Legacy declines drag down MTS Allstream by 6 percent in Q4, to $410 million

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MTS Allstream (Toronto: MBT.TO) reported on Friday that a rise in strategic revenues wasn't enough to overcome the drag of legacy revenue declines as overall Q4 2012 revenues dropped 6 percent to CAD 413.1 million (USD 410 million).

Taking out declines in its legacy lines of business, the service provider said revenue actually increased by 2.2 percent year-over-year due to sales of IP-based consumer IPTV and business-grade Ethernet services.

MTS, the consumer division of MTS Allstream, saw strong gains in bundled services throughout the year, and Q4 2012 revenue of CAD 243.5 million (USD 242 million). During the year, the company reported that it increased the number of customers with bundled services by 8.5 percent to 96,503, and saw ARPU growth in all strategic product lines.

In particular, MTS reported that Internet and IPTV continued to grow in the quarter. Internet revenues rose 8.4 percent to CAD 110.1 million (USD 109.2 million), while an increase in ARPU and subscribers drove up IPTV revenues 11.2 percent to CAD 78.5 million (USD 77.9 million).

Setting the stage for future consumer broadband growth, MTS deployed FTTH in four more communities, and its IPTV service is now available to 95 percent of Winnipeg households, to 98 percent of Brandon households, to 94 percent of Portage La Prairie households, and to a growing number of homes in nine other communities. Similar to AT&T (NYSE: T), 77 percent of MTS' IPTV customers subscribe to the higher-ARPU Ultimate TV service, up from 64 percent in 2011.

At Allstream, MTS Allstream's business unit, the service provider reported that its CAD 178.3 million (USD 176.9 million) in revenue reflected a 1.6 percent rise in high-margin on-net IP revenues. Like its consumer business, however, IP revenues were offset by legacy revenue declines.

A big focus was on increasing the company's on-net building footprint in order to drive increased strategic business sales. In 2012, Allstream added 335 buildings to its national IP fiber network, ending the year with 2,723 buildings. Finally, IP sales for the year were up 15.8 percent over 2011.

Looking forward, MTS has forecast revenues in 2013 to be between CAD 1.6 billion (USD 1.59 billion) and 1.7 billion (USD 1.69 billion).

Shares of MTS Allstream were trading at CAD 33.31 (USD 33.05), up CAD 48 cents (USD 47 cents), or 1.46 percent, in late morning trading on the Toronto Stock Exchange.

For more:
- see the release (.pdf)

Earnings roundup: Wireline telecom earnings in the fourth quarter of 2012

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