Windstream 2013 Annual Report Download - page 140

F-4
Consumer high-speed Internet: As of December 31, 2013, we provided high-speed Internet service to approximately 72 percent
of primary residential lines in service. The number of high-speed Internet customers we serve will continue to be impacted by
the effects of competition from other service providers and increased penetration in the marketplace as the number of
households without high-speed Internet service continues to shrink. However, we believe growing customer demand for faster
speeds and value-added services, such as online security and back-up, will drive growth in consumer high-speed Internet
revenues. We are continuing to focus on increasing our broadband speeds available to customers. As of December 31, 2013, we
could deliver speeds up to 3 Megabits per second ("Mbps") to approximately 98 percent of our addressable lines, and speeds up
to 6 Mbps, 12 Mbps and 24 Mbps are available to approximately 77 percent, 52 percent and 17 percent of our addressable lines,
respectively.
Consumer voice line losses: Voice and switched access revenues will continue to be adversely impacted by future declines in
voice lines due to competition from cable companies, wireless carriers and providers using other emerging technologies. To
combat competitive pressures, we continue to emphasize our bundled products and services. Our consumers can bundle voice,
high-speed Internet and video services, providing one convenient billing solution and bundle discounts. We believe that product
bundles positively impact customer retention, and the associated discounts provide our customers the best value for their
communications and entertainment needs. As of December 31, 2013, all of our voice lines had wireless competition and
approximately 70 percent of our voice lines had fixed-line voice competition. Consumer lines decreased 119,600, or 6.5 percent
during 2013, primarily due to the effects of competition.
Synergies and operational efficiencies: To secure our bottom line against evolving revenue streams and a shift in our revenue
mix that has resulted in a higher proportion of lower margin revenues, we are committed to aggressive cost management
strategies that emphasize operational efficiencies. During 2013, we capitalized on the 2012 review of our management structure
which resulted in 350 management positions being eliminated and a cost savings of approximately $40.0 million, annualized.
Moving into 2014, we are focused on continued improvements in our cost structure through network grooming and continued
declines in the cost of providing services due to operational efficiencies and billing system conversions that will further reduce
costs.
ACQUISITIONS AND DISPOSITIONS
Recent transactions and their value to our business are discussed below. Refer to Notes 3 and 15 of the consolidated financial
statements for additional information regarding these transactions.
Acquisitions
On November 30, 2011, we completed the acquisition of PAETEC Holding Corp. ("PAETEC"), a communications carrier
focused on business customers. The PAETEC transaction enhanced our capabilities in strategic growth areas, including IP-
based communications services, cloud computing and managed services. In this transaction, we added an attractive base of
medium-to-large sized business customers, approximately 36,700 fiber miles, seven data centers, and an experienced sales
force focused on serving enterprise-level customers.
Dispositions
On December 5, 2013, we completed the sale of Pinnacle Software Company ("Pinnacle"), a software business acquired as part
of the PAETEC acquisition, for $30.0 million in cash. On June 15, 2012, we completed the sale of the energy business also
acquired in the PAETEC acquisition for approximately $6.1 million in cash. The divested operations were not central to our
growth strategy for our core communications business.