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MTS Allstream earnings get boost from IPTV, IP business services

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MTS Allstream (Toronto: MBT.TO) reported on Thursday that net Q3 2012 earnings were CAD40.8 million (USD40.8 million) year-over-year for the three months ended Sept. 30, 2012, up from CAD37.0 million (USD36.9 million) from the same period a year ago.

The service provider said its earnings per share were CAD0.61 (USD0.60) in Q3 2012, up 8.9 percent over Q3 2011, adding that its Q3 results position it to meet its "financial guidance ranges on all metrics."

All of the company's revenue growth was driven by gains in its consumer and business service segments.

On the consumer side, Internet services and IPTV were the main drivers, with both revenues and Average Revenue Per User (ARPU) up during the quarter.

Internet revenues grew 6.9 percent in the quarter to CAD27.7 million (USD27.6 million) due to subscriber growth and price increases, while year-to-date broadband residential ARPU rose 8.6 percent year-over-year to CAD41.59 (USD41.58). Likewise, IPTV revenues grew 7.7 percent to CAD19.5 million (USD19.5 million) in Q3 2012, driven by increased ARPU and subscriber growth. On a year-to-date basis, IPTV ARPU rose 9.0 percent over Q3 2011, to CAD66.79 (USD66.79).

As of the end of September, MTS had a total of 102,039 TV customers, with 95,374 being IPTV subscribers. IPTV customers rose 2.3 percent year-over-year.

Business services delivered through the company's Allstream division also performed well in the quarter.

Similar to other telcos, Allstream's converged IP revenue growth was offset by an increase in disconnects due to a large customer contract with a Government of Ontario contract. Taking out the impact of that contract loss, overall converged IP revenues would have grown 5.5 percent over Q3 2011 and 7.1 percent in the first nine months of the year. The service provider expects that IP revenues from this customer will decline by about CAD12 million (USD12 million) this year and will continue to affect IP revenues in 2013.

On a more positive note, Allstream added 90 buildings to its IP fiber network, upping its total number of on-net fiber buildings 14.3 percent year-over-year to 2,644 as of the end of September.

What's more, Allstream reported that the ongoing demand for IP service drove revenue up CAD0.3 million (USD0.3 million) to CAD60.7 million (USD60.7 million) in the quarter.

MTS Allstream's shares were trading at CAD33.11 (USD33.11), up CAD0.18 (USD0.18), or 0.55 percent on Friday morning on the Toronto stock exchange.

For more:
- see the earnings release (.pdf)

Special report: Wireline telecom earnings in the third quarter

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