SureWest (Nasdaq: SURW) had what might be described a lumpy Q3 2011 as revenue rose, but income declined.
During the quarter, SureWest reported revenue of $63 million in the quarter, up from $61.1 million a year ago, while net income was $643,000, down from $1.4 million in the same period last year.
Meanwhile, basic and diluted earnings per share was 5 cents, down from 10 cents in Q3 2010.
Here's a breakdown of SureWest's metrics:
- Voice services: Like other telcos, SureWest reported ongoing declines in its traditional telecom business. During the quarter, traditional telecom revenue was down 13 percent year-over-year due to voice line losses. Of the 6,500 year-over-year Telecom Residential voice RGU losses, 2,600, or 40 percent, migrated to the SureWest Broadband VoIP service, which enables the continued preservation of consolidated voice revenues.
- Broadband and video services: SureWest reported a 9 percent year-over-year rise in broadand revenue, which accounted for 76 percent of the company's total revenues in the quarter. SureWest expects to continue increasing its broadband revenues and adjusted EBITDA as a result of growth in both residential and business services. The telco also added 800 new IPTV net customers from the previous quarter to bring its total subscriber numbers to 64,900. A year ago, SureWest reported 61,200 subscribers in the third quarter. SureWest has shown some erosion in penetration for its IPTV service, standing at 22.5 percent.
- Business services: Due to slowdowns in the economy, SureWest's telecom business revenues declined 7 percent year-over-year to $8.1 million as a result of a 4 percent decrease in business customers in the company's incumbent ILEC territory. However, SureWest is seeing an uptick in its wholesale business, including strong gains in selling wireless backhaul services with contracts in place for 390 connections. The ILEC anticipates over $4 million in annualized revenues when those sites are active.
Looking forward, SureWest projects 2011 capex to be in the $68-72 million range and that projected capital expenditures remain in the $60-70 million range for 2012, with roughly 10-11,000 new fiber homes scheduled in the Kansas City market.
- see the earnings release
- here's FierceIPTV's take
Earnings summary: Wireline in the third quarter 2011
Karlyn Oberg, SureWest Communications
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