ANCHORAGE, Alaska, Nov. 2, 2011 /PRNewswire/ -- General Communication, Inc. ("GCI") (NASDAQ: GNCMA) today reported its third quarter 2011 results with revenues increasing to $177.7 million over revenues of $171.5 million in the third quarter of 2010. Adjusted EBITDA for the third quarter of 2011 was $63.1 million, an increase of $0.4 million over Adjusted EBITDA of $62.7 million for the third quarter of 2010. Adjusted EBITDA for the third quarter of 2011 increased $2.3 million or 3.7 percent after excluding the net benefit of $3.8 million of billing disputes offset by $1.9 million in accrued accident expenses reflected in the third quarter of 2010.
Net income for the third quarter totaled $7.2 million or earnings per diluted share of $0.15 and compares to net income of $7.6 million, or earnings per diluted share of $0.14 for the same period of 2010.
Third quarter revenues increased 5.7 percent or $9.6 million over second quarter of 2011 revenues. Adjusted EBITDA for the third quarter increased 14.9 percent or $8.2 million over the second quarter of 2011 Adjusted EBITDA.
"Third quarter results are significantly improved on a sequential basis," said GCI president Ron Duncan. "However, year over year results are relatively flat and our overall performance is not as strong as we had expected. We are experiencing continued decreases in our wireline customer base as consumers cut the cord and move to wireless and growth in our wireless segment has been slower than anticipated due to delays in the turn up of our new high speed networks."Construction of our important $88 million TERRA microwave project is basically complete and we expect to turn up service on it before the end of this year. For the first time residents of southwest Alaska will have access to high speed terrestrial broadband services." GCI previously provided guidance on revenues of $685 million to $700 million and adjusted EBITDA of $233 million to $238 million for the year 2011. GCI expects 2011 revenues will be within the range of the revenue guidance. Adjusted EBITDA is now expected in the range of $225 million to $227 million for 2011. Highlights
- GCI has substantially completed construction on TERRA-Southwest (TERRA-SW), its project to extend terrestrial broadband service to Bristol Bay and the Yukon-Kuskokwim Delta. The $88 million project will provide terrestrial broadband to 65 communities in Southwest Alaska for the first time. GCI will begin to cut over customers to terrestrial from satellite service before the end of the year 2011. TERRA-SW was originally scheduled to be completed by the end of 2013.
- GCI repurchased 1,919,900 shares of its Class A common stock in the third quarter of 2011 at an average price per share of $9.32. GCI is authorized to repurchase $114.4 million of its common equity depending on company performance, market conditions, and liquidity and subject to board oversight. At the end of the third quarter of 2011 GCI had approximately 43.9 million shares outstanding.
- Managed broadband revenues increased $3.9 million or 28.5 percent over the third quarter of 2010 and increased $2.8 million or 18.9 percent over the second quarter of 2011.
- GCI is the second largest wireless provider in Alaska with 140,700 wireless subscribers at the end of the quarter. GCI launched 4G service in Anchorage in September and will upgrade service in the next ten largest communities to 3G service before the end of the year.
- GCI entered into an arrangement under the New Markets Tax Credit (NMTC) program with US Bancorp to help fund a $34.5 million project to extend terrestrial broadband service to communities in Northwest Alaska. This project is called TERRA-Northwest (TERRA-NW) and will complement the TERRA-SW project. The NMTC program was provided for in the Community Renewal Tax Relief Act of 2000 (the Act) to induce capital investment in qualified low income communities. The Act permits taxpayers to claim credits against their federal income taxes of up to 39 percent of qualified investments. The NMTC program will provide $16.5 million of the total project. The Regulatory Commission of Alaska will provide another $5.3 million in grants for the project. GCI will provide the remaining $12.7 million to complete the project.
- On October 27, 2011 the FCC adopted an order that is expected to reform the methodology for distributing Universal Service Fund ("USF") high cost support for voice and broadband services, as well as the system by which carriers compensate each other for terminating traffic. These changes are likely to alter how GCI will be compensated for providing services in the state. Putting aside any potential impact from the order, GCI expects to record approximately $54 million of USF high cost support revenue in 2011. Although the detailed order has not yet been released, GCI expects that high cost support for markets defined as urban will be subject to a five year transitional phase out beginning July 1, 2012. GCI anticipates that changes to the Universal Service Fund program will reduce high cost support revenue by approximately $5 million per year in both 2012 and 2013. Once the order has been released and fully analyzed, GCI will re-evaluate its on-going program of reinvestment in light of the potential impact of the regulatory changes on free cash flow.
- GCI had 139,200 access lines at the end of the third quarter of 2011, representing an estimated 36 percent share of the total access line market in Alaska. Access lines decreased by 3,200 lines from the second quarter of 2011. The line decreases were primarily consumer access lines.
- GCI's facilities-based access lines totaled 109,700, representing 78.8 percent of its total access lines at the end of the third quarter of 2011. Reported facilities based access lines decreased 2,600 lines from the second quarter of 2011. The decrease in facilities based access lines were primarily consumer access lines.
- GCI had 117,900 consumer and commercial cable modem customers at the end of the third quarter of 2011, an increase of 1,500 over the 116,400 cable modem customers at the end of the second quarter 2011. Average monthly revenue per cable modem for the third quarter of 2011 was $57.43, an increase of 13.5 percent over the $50.61 figure posted for the prior year and 6.6 percent from the $53.85 figure posted for the second quarter of 2011.