MTS Allstream's (Toronto: MBT.TO) Q2 earnings reflect the ongoing challenge of balancing out new growth in broadband and converged IP services with legacy service declines.
While MTS Allstream's revenue grew to CAD 443.7 million (USD 447.4 million), up slightly from the CAD 439 million (USD 442.7 million) it reported in Q1 2011, the big area of growth was seen in earnings per share, which rose 40.7 percent to 76 cents, and net income, which rose 41.5 percent to CAD 49.8 million (USD 50.2 million).
Pierre Blouin, CEO of MTS Allstream said in the financial release that "Our past investments and strong focus on IP technology nationally and on unique bundles of home services in Manitoba contributed to another quarter of solid financial results for both MTS and Allstream."
Looking at it from the division perspective, the growth of MTS and Allstream was driven by new consumer broadband and converged IP-based business services.
MTS' continued bets to expand its wireless, broadband, and IPTV service initiatives, all of which all rose collectively by 9.6 percent year over year, paid off in Q2 as MTS reported that revenue rose 2.9 percent from CAD 232.8 million (USD 234.8 million) to CAD 239.5 million (USD 241.5 million).
Allstream, however, again saw its share of IP-based service growing pains. Although continued to connect more buildings to its IP and fiber network, Allstream's overall revenue declined by CAD 5.9 million (USD 5.95 million), or 2.8 percent, to CAD 204.2 million (USD 205.9 million) from CAD 210.1 million (USD 211.9 million) due to declines in legacy voice and data revenues.
However, Allstream's legacy losses were slightly offset by a 10.6 percent increase in converged IP revenues that are supported by success-based investments that are adding more new fiber-fed buildings to its network. In Q2 2011 alone, Allstream lit an additional 47 buildings on its network, bringing it to a total of 2,211 buildings as of the end of June.
In addition to EPS, the success of both the MTS and Allstream divisions drove EBITDA growth. Overall EBITDA growth for the quarter was 8.6 percent year-over-year.
Due to the Q2 results, MTS Allstream decided to raise its 2011 revenue outlook from CAD 1.7 billion (USD 1.71 billion) to CAD 1.78 billion (USD 1.8 billion).
For more:
- see the release
- Winnipeg Free Press has this article
Earnings report: Wireline in the second quarter 2011
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