TDS Telecom sees Q2 gains in managedIP, triple play service adoption

TDS Telecom, the wireline ILEC division of Telephone & Data Systems (NYSE: TDS), reported on Friday that wireline revenue rose on strong gains in managedIP for businesses and residential triple play bundle services.

During the quarter, TDS Telecom reported $208.5 million in revenues, up from $198.9 million in Q1 2012.

Residential triple play penetration increased to 30 percent, up from 27 percent in the previous quarter. A key piece of its growing triple play bundle is IPTV. With plans to offer IPTV service 19 markets in 2012, TDS launched the service in La Vergne, Tenn.

"TDS Telecom added ILEC residential broadband and IPTV customers, and commercial managedIP customers, and increased revenues in its hosted and managed services business," said LeRoy T. Carlson, Jr., TDS president and CEO, in the earnings release.

At the same time, managedIP connections, including both ILEC and CLEC, grew 91 percent to 74,600 from 39,000. Part of the managedIP connections growth is due to the ongoing buildout of its solutions set via organic growth initiatives and targeted acquisitions including, most recently, Vital Support Systems.

"Higher revenue from the hosted and managed services business offset decreases in legacy ILEC and CLEC revenue, and we continued to build the HMS business with the acquisition of solutions provider Vital Support Systems in June," Carlson said.

Carlson added that while the FCC's Universal Service Fund (USF) and Intercarrier Compensation (ICC) reforms "negatively impacted revenue and earnings in the first half of this year," they "expect FCC-authorized recovery mechanisms to help offset additional rate changes set to begin in the second half."

From an overall financial perspective, TDS Telecom's parent company Telephone and Data Services reported operating revenues of $1.3 billion for Q2 2012, up 3 percent from $1.279 billion in Q2 2011.

TDS shares closed at $22.71 on the Nasdaq stock market on Monday, and reached $22.79 in late morning trading on Tuesday.

For more:
- see the earnings release

Special report: Wireline in the second quarter of 2012

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