access. Switched access revenues include access services to other communications carriers to terminate or originate long-distance calls on its network. Special access circuits provide dedicated lines and trunks to business customers and interexchange carriers. Certain of the company’s network access revenues are based on rates set or approved by the federal and state regulatory commissions or as directed by law that are subject to change at any time.

Other Products and Services

Other products and services include revenues from telephone directory publishing, video advertising, billing and support services and other miscellaneous revenues, such as revenue from its Public Private Partnership arrangements. The company has entered into numerous Public Private Partnership agreements with several towns in New Hampshire to build new FTTP Internet networks. The new town networks provide multi-gigabit broadband speeds to residential and commercial customers. Public Private Partnerships are a key component of Consolidated’s commitment to expand rural broadband access.

Wireless Partnerships

In addition to its core business, the company derived a portion of its cash flow and earnings from investments in five wireless partnerships: Mobilnet South Partnership, RSA #17, Pittsburgh SMSA, RSA 6(I) and RSA 6(II). Cellco is the general partner for each of the five cellular partnerships. Cellco is an indirect, wholly-owned subsidiary of Verizon Communications Inc. As the general partner, Cellco is responsible for managing the operations of each partnership.

On September 13, 2022, the company completed the sale of all of its limited partnership interests in the five wireless partnerships to Cellco Partnership (Cellco).

The company owned 2.34% of the Mobilnet South Partnership. The principal activity of the Mobilnet South Partnership is providing cellular service in the Houston, Galveston and Beaumont, Texas metropolitan areas.

The company owned 20.51% of RSA #17, which serves areas in and around Conroe, Texas. This investment was accounted for under the equity method.

The company owned 3.60% of Pittsburgh SMSA Limited Partnership (Pittsburgh SMSA), 16.67% of Pennsylvania RSA No. 6(I) Limited Partnership (RSA 6(I)) and 23.67% of Pennsylvania RSA No. 6(II) Limited Partnership (RSA 6(II)). These partnerships cover territories that almost entirely overlap the markets served by the company’s Pennsylvania Incumbent Local Exchange Carrier (ILEC) and Competitive Local Exchange Carrier operations.

Network Architecture and Technology

The company has made significant investments in its telecommunications networks and continue to enhance and expand its network by deploying technologies to provide additional capacity to its customers. As a result, the company is able to deliver high-quality, reliable data, video and voice services in the markets it serves. The company’s wide-ranging network and extensive use of fiber provide an easy reach into existing and new areas. By bringing the fiber network closer to the customer premise, the company can increase its service offerings, quality and bandwidth. The company’s existing network enables it to efficiently respond and adapt to changes in technology and is capable of supporting the rising customer demand for bandwidth in order to support the growing amount of wireless data devices in its customers’ homes and businesses.

The company’s networks are supported by advanced 100% digital switches, with a core fiber network connecting all remote exchanges. The company continues to enhance its copper network to increase bandwidth in order to provide additional products and services to its marketable homes. In addition to its copper plant enhancements, the company has deployed fiber-optic cable extensively throughout its network, resulting in a 100% fiber backbone network that supports all of the inter-office and host-remote links, as well as the majority of business parks within its service areas. In addition, this fiber infrastructure provides the connectivity required to provide broadband and long-distance services to the company’s residential and commercial customers. The company’s fiber network utilizes FTTP and fiber-to-the-node (FTTN) networks to offer bundled residential and commercial services.

The company operates advanced fiber networks which it owns or has entered into long-term leases for fiber network access. As of December 31, 2022, the company’s fiber-optic network consisted of over 57,800 route-miles, which includes approximately 17,000 miles of FTTP deployments, approximately 22,000 route miles of fiber located in the northern New England area, approximately 3,950 miles of fiber network in Minnesota and surrounding areas, approximately 4,790 miles of fiber network in Texas including parts of the greater Dallas/Fort Worth market, approximately 1,830 route-miles of fiber-optic facilities in the Pittsburgh metropolitan area, approximately 2,300 miles of fiber network in Illinois and approximately 1,150 route-miles of fiber optic facilities in California that cover large parts of the greater Sacramento metropolitan area. The company’s remaining network includes approximately 4,850 route-miles spanning across various states, including portions of Alabama, Colorado, Florida, Georgia, Kansas, Massachusetts, New York, Pennsylvania and Washington.

As of December 31, 2022, the company passed more than 2.6 million homes and have direct fiber connections to 14,427 on-net commercial building locations. The company intends to continue to make strategic enhancements to its network, including improvements in overall network reliability and increases to its broadband speeds. The company offers data speeds of up to 2 Gbps in select markets, and up to 100 Mbps in markets where 2 Gbps is not yet available, depending on the geographical region. As part of its multi-year fiber build plan, the company plans to extend fiber coverage enabling multi-Gig data speeds to over 70% of its passings by 2026. The upgrades will be made primarily across ten states including more than 1.1 million passings within the northern New England service areas to significantly enhance the company’s broadband speeds.

Through its extensive fiber network, the company also expects to be able to support the increased demand on wireless carriers for high-capacity transport services, and intends to also leverage its investments to grow commercial data services. In all the markets it serves, the company has launched initiatives to support fiber backhaul services to cell sites. As of December 31, 2022, the company had 3,805 cell sites in service and an additional 304 additional cell sites pending completion.

Sales and Marketing

The company offers its services through customer service call centers, its website, commissioned sales representatives and third-party sales agents. The company’s customer service call centers and dedicated sales teams serve as the primary sales channels for consumer, commercial and carrier services. The company’s sales efforts are supported by digital media, direct mail, bill inserts, radio, television and internet advertising, public relations activities, community events and customer promotions. The company sells its Gigabit consumer fiber broadband service in select markets using the brand known as Fidium Fiber, which launched in November 2021. In February 2023, the company launched Fidium@Work and expanded its Fidium Fiber service to small businesses everywhere Fidium internet is available.

Business Strategies

The key elements of the company’s strategy are to transform the company into a dominant fiber, gigabit broadband provider; continue to grow and invest in commercial and carrier services; and improve the overall customer experience.

Competition

Depending on the market area, the company competes against Comcast, Charter, AT&T, Mediacom, Armstrong, Optimum, First Light, NewWave Communications and a number of other carriers, in both the commercial and consumer markets.

Regulatory Environment

At the federal level, the Federal Communications Commission exercises jurisdiction over facilities and services of local exchange carriers, such as the company’s rural telephone companies, to the extent they are used to provide, originate or terminate interstate or international communications.

The company’s incumbent local exchange companies and competitive local exchange companies must comply with the Communications Act of 1934, which requires, among other things, that telecommunications carriers offer services at just and reasonable rates and on non-discriminatory terms and conditions.

The company’s cable television subsidiaries each require a state or local franchise or other similar authorization in order to provide cable television service to customers. Each of these subsidiaries is subject to regulation under Title VI of the Communications Act.

History

Consolidated Communications Holdings, Inc. was founded in 1894. The company was incorporated under the laws of Delaware in 2002.