FairPoint's data and Internet services revenue grows 13% to $42M, partially offsets legacy losses
FairPoint (Nasdaq: FRP) reported that during the fourth quarter of 2013, it achieved what it said was positive momentum for its growth-oriented services, particularly data and broadband Internet services like Ethernet, which rose 13 percent to $42 million.
Ethernet services continued to be a key factor in the fourth quarter, contributing about $18.2 million of revenue, up from $13.3 in the same period a year ago due to 60.1 percent year-over-year growth in retail and wholesale Ethernet circuits.
It ended the quarter with a total of 9,517 Ethernet circuits, including 4,651 retail and 4,866 circuits that it sells to wireless operators and other carriers.
The service provider said in its earnings release that it expects to see continual growth in its Ethernet products "based on demand from customers like regional banks, healthcare networks and wireless carriers."
Besides Ethernet, broadband continues to be a factor for FairPoint.
Over the past year, the service provider expanded service availability throughout its northern New England territory. It recently announced that broadband services are now available to 95 percent of its access lines in New Hampshire, while extending service to 10,400 homes and businesses in Maine.
FairPoint added over 4,700 broadband subscribers as penetration reached 37.5 percent of the telco's voice access lines as of the end of 2013.
However, broadband subscribers declined 1.5 percent year-over-year primarily due to what it said was "normal seasonality of the business and proactive efforts to improve the credit profile of subscribers."
While voice access line losses were again an ongoing reality for FairPoint, they did narrow the decline slightly to 7.1 percent year-over-year vs. 7.7 percent a year ago. FairPoint said the slower decline was driven by a reduction in the rate of loss in business voice and wholesale access lines.
"Our fourth quarter revenue helps confirm our view that we are in a period of stabilization, and through disciplined operations and capital expenditures, Adjusted EBITDA and Unlevered Free Cash Flow are at the high end or above our annual guidance range for 2013," said Paul H. Sunu, CEO of FairPoint, in the earnings release.
Overall revenue declined by $2.6 million to $233.4 million due to expected declines in voice services, lower long distance usage and seasonality in local access revenue and an unfavorable variance in service quality penalties.
For the year 2014, FairPoint has forecast revenue of $930 million to $940 million. It also expects that adjusted EBITDA is expected to be $260 million to $270 million and capital expenditures are expected to be approximately $125 million.
"As we look to 2014, we expect to continue our revenue transformation as we add growth oriented fiber and Ethernet based revenues, enhance our retention initiatives and build a strong pipeline of meaningfully relevant products and services for our customer base," Sunu said.
Shares of FairPoint closed at $13.73, up 30 cents or 2.19 percent, at the end of Tuesday afternoon trading on the Nasdaq stock exchange.
- see the earnings release
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