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Alaska Communications Systems Reports Second Quarter 2012 Results

Alaska Communications Systems Group, Inc. (“ACS”) (NASDAQ: ALSK) today reported financial results for its second quarter ended June 30, 2012.

“Six months ago we launched a new business plan and today we are pleased to announce solid growth in both revenue and customer metrics. This plan dedicated us to achieve top-line growth through driving retail broadband revenues across all customer segments, with a focus on business customers. I’m pleased to report that we see particular strength in broadband data, with ARPU growth across all customer and product segments. Year-over-year broadband revenue as a percentage of total retail revenues is increasing. I’m also pleased to report that we improved our market position in wireless, with a very successful launch of the iPhone, adding approximately 2,900 wireless connections while churn fell by approximately 10 percent. Finally, this quarter we announced an agreement with General Communication, Inc (“GCI”) to form the Alaska Wireless Network (“AWN”), which will be the fastest, most geographically extensive wireless network in Alaska. We remain focused on executing to our business plan, working to close the AWN transaction, and de-levering our balance sheet,” said Anand Vadapalli, Alaska Communications president and CEO.

Financial Highlights: Second Quarter 2012 Compared to Second Quarter 2011
  • Revenue of $90.0 million grew by $5.1 million, or 6 percent, from $84.9 million in the prior year.
    • Business and Wholesale revenue increased by $1.0 million, or 4 percent, led by growth in broadband revenue, which increased $0.9 million, or 12 percent.
    • Wireless revenue increased by $3.5 million, or 11 percent. Wireless broadband revenue grew $0.8 million, or 15 percent. Roaming revenue grew $3.4 million, or 35 percent, driven by higher data usage.
    • Access and CETC revenue increased $0.9 million, or 5 percent.
    • Consumer broadband revenues increased $0.2 million, or 5 percent.
  • EBITDA of $25.6 million, which excluded $4.1 million of AWN transaction costs and $0.9 million in stock-based compensation, decreased $5.1 million.
    • Wireless subsidy grew by $3.4 million to $7.3 million, or 89 percent.
    • Costs of service and sales increased $3.0 million, excluding $3.7 million related to wireless equipment sales, due in part to higher intrastate access and circuit related expenses.
    • Selling, general and administrative expenses increased by $3.5 million inclusive of a $1.4 million favorable contract settlement in the prior year. The remaining $2.1 million increase was in-line with management expectations and reflects a commitment to higher level of investment in customer service, sales, strategic initiatives, and process improvement.

Metric Highlights: Second Quarter 2012 Compared to First Quarter 2012
  • Business broadband connections remained relatively flat at 19,069, and ARPU grew 4 percent to $147.25.
  • Wireless connections grew by 2,894 from 117,156 to 120,050 and churn declined from 2.3 to 2.0 percent. We sold 22,900 devices in the quarter, compared to 15,900 in the prior quarter. 47 percent of our device sales in the quarter were from the iPhone, with 21 percent of these sales to new customers. 10 percent of our postpaid customers now use the iPhone with new long-term contracts.
  • Wireless broadband ARPU grew 8 percent to $18.74 but was more than offset by erosion in voice ARPU, leading to lower overall retail wireless ARPU of $51.26 compared to $51.83 last quarter.
  • Consumer broadband connections increased for the first time in twelve quarters, growing by 134 to 38,583, while ARPU grew 4 percent to $39.01.

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