Windstream 2011 Annual Report Download - page 110

F-2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Unless the context requires otherwise, the use of the terms "Windstream," “we,” “us” and “our” in this Management's
Discussion and Analysis refers to Windstream Corporation and its consolidated subsidiaries.
The following sections, to the extent practicable, provide an overview of our results of operations and highlight key trends and
uncertainties in our business. Certain statements constitute forward-looking statements. See “Forward-Looking Statements” at
the end of this discussion for additional factors relating to such statements, and see “Risk Factors” in Item 1A of Part I of this
annual report for a discussion of certain risk factors applicable to our business, financial condition and results of operations.
OVERVIEW
We are a leading provider of advanced communications and technology solutions, including managed services and cloud
computing, to businesses nationwide. In addition to business services, we offer broadband, voice and video services to
consumers in primarily rural markets. We have operations in 48 states and the District of Columbia, a local and long-haul fiber
network spanning approximately 115,000 miles, a robust business sales division and 21 data centers offering managed services
and cloud computing.
EXECUTIVE SUMMARY
During 2011, we made significant progress on our strategy to grow business and consumer broadband revenues to offset
continuing pressure on our consumer voice and long-distance revenues and intercarrier compensation. Revenues from
businesses and consumer broadband were 61.2 percent of total revenues for the year ended December 31, 2011, as compared to
54.7 percent in the same period in 2010.
Key strategic activities during 2011 included:
• the acquisition of PAETEC Holding Corp ("PAETEC") on November 30, 2011, which turned us into a national
provider of business services and included an attractive customer base of medium and large businesses and
significantly enhanced our capabilities in strategic growth areas, including Internet protocol ("IP") based services,
cloud computing and managed services;
• continued focus on revenue growth opportunities in our business service areas;
• significant success-based capital investments in our fiber network, designed to accommodate network capacity
requirements for wireless carriers as a result of growing wireless data usage;
• continued activities around integration of our acquired businesses; and
• refinancing of long-term debt, resulting in an extension of debt maturities and lower future interest costs.
These activities, in conjunction with the strategic acquisitions we completed in 2010, further our transformation from a
traditional telephone company into an advanced communications and technology solutions provider.
BUSINESS TRENDS
The following discussion highlights key trends affecting our business.
Business communications services: Demand for advanced communications services is expected to drive growth in revenues
from business customers. To meet this demand, we continue to expand our capabilities in integrated voice and data services,
which deliver voice and broadband services over a single Internet connection. We also offer multi-site networking services
which provide a fast and private connection between business locations as well as a variety of other data services. We view this
as a strategic growth area, but we are subject to competition from other carriers and cable television companies, which could
suppress growth. See "Competition" in Item 1 of Part I of this Annual Report for more details.
Data center services: Many businesses are moving towards cloud computing and managed services as an alternative to a
traditional information technology infrastructure. Our data centers are capable of delivering those services, and we are actively
investing in data center expansion in order to meet the growing demand for these types of services. In addition to cloud
computing and managed services, our data centers offer colocation services, in which we provide a safe, secure environment
for storage of servers and networking equipment.