HickoryTech Q2 revenue up 9% to $43.8M on strong business services sales

HickoryTech (Nasdaq: HTCO), a regional Midwest independent ILEC, reported on Wednesday that while Q2 2012 revenue rose, ongoing local and long-distance voice service revenue declines contributed to lower company net income.

For the quarter, the telco reported that strong business sales drove up revenues 9 percent to $43.9 million. However,, income was down 33 percent to $1.8 million due to expected declines in traditional PSTN voice and network access services.

Earnings for the six months ended June 30, 2012 were $4.1 million, down 15 percent from Q2 2011, and earnings per share of 31 cents were down 14 percent from the same period last year. Likewise, revenue for the six-month period totaled $90.8 million in 2012, a 15 percent increase over the same period in 2011.

John Finke, HickoryTech's president and chief executive officer, said that despite the expected declines in traditional landline voice service revenues, he's confident the telco will see a continual uptick in business service revenues.

"Although our Telecom Segment experienced higher than anticipated declines in the second quarter, the emphasis we have placed on growing our business services continues to deliver solid growth as demonstrated by the 37 percent increase in fiber and data revenue providing top line revenue growth," Finke said in the earnings release.

A key part of the ILEC's busines services growth in the remaining part of 2012 will likely stem from the acquisition of local provider IdeaOne. Finke said that "HickoryTech is well positioned for the second half of the year as we work to complete the integration of IdeaOne and remain focused on executing on our long-term strategic plan."

Here's a breakdown of HickoryTech's key segment results:

  • Fiber and data services: The service provider reported that Q2 data segment revenue was $15.4 million, up 37 percent year over year, a factor it attributes to strong retail and wholesale transport and data services sales and the addition of IdeaOne Telecom operations for the full quarter. Data service net income rose 19 percent from the same period a year ago to $1.4 million.

  • Equipment: HickoryTech's Q2 2012 equipment segment revenue was $12.9 million, up 10 percent year over year, primarily as a result of increased Equipment installations. As of the end of the six-month period, Equipment Segment revenue increased 37 percent over last year.

  • Telecom: The telco's Q2 2012 Telecom Segment revenue declined 8 percent year-over-year to $16.3 million. Likewise, the Telecom Segment net income declined 26 percent over Q2 2011 to $1.2 million. It said the declines illustrate a decline in network access revenue and continued declines in local voice service revenue, partially offset by increases in bill processing revenue from the company's SuiteSolution billing and customer management services.

The service provider is maintaining its previous revenue and net income guidance for 2012. It has forecast revenue between $177 million to $183 million and net income from $7.6 million to $8.6 million.

Shares of HickoryTech closed on Wednesday at $10.38 on the Nasdaq stock exchange.

For more:
- see the earnings release

Special report: Wireline in the second quarter of 2012

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