Broadweave Misses Another Again Uses Reserve for Payment Despite Claiming Sharply Increased Revenues

The Daily Herald reported today that Broadweave failed yet again to make their payments to Provo from their operating revenues, dipping into the reserve fund for the third month in a row. This is despite claiming revenues that have increased 20% in the last 6 months and adding 400 more subscribers since last month. Some back of the napkin figures from a telecom professional I know shows that Broadweave may need to add as many as 5,000 new subscribers at an ARPU of nearly $65/mo in order to make that bond payment.

Because of the weather, new installs are challenging at best. Trenching the frozen ground isn’t much of an option right now which would force new installs to lay fiber across their lawn until the trench and conduit can be put in. Odds are that a lot of the new subscribers are incoming college kids for the winter semester, the ones that are predominantly Internet-only subscribers and disproportionately heavy users.

Since the only data we have is pre-Broadweave or heavily filtered, all we have to go on are best guesses. So far, though, it’s not looking too good. If they experience a sudden drop in subs in May-June, we’ll know for sure that the student population is making up a large proportion of the subscribers.

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9 Responses to Broadweave Misses Another Again Uses Reserve for Payment Despite Claiming Sharply Increased Revenues

  1. Capt. Video says:

    I feel it less than completely accurate to state Broadweave “missed it’s payment to Provo”. No payments have been missed. Broadweave elected to make the payment from it’s reserve fund rather than operating revenues is a more accurate statement.

    The contract allows Broadweave to make that election. There is no violation of the contract or missed payment. The bond continues to be paid and Provo City owes less with each payment Broadweave makes.

    If you elected to withdraw your next mortgage payment from “savings” rather than paying it from your checking account would anyone say you “missed the payment”?

    They would not because you did NOT miss making the payment. The payment was made.

  2. Jesse says:

    No, it’s not like making a payment from savings. It’s like making a payment from your credit card. There’s a big difference.

  3. Capt. Video says:

    But in neither case was a payment missed. The “payment missed” statement is the inaccurate part.

    The statement remain inaccurate if the payment came from saving or credit.

    I’m not making a case that paying from the bond is good or bad. I’m making the case that to say “missed the payment” is inaccurate and misleading.

  4. Ben Saunders says:

    The fact is that Broadweave has a cash flow problem that requires them to keep using the credit card month after month to make the “house” payment. It’s not a cash preservation strategy, that’s BS and spin. They are also having trouble paying other bills. Their days are numbered and you might as well admit it now Capt. Video.
    What happens when they have a major equipment replacement issue?

    Yhe building could be belching smoke with flames pouring out the windows and you would say that the “thermostat was just set a little high”.

  5. Capt. Video says:

    As usual, you are wrong again Ben.

    My comment has little to do with Broadweave’s problems or lack there of.

    It’s just a matter of accuracy and truth in a simple one line statement.

    No matter if Broadweave has or does not have the problems you describe….it’s simply inaccurate and not truthful to say Broadweave missed a payment.

    Had Jesse pointed out the items you did…and NOT make the false statement about Broadweave missing a payment. I would not have commented. I have no knowledge of Broadweave’s financial situation. I clearly see they have a hard road ahead and they could fail. I do not believe they are “profitable” yet, but I hope they are on the road to profitability….for Provo’s sake as well as Broadweave’s.

    (..for some reason, whenever you try to state my position, you make it seem (incorrectly) that I am saying Broadweave has no problems and is doing great and will be here in 20 years to pay off the bond completely? I have over and over expressed the opinion that the road ahead is hard for Broadweave, they may fail, but they have a chance to be successful. Is there some part of that you just don’t understand?)

    Why do you make statements like, “The building could be belching smoke with flames pouring out the windows and you would say that the “thermostat was just set a little high”.”

    Because I comment on an inaccurate statement, (Broadweave missed the payment) you paint me as foolish or blind to the problems Broadweave faces as it work to be successful?

    Let me state for the record….

    I will not be shocked if Broadweave is not able to turn iProvo around. They bought a failing business. I will not be “wrong” if Broadweave folds, I’ve never said they were a shoo-in for success. (I do hope they are successful.)

    I WILL be totally shocked if UTOPIA succeeds. (I do hope I am wrong and they too will be successful!)

    You, for some reason I fail to understand, appear to actually hope Broadweave fails? Why would that be? Why would you want to hurt Provo City and it’s citizens?

    As moderator, I feel Jesse should make an effort to be fair and accurate. I believe it would be fine for Jesse to say, “Broadweave again made the payment from the reserve fund…even using the credit card to pay the mortgage comparrison or any similar comment. But “Broadweave missed the payment” is just not a true and accurate statement.

  6. Jesse says:

    Okay, I updated the title. My point still stands; using credit cards to make your house payment is not good news.

  7. Capt. Video says:

    …a point we all agree upon!

  8. Mark Towner says:

    Capt. Video, would you please send me your contact information to my private email


  9. Ben Saunders says:

    I don’t hope that Broadweave fails. I actually think they have already failed with their lackluster approach to taking over the project. I do however hope that investors don’t end up losing millions again like they did when Homenet played a similar game. There seems to be pattern here. The city picks a less than stellar partner. The city gives them undeserved creditability and paints a rosy picture. The partner milks the venture capitalists for all their worth and folds leaving a bunch of folks holding an empty bag. It’s a little worse this time since the city is directly involved in using the investor cash for the bond payments.

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