Hawaiian Telcom (Nasdaq: HCOM) saw in the first quarter that its focus on growing broadband and IPTV helped drive up Q1 2013 revenues 2 percent to $96 million.
Due to the overall revenue increase, adjusted EBIDTA also rose year-over-year to 2 percent to $29.2 million. Meanwhile, the telco's net income was $1.8 million, or $0.17 per diluted share for the quarter, which it said it was tenth consecutive quarter of profitability.
"Our execution in the first quarter demonstrates a solid start to the year, highlighted by significant expansion of our enhanced broadband network and strong growth in Hawaiian Telcom TV and HSI subscribers," said Eric K. Yeaman, Hawaiian Telcom's president and CEO, in the earnings release.
Here's a breakdown of the telco's key metrics:
Consumer Revenue: Driven by video and high-speed Internet (HSI) revenue of $1.7 million and $0.6 million, respectively, the telco's consumer revenue rose 2.1 percent year-over-year to $34.6 million. This marks what it says is "the third consecutive quarter of year-over-year growth in consumer revenue." As reported by other larger telcos such as AT&T (NYSE: T) and Verizon (NYSE: VZ), the growth of video and broadband services continues to offset declines in legacy local and long-distance voice revenues.
Video services, while still an emerging part of Hawaiian Telcom's business, grew to $2.2 million in the quarter, up from $0.5 million in Q1 2012. It added over 1,800 subscribers in Q1, ending the quarter with a total of about 11,700 subscribers. What's more, the telco passed an additional 18,000 homes with the IPTV service, bringing its total to over 83,000.
Likewise, consumer HSI revenue rose 7.1 percent to $9.61 million due to a 4.6 percent year-over-year increase in consumer HSI consumer subscribers to about 89,500, which it said "was driven primarily by high HSI pull-through rates with new video subscribers, and standalone HSI subscriber additions." Bundling continued to be a big factor of growth with about 53 percent of all video subscribers having a triple-play and 87 percent subscribing to a double-play bundle.
The increases in consumer video and HSI services were partially offset by declines in legacy consumer access and long distance lines of 8.5 percent and 7.2 percent, respectively. Due to its acquisition of Wavecom, which included the addition of 11,800 access lines and 6,200 business long distance lines, the telco's overall landline voice access lines rose 1.9 percent to 400,364 lines.
Business Revenue: Business revenues declined 1.6 million to $40.5 million year-over-year, a factor it attributes to a $3.1 million year-over-year decrease in equipment and managed services revenue that's related to a $2.7 million sale of equipment to a large Hawaii-based public school in Q1 2012. While the decline in legacy business access and long distance revenues contributed to the decline in business revenue, these decreases were offset by revenues added as a result of its acquisition of Wavecom.
Despite the losses in the business segment, Yeaman said that they "continue to see growth in our IP-based services, driven by a 30 percent year-over-year increase in business data revenue, including revenue from Wavecom Solutions Corporation."
Wholesale Revenue: Like the business segment, the 7.2 percent year-over-year drop in Q1 wholesale revenue to $17.2 million was related to declines in switched access revenue. Inside the segment, wholesale carrier data revenue declined $0.7 million year-over-year to $15.5 million, mainly due to what it says was "the elimination of revenue previously recognized that related to Wavecom." Meanwhile, switched carrier access revenue declined $0.6 million year-over-year to $1.8 million, mainly due to declines in access lines and minutes of use, in addition to the impact of intercarrier compensation (ICC) reform.
One key area of revenue growth will likely come from the Ethernet-based services that it will sell to wireless operators and to other carriers looking to extend their services into Hawaii.
"In our wholesale channel, we expanded our product portfolio with the launch of additional Ethernet-based service offerings, providing our wholesale customers with cost-effective, viable options to existing legacy service offerings," Yeaman said.
Shares of Hawaiian Telcom were listed at $24.98 in midday trading on the Nasdaq stock exchange on Monday, down 17 cents from its Friday close.
- see the earnings release
Earnings roundup: Wireline telecom earnings in the first quarter of 2013
Special report: The top wireline mergers & acquisitions in 2012
Hawaiian Telcom Q4 results driven by strong IPTV gains
Hawaiian Telcom absorbs Wavecom
Hawaiian Telcom wraps up its $13 million acquisition of Wavecom Solutions
Hawaiian Telcom and union ratify five-year agreement