Hawaiian Telcom Q4 results driven by strong IPTV gains

Hawaiian Telcom (Nasdaq: HCOM) may not be the largest IPTV provider, but its effort to increase its service footprint paid off in Q4 and drove up its growing consumer segment 4 percent to $35 million.

The telco said the "revenue increase in its consumer channel from the same period a year ago marks a key inflection point and transformation in its growth profile from legacy to next-generation services."

During Q4 2012, IPTV revenues were $1.8 million, up from $0.2 million in Q4 2011, a factor it attributes to the addition of over 8,200 subscribers in 2012, ending the year with approximately 9,800 subscribers in service.

Besides IPTV, the telco also reported ongoing gains in three of its other key sectors: broadband, business and wholesale services.

Here's a breakdown of the telco's key metrics:

  • Landline Voice: As seen with other telcos, ongoing declines in both local and long-distance voice revenues offset increases in video, high speed Internet and new IP-based business services. Local voice service revenues declined to $34.6 million, while long-distance revenues declined to $6.6 million. Access lines declined year-over-year to 392,877 from 416,667.
  • Broadband and Video: Consumer high speed Internet (HSI) revenue rose year-over-year to $9.4 million due to a 4 percent increase in HSI subscribers to about 88,000. The telco said the rise in HSI subscribers was driven by high pull-through rates for new video subscribers and an increase in standalone HSI additions. Subscriber penetration of its IPTV service increased to approximately 15 percent of the 65,000 households enabled at year-end, up from about 14 percent of the 59,400 households enabled at the end of the third quarter. Another key trend that took place in the consumer market was bundling. As of the end of 2012, about 54 percent of total video subscribers had a triple-play and 91 percent had a double-play bundle.  However, the telco said the increase in next-generation consumer video and HSI services "were offset by the decline in legacy consumer access and long distance lines of 8.8 percent and 7.6 percent, respectively."
  • Business and Wholesale: The telco's Q4 business revenue declined $2.4 million to $40.4 million year-over-year due to a $1.8 million decrease in equipment and managed services revenue. The decline in equipment revenue was related to the higher level of sales of customer premise equipment to a single customer in the fourth quarter of 2011 versus the fourth quarter of 2012.  However, these decreases were partially offset by a 6.4 percent year-over-year increase in business data revenue driven by demand for IP-based data services such as IP VPNs and business HSI revenue. HSI subscribers rose 6.5 percent to about 18,600 subscribers. On the wholesale side, the big focus was again on Fiber to the Tower (FTTT). As of the end of the quarter, the company completed the buildout of fiber to 230 cell sites and it has an additional 160 sites under contract with major carriers to build. It also is pursuing other opportunities, including leveraging the same fiber network facilities to target separate business service prospects. Overall Q4 wholesale revenue was $17.8 million, down 4.9 percent from Q4 2011 due to the decline in access lines and minutes of use, as well as the impact of intercarrier compensation reform.

In total, Hawaiian Telcom's Q4 revenue was $96.6 million for the fourth quarter and $385.5 million for the year.

Shares of Hawaiian Telcom were listed at $21, up 41 cents, or 1.99 percent, in Thursday morning trading on the Nasdaq stock exchange.

For more:
- see the release

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