Windstream CEO: Time to Embrace SD-WAN, Fade Legacy Services

Windstream this year will push harder than ever for more enterprise customers to migrate from legacy services to SD-WAN and UC.

That’s according to Windstream president and CEO Tony Thomas, who spoke during this week’s Citi 2019 TMT West Conference in Las Vegas. He said Windstream is the nation’s largest SD-WAN service provider and has about 500,000 unified-communications (UC) seats.

“We will continue to make really incredible new capabilities available leveraging things like artificial intelligence (AI), machine learning and a single pane of glass for a portal or mobile app experience,” he said. “And we think embracing this disruption – leading this disruption – is the key, and in 2019 that’s what we fully expect to do. We’ll be aggressively migrating our customers off of legacy solutions onto next-generation solutions.”

Windstream’s Tony Thomas

Currently, about 7 percent of Windstream’s revenue is associated with SD-WAN, UC, and security, and that revenue segment is growing 71 percent year over year, Thomas said.

“Then there’s a core chunk that what we call core enterprise revenues – MPLS, DIA, basic internet connectivity and Ethernet connectivity – and then there is the legacy revenue – the TDM, the T1s, data and voice legacy services that we really need to get those customers migrated over [from],” he said. “Our mantra at Windstream is we’ve got to aggressively move customers from the legacy solutions to the strategic solutions, especially with existing customers.”

While not yet made public, fourth-quarter 2018 earnings will show Windstream continuing to sell predominantly SD-WAN and UC, Thomas said.

“The key is, how do you get your existing customers to make that migration and how do you do that migration at scale?” he said. “And we’re investing a lot in IT automation and software-defined networking that enables flow-through provisioning, so it scales without having to have people. It scales through machine-to-machine interaction. So we’re really bullish about what’s in front of us and that conversion will be one of our fundamental pushes.”

Another top priority for 2019 is to take costs out of the business, Thomas said. Windstream‘s largest expense category is interconnection — money it pays other carriers. Migrating from legacy services will help decrease costs, he said.

“We have a goal of taking 10 percent of that cost out in 2019,” he said. “You think about SD-WAN … the cost of connectivity is about 300 percent less, going from $400-$500 to $150-$200. That’s why we’ve embraced SD-WAN. And obviously with UC, we have our own proprietary UC suite that we refer to OfficeSuite.”