Alaska Communications Systems Group ( ALSK)

Q3 2010 Earnings Call

October 28, 2010 5:00 p.m. ET


Liane Pelletier – Chief Executive Officer, President and Chair

Anand Vadapalli – Chief Operating Officer

David Wilson – Executive Vice President, Chief Financial Officer

Leonard Steinberg – Vice President, General Counsel and Corporate Secretary


David Barden – Bank of America

Tim Horan – Oppenheimer

Frank Louthan – Raymond James

David Coleman – RBC Capital Markets



Ladies and gentlemen, thank you for standing by. Welcome to the Alaska Communications Systems third quarter 2010 earnings conference call. [Operator Instructions.] This conference is being recorded today, Thursday, October 28, 2010. I would now like to turn the conference over to David Wilson, Chief Financial Officer. Please go ahead, sir.

David Wilson

Thank you, operator. Good afternoon and welcome to Alaska Communications Systems third quarter conference call. With me today are Liane Pelletier, President, Chief Executive Officer, and Chairman of ACS; Anand Vadapalli, Chief Operating Officer; and Leonard Steinberg, General Counsel.

During this call, company [assistants] may include forward looking statements as defined in the US Securities laws. Forward looking statements are such statements that are not historical facts and may include financial projections, estimates of shareholder returns, or other descriptions of the company’s plans, objectives, expectations, or intentions. You are cautioned not to put undue reliance on forward looking statements as actual results could differ materially from expectations as a result of a variety of factors, many of which are outside the company’s control. We discuss these factors in our SEC filings.

Lastly, any non-GAAP measurements referred to during this call have been reconciled to the nearest GAAP measure. You may find these reconciliations, today’s press release, and our SEC filings on our investor website at

We will begin the call with Liane providing an overview. Then Anand will discuss operating details; I will cover Q3 metrics and financial performance, and recap our recently executed term loan refinancing. With that I would like to turn the call over to Liane. Liane?

Liane Pelletier

Thank you, David. Since Q3 of last year, we've generated $5.2 million of growth in enterprising wireless data revenues. Access points and other revenues were $6.5 million, lower this year versus last, and about half of that difference is associated with out of period revenues hitting 2009. Our company practice of process improvement and strategic focus helped maintain third quarter 2010 EBITDA to be level with that of third quarter 2009.

Since our last call, we funded a major brand relaunch and a new website. We refinanced our term loan and revolver. We designed and turned up some complex enterprise data networks, and we closed the TekMate investment with significant market activity proving the power of that partnership.

Earlier this week we issued press releases that describe how customers have taken advantage of the solutions enabled by the ACS TekMate CONNECT/HOST/MANAGE capabilities. Anand will profile the very different solution approach we bring to the market, shifting boldly from the commodity connectivity [plays] that the Alaska market is used to getting, and really playing off the brand promise of delivering smarter thinking to our customers.

The thinking extends beyond enterprise data solutions and extends into our wireless business, where we also help customers live the mobile lifestyle with our fast mobile network and devices like MiFi and a growing Android lineup.

Anand is going to start by putting some meat on the bones of how our operations are growing the data business in differentiated ways. Anand?

Anand Vadapalli

Thank you Liane. Picking up from Liane's comments, I'm satisfied with how we are generating new opportunities to keep our funnel strong, and how we are winning deals where we go in with a differentiated solution set that delivers high value to customers and to us, that generates sticky relationships, and that makes us more immune from commodity pricing.

I'll now share some of the customer stories we reported in press releases this week. One: For Sitnasuak Native Corporation, an Alaska village corporation with business in Alaska, the lower 48, and Puerto Rico, ACS provides data and application hosting out of our facilities in Hillsborough, Oregon. We host their Microsoft applications, providing full data backup and business capabilities. This is an example of how we follow our customers outside Alaska, and how we sell connectivity and hosting.

Two: For the Alaska Rural Telehealth Network, we provide fully integrated connectivity, network management, and videoconferencing. This network and organization is designed to serve medical providers that address more than 50% of Alaska's rural population. With our solution, we enable doctors and nurses to focus on patient care and not worry about technology. This is an example of our expanded portfolio including the all-important videoconferencing capability for remote healthcare applications in Alaska.

Three: For Rivada Sea Lion, we are doing the engineering and design for their 4G rural wireless network. They received federal stimulus funding to bring much-needed broadband services to southwest Alaska. We are pleased to be chosen to help them. Through this project we may in fact be associated with the 4G wireless network operational as early as summer 2011. Our reputation as quality builders and operators of networks in rugged conditions distinguished us as the right player for them.

These examples showcase our full portfolio of CONNECT/HOST/MANAGE solutions at work: The breadth of our competencies, the degree of strategic value we bring to our customers, and the way we define the market for ACS. More than connectivity, more than Alaska, and more than ACS.

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