Hawaiian Telcom reports rise in business, consumer revenue; overall revenue declines to $94M

Hawaiian Telcom (Nasdaq: HCOM) reported on Thursday that even though the telco's Q2 2012 revenue declined slightly due to ongoing access line loss, it saw continual gains in both consumer and business service revenue.

The telco's Q2 revenue was $94.7 million, down from $100.7 million in the same period a year ago due to what it says was a large sale of customer premise equipment to one government customer and a 6 percent decline in access lines. However, the landline losses were partially offset by revenue growth from video, broadband Internet and business data services. 

It generated net income of $5.5 million, or $0.51 per diluted share for the quarter, recording what it said was its seventh consecutive quarter of profitability.

Here's a breakdown of its key unit results:

  • Landline loss: During the quarter, it lost a total of 25,792 access lines, ending the quarter with a total of 402,735 lines. It lost a total of 19,676, 8.5 percent, of residential access lines and 5,892, or 3.1 percent, of business access lines, respectively.

  • Broadband and video: Overall Q2 consumer revenue declined 1 percent year-over-year due to expected legacy voice service declines, the doubling of video service revenue drove up revenue 1 percent sequentially over Q1 2012. Broadband revenue got a boost from a 3.3 percent rise in consumer HSI subscribers to 86,000. Interestingly, the telco said that HSI subscriber growth "was driven by high HSI pull through rates for new video subscribers and enhancements to the broadband network." About 60 percent of its total video subscribers subscriber to a triple play bundle, while 86 percent have a double play bundle. Although its video service is arguably nascent, revenue did increase to $1 million from $0.5 million in Q1 2012 as it increased its subscriber base to almost 6,400 users. To date, it has passed 50,149 homes with its video service. Eric Yeaman, president and CEO, said that "After only a year in the market, we are already reaching subscriber penetration rates over 20 percent in certain neighborhoods."

  • Business Services: Declines in access and long distance voice lines, equipment, and managed services revenue drove down business revenue $4.6 million to $39.8 million. However, these decreases were partially offset by a 5 percent year-over-year increase in business data revenue as a result of a strong demand for IP-based data services in addition to 6.2 percent increase in HSI subscribers to almost 18,000. Another notable development during the quarter was its announcement to acquire competitive business service provider Wavecom, a move that will expand its fiber capacity and diversity to serve area businesses. "With the acquisition of Wavecom, we will further enhance our network capabilities through increased fiber capacity and diversity and be better positioned to deliver next generation, end-to-end solutions for customers throughout Hawaii," Yeaman said.

  • Wholesale Services: As expected, legacy services continued to be a drain on Hawaiian Telcom's wholesale revenue mix. Wholesale revenue declined 3.6 percent year-over-year to $17.7 million. The service provider is also seeing its share of IP-based service growing pains as a number of its wireless customers migrate away from legacy T1 circuits to Ethernet. During the quarter, carrier data revenue declined 2.7 percent year-over-year to $15.4 million. Finally, switched carrier access revenue declined 9.1 percent year-over-year to $2.3 million, a factor it attributes to the overall decline in access lines. Yeaman said that it "was recently awarded a contract to build out fiber facilities to over 100 new cell sites to continue to support the 4G rollout of the large national wireless carriers."

Shares of Hawaiian Telcom were trading at $18.58, up 18 cents, or 0.98 percent, in morning trading on the Nasdaq stock exchange.

For more:
- see the release

Special report: Wireline in the second quarter of 2012

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