Santa Clara, California-based Covad Communications Group Inc yesterday said its DSL subscriber base shrunk in the second quarter as the company deals with a wholesale business that has bankrupt resellers. Despite this, the company said it managed to reduce its losses in the three months to June 30.

The company reported a net loss of $40.8m, compared to a loss of $175.5m a year ago, on revenue that was up 12% at $97.7m. Covad said customer churn was 4.2%, and that its subscriber base shrunk 2,000 to 357,000 in the quarter. Churn was 3.7%, excluding resellers "facing financial difficulties".

"Although we continue to experience strong demand for our services, we are experiencing high churn rates which reduced our net line count for the quarter," said CEO Charles Hoffman. "We have a concentration of churn in our wholesale consumer segment based on high customer move rates and competition in pricing as well as three of our top ten wholesale partners in bankruptcy."

© ComputerWire