BKD Rural Telecommunications Benchmark Study Results for 2020

BKD Rural Telecommunications Benchmark Study Results for 2020
Authors: Marty Fredericks Matthew Macdonald

Companies Electing ACAM Show Immediate Returns

The results of the BKD Rural Telecommunications Benchmark Study (Study) are complete for 2020 and provide an in-depth look at how the rural telecommunications industry performed in 2019. The Study offers important benchmarks for this year as rural telecommunications companies track the effects of COVID-19 on their financial results.

The Study answers two main questions:

  • How is the telecommunications industry performing financially? 
  • How is my company’s financial performance compared to my peers?

More than 170 rural telecommunications companies in 17 states participated in the Study. It provides 2019 benchmark results for the balance sheet and income statement and more than 30 other key metrics. Industry peer groups for comparison include:

  • Commercial/Cooperatives
  • Rate of Return/ACAM I/ACAM II
  • Revenues (Four Groups)
  • Access Lines/Connections (Five Groups)
  • All Companies

This is the third year the Study has been published, and we’ve made enhancements and changes this year that have improved the metrics significantly, including adding operating income before depreciation and amortization (OIBDA) as a key metric both in dollars and percentage. With a significant number of rural telecommunications companies receiving income from investments, operating income is a better indicator than earnings before interest, taxes, depreciation, and amortization of how a company is performing as compared to its peers.

Also added this year is ACAM II as a form of regulation. Of the 172 companies that participated in the Study, 90 have elected either ACAM I (46 companies) or ACAM II (44 companies) as their form of regulation. The graph below demonstrates, at least early on, that companies electing ACAM have higher operating income as a percentage of revenues than legacy rate-of-return carriers.


It will be interesting to see if the companies electing ACAM can stay ahead of the legacy rate-of-return carriers as their buildout obligations increase in future years.

2020 Key Benchmark Results Based on Revenues

OIBDA is an important financial metric to measure growth in cash flows and total leverage ratios.


Revenue per employee assists in determining whether your company is overstaffed or understaffed. The graph below indicates a relatively small deviation between companies based on revenues.


One of the biggest effects on profitability is the investments necessary to provide services to customers. All the average amounts invested per access line below are slightly higher than the results in 2019. For 2018 and 2019, the companies in the revenue group ranging from $10 million to $25 million have the highest average gross investment per access line.


The average operating income percentage measure demonstrates how much of the company’s revenues ultimately gets to the bottom line. Growth in revenues needs to provide for growth of operating income.


Trends are important, whether it’s your company’s performance or the industry as a whole. The graph below provides a historical trend in operating income for the industry over the last 19 years. While the trend from 23.2 percent in 2001 down to 9.8 percent in 2016 is disappointing for the industry, it does appear the decline has subsided as the 12.6 percent for 2018 and 16.2 percent for 2019 are the best percentages in the past 10 years. 


These are just a few of the key benchmarks available in the BKD Rural Telecommunications Benchmark Study that will be released soon. 

If you participated in the Study, you should have your results. If you want to participate or learn more about the Study and how it can benefit your company, reach out to your BKD Trusted Advisor


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