Hawaiian Telcom's Q4 broadband, TV growth offset by managed service, legacy voice losses

Hawaiian Telcom reported that despite ongoing gains in IPTV, broadband and data center colocation service growth in the fourth quarter, these gains were offset by a decline in managed revenues and legacy POTS voice access line revenue, a factor that drove revenue down to $99.6 million year-over-year from $101 million in the same period a year ago.

The slight decline in revenue reflects the fact that the revenue it gained in the same period a year ago benefitted from $1 million in government subsidies from the Universal Service Connect America Fund program for the expansion of broadband. 

New video, high speed Internet and $1.3 million of data center colocation revenue from SystemMetrics was offset by a $2 million decrease in equipment and managed services revenue, related to lower customer premise equipment sales and a 5.7 percent decline in voice access lines. 

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

Consumer: Consumer segment revenue rose 2.6 percent year-over-year to $37.4 million, due to revenue growth from its TV and high speed Internet (HSI) services. Hawaiian Telcom said in the earnings release that the "increased reach of the company's next-generation fiber network is the catalyst that is driving revenue growth in video and HSI services, which is more than offsetting declines from legacy services."

Video services grew to $7.1 million in the quarter, up from $4.2 million in the same period a year ago, due to the addition of approximately 9,700 subscribers in 2014, ending the year with approximately 28,100 subscribers in service. Interestingly, Hawaiian Telcom TV ARPU was up about 5.8 percent year-over-year. In 2014, the service provider enabled another 8,000 households with the TV service, increasing the total number of households enabled to 160,000 with over 57.5 percent of those households capable of connecting directly to its fiber network. 

HSI was also a key source of revenue growth in the quarter, with subscribers rising 1.6 percent to about 92,900 total subscribers and a 9.3 percent increase in consumer HSI ARPU due to increased adoption of higher speed offerings. As of the end of 2014, about 53 percent of all of its video subscribers had triple-play bundles and approximately 92 percent had double- or triple-play bundles. 

Business: Business service revenues were $42.7 million, down from $44.7 million in the fourth quarter of 2013. Although SystemMetrics revenue increased over 60 percent year-over-year due to the sales of security products and solutions, the company said this growth was more than offset by a $2.0 million decrease in equipment and managed services revenue. In addition, the year-over-year decline in legacy business access and long distance revenues contributed to the decline in business revenue. 

Wholesale: Hawaiian Telcom's fourth-quarter wholesale revenue remained flat at $16 million. Wireless backhaul continued to be a bright spot in the mix, with special construction related to its fiber to the tower (FTTT) projects driving up wholesale carrier data revenue $0.3 million year-over-year to $14.7 million.

Shares of Hawaiian Telcom were listed at $25.99, up 1 cent or 0.04 percent, in early Thursday afternoon trading on the Nasdaq stock exchange.

For more:
- see the release

Special report: Wireline telecom earnings in the fourth quarter of 2014

Related articles:
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Hawaiian Telcom's Yeaman: We hope to reach 80% of Oahu's homes with IPTV
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