Strong fiber-optic signups will speed EPB debt payback

Strong fiber-optic signups will speed EPB debt payback

February 18th, 2012 by Ellis Smith in Business Around the Region

EPB revealed on Friday that it has surpassed 35,000 fiber-optic customers in the Chattanooga area, leaping ahead of initial projections of 26,000 users by the third year.

"We're beating our projections on that," EPB Chief Financial Officer Greg Eaves said Friday. "The fiber-optics business is actually pretty good."

If the city-owned utility continues to make money and pay down its debt, it will become the most successful government-owned network after cities such as Chicago, Philadelphia and Marietta, Ga., gave up their similar efforts.

The 59-employee fiber-optic division brought in $57.3 million in its third year, according to the company's 2011 report.

At the current rate, EPB can shave seven years off the time it will take to pay off its telecom debt, becoming virtually debt-free by 2020 instead of 2027 as projected, Eaves said.

Even so, the government utility still is spending money to sign up new customers, a process that will increase debt until 2013, Eaves said.

The utility has $51 million in total debt so far, but it only needs 30,000 customers to break even on operational costs, Eaves said.

"We are currently cash- flow positive from an operations standpoint, but still increasing debt to fund the capital associated with signing up new customers," he said.

Eaves won't speculate about when EPB could earn enough to offset the taxpayer dollars that helped fund the Smart Grid, but the utility already is finding new sources of revenue.

A new advertising program brought in $30,000 in January, and is projected to show $360,000 in ad revenue for the year, said Eaves.

"The main driver of cost is the cost of video content, which will have to be offset," he said.