Hawaiian Telcom (Nasdaq: HCOM) continues to find itself on solid ground as gains in broadband, business and wholesale drove the bulk of its $98.9 million in fourth-quarter 2011 revenue.
However, ongoing access line loss drove revenue down $1.2 million from $100.1 million in the fourth quarter of 2010, which was offset by an uptick in equipment sales and growth in consumer broadband and IP-based business services such as cloud-based storage.
At the same time, adjusted EBITDA rose nine percent year-over-year to $29.8 million, due to what the company says was lower operating expenses as a result of various cost improvement initiatives.
Here's a breakdown of its key unit results:
- Landline loss: During the quarter, local telecom services declined four percent to $35.9 million, due to a 5.6 percent year-over-year decline in access lines. However, landline loss was lower than the 6.1 percent decline it reported in the last quarter of 2010. The service provider attributes the narrowing of its landline to successful retention and acquisition programs, including its "Price for Life" consumer bundle. The service provider ended the quarter with 416,667 access lines.
- Broadband and video: Ongoing investments in broadband access paid off in the fourth quarter as revenues rose three percent to $9.0 million due to a 3.5 percent year-over-year increase in broadband subscribers. Hawaiian Telcom added over 1,250 subscribers in the fourth quarter, increasing its total broadband subscriber base to over 103,230. At the same time it also made progress with its IPTV Hawaiian Telcom TV (HTTV), ending 2011 with 1,600 subscribers, or almost six percent subscriber penetration of the 27,400 households it has enabled. When taking into account a number of bulk multi-dwelling unit contracts it signed and other customer sales, HTTV sales penetration was 12.1 percent.
- Business Services: Driven by an increase in IP-based voice, data, and managed services sales, business revenue rose two percent year-over-year.
- Wholesale: As seen by other wireline-centric service providers, Hawaiian Telcom's wholesale revenue rose 1.8 percent for 2011 due to its ongoing fiber-to-the-tower (FTTT) initiative supporting the state's wireless operators. During the quarter, the service provider said it completed an additional 43 fiber builds to towers, ending the year with 184 sites installed. It is currently billing for those sites, which it says equates to "annualized revenue of approximately $2.7 million." In 2012, it plans to build fiber to an additional 62 towers.
As the company moves into 2012, Eric K. Yeaman, Hawaiian Telcom's president and CEO, said the provider will "continue investing in our next-generation network to expand and enhance our broadband capabilities and strengthen our competitive position."
Barry M. Sine, managing director of equity research at Drexel Hamilton, said in an Action Note that Hawaiian Telcom's roll-out of IPTV will help it more effectively battle its cable rival, Time Warner Cable.
"With the addition of video service to round out the company's triple play bundle, we expect voice line and internet line metrics to improve as Hawaiian Telcom is now on a more equal competitive footing with Time Warner Cable in Oahu," he wrote.
Despite the positive quarterly report, the biggest challenge the telco is facing is that its main union, IBEW 1357, has yet to sign a new labor contract.
- see the release
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