HickoryTech's (Nasdaq: HTCO) ongoing expansion into the business and wholesale services space was a major contributor to the 4 percent year-over-year rise in Q1 revenue to $44.8 million.
John Finke, HickoryTech's president and CEO, said in the earnings release that fiber and data revenue rose 24 percent as they continued to expand their "focus on expanding our distribution networks and building fiber directly to our customers."
A key contributor to the fiber and data segment's growth was driven by the assets it acquired from IdeaOne, which have been integrated into its operations, last March.
The telco reported that Q1 results included a $630,000 pre-tax charge related to the decision to remove a non-strategic wireless Internet product that came from the IdeaOne deal in its Fargo, N.D., market.
Here's a breakdown of their key segments:
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Fiber and Data Segment: Driven by an increase in retail and wholesale customer sales and a full quarter of IdeaOne operations following the acquisition last March, Q1 Fiber and Data Segment revenues were $16.7 million. Finke said they "invested $2.9 million of capital in our Fiber and Data segment in the first quarter and are also investing in the resources to continue to support and grow this line of business."
- Equipment Segment: As it has reported in earlier quarters, Q1 Equipment Segment revenue was $17.2 million, down 1 percent year-over-year as it reported declines in both equipment revenue and support systems. Equipment revenue was $15.4 million, while Support Services revenue was $1.9 million, down 12 percent from Q1 2012.
- Telecom Segment: Telecom Segment revenue declined 6 percent year-over-year to $15.6 million due to ongoing declines in network access, local service and bill processing revenue. Typical of the wireline telecom industry segment, local and long distance voice service subscribers declined 8 and 6 percent to end the quarter with a total 41,760 and 29,741 subscribers, respectively. While HickoryTech did see a small bright spot with a 5 percent increase in DSL subscribers and a 6 percent increase in Digital TV subscribers, it said that "competitive price compression is impacting broadband revenue which was the same year over year." It ended the quarter with a total of 20,327 broadband subscribers and 10,910 Digital TV subscribers.
Looking toward the rest of the year, the service provider has confirmed its previous outlook that 2013 revenue is expected to range between a 2 percent decline to 3 percent increase as compared to 2012 revenue.
As reported by other Tier 1 and Tier 2 telcos, HickoryTech expects that the growth in business revenue will offset "the majority of the declines in legacy Telecom services." It also expects capital spending to decline by 6 to 20 percent compared to 2012 and be between $24 and $28.2 million.
Shares of HickoryTech closed at $10.28 at the end of day trading on Tuesday on the Nasdaq stock exchange.
For more:
- see the earnings release
Earnings roundup: Wireline telecom earnings in the first quarter of 2013
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