“Huval: LUS Fiber ‘well above’ target”

The Indpendent blog checks in with Terry Huval, director of LUS, and gets a nice chunk of good news for supporters of the system. The system will be complete in “around July,” 9 months ahead of schedule. Even more heartening is:

LUS Director Terry Huval writes in an e-mail. “Early in the planning of the project in 2004, we estimated that our breakeven for the project would be about 23 percent. In the areas where we have done the most of our limited marketing, we are already well-above that target. We are opening up new areas for service every week, so naturally those early take rate level are lower in those areas. But, we are pleased with the response we are getting. All indications are that we will easily meet all our financial obligations moving forward.” He adds that the business has also exceeded its projection of customers who buy all three services — phone, TV and Internet. LUS Fiber first began serving customers in February of last year.

That’s all good news! To unwrap that last a bit…having higher than expected take rates for the full triple play is not only a vote of confidence, it also means that the very large expense of taking on a new customer (paying for the truck rolls and expensive electronics inside and on the side of the house) will be paid off more quickly than expected. Purely in terms of paying back the bonds this is a “better” pattern.

The Ind unfortunately continues to feel obliged to report meaningless and misleading monthly revenue vs expenditure figures. (I know, this quarter’s numbers are “good” in that for two of the three months it shows a paper profit. It’s still misleading to cite them.) It’s meaningless because now and for several years into the future LUS is making huge upfront capital investments in plant and customer acquisition. NO business like LUS’ should be making money at this time. It’s also meaningless because the figures mix in the revenues from the mature wholesale business with the still-building retail network. Without accounting for build out and separating mature and growing parts of the division it is impossible for reporting on those numbers to be anything other than sensationalistic—whether they look good or not.