Windstream 2011 Annual Report Download - page 74

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Item 1. Business
THE COMPANY
Unless the context requires otherwise, the use of the terms "Windstream," “we,” “us” and “our” in this Annual Report on
Form 10-K refers to Windstream Corporation and its consolidated subsidiaries.
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.
Transformation of the business
Our strategy has been and continues to be transformation of our business from a rural, consumer-focused voice and broadband
provider into a national provider of advanced communications and technology solutions to businesses. We took key steps in
2010 and 2011 to advance this strategy. At the same time, we continued to build our consumer broadband operations in
response to public demand for faster Internet speeds. Together, these initiatives align our focus with the growth opportunities in
our industry and provide investors with the opportunity to combine growth and a high-yield dividend.
Today, we are a very different company from the one that was created in July 2006 through the spinoff of Alltel Corporation's
landline division and merger with VALOR Communications. At that time, we operated in just 16 states with less than 24,000
miles of fiber, a modest business sales organization, and only a handful of lower-tier data centers. In 2006, like other traditional
telephone companies, we faced two important challenges: Consumers were abandoning wireline voice connections in favor of
wireless services, and cable television companies were increasingly competing for both voice and Internet customers. This led
to a decline in revenue and shrinking cash flows and had the potential to impair our ability to maintain our dividend practice.
To manage these pressures, we completed acquisitions of other traditional telephone companies, which improved our size, scale
and cost structure. However, the core problems presented by a shrinking customer base still remained.
In response to this pressure, we took many steps to transform our company and position it to grow cash flows. First, businesses
were experiencing a growing need for advanced data services, including integrated voice and data services, multi-site
networking and managed data services. Second, cellular customers were using more and more wireless data, requiring the
wireless carriers to obtain additional bandwidth on the wireline network that transports their wireless traffic. Third, consumers
were demanding faster broadband speeds at home to accommodate their growing use of streaming video and other Internet-
based services. As we considered how to capitalize on these opportunities, it quickly became apparent that we would have to
build a stronger company with increased scale and a more diverse portfolio of product offerings.
In early 2010, we made a critical move to accelerate the transformation of the company when we acquired NuVox Inc.
("NuVox"), a leading regional business services provider based in Greenville, South Carolina. NuVox added a broad portfolio
of Internet protocol ("IP") based services and an aggressive sales force, and this acquisition marked an important step in
positioning the company to better serve business customers.
Two more acquisitions followed quickly in late 2010. On December 1, we purchased Hosted Solutions Acquisition, LLC
("Hosted Solutions") of Raleigh, N.C., a data center operator in the eastern United States. Hosted provided us the infrastructure
to offer many advanced data services, such as cloud computing, managed hosting and managed services, on a wide scale. We
gained five state-of-the-art data centers and approximately 600 business customers. On December 2, we completed the
acquisition of Q-Comm Corporation's ("Q-Comm") wholly-owned subsidiaries Kentucky Data Link, a regional transport
services provider with 30,000 miles of fiber, and Norlight, a business services provider with approximately 5,500 customers.
This transaction significantly expanded our fiber network, allowing us to reach more business customers and to compete for
more wireless backhaul contracts. KDL's fiber transport network also provided opportunities for substantial operating synergies
by allowing us to carry more traffic on our own network rather than paying other carriers for this service.
We took another significant step in the transformation of our company on November 30, 2011, when we acquired PAETEC
Holding Corp. ("PAETEC"), a leading national business services provider with more than 36,000 miles of fiber and seven data
centers, as well as an experienced sales force focused on serving enterprise-level clients. The PAETEC transaction significantly
enhanced our capabilities in strategic growth areas, including IP based services, cloud computing and managed services,