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Broadband upgrades cut into HawTel earnings
Aug 10, 2012 (The Honolulu Star-Advertiser - McClatchy-Tribune Information Services via COMTEX) --
An increase in costs related to the expansion of its broadband network weighed on Hawaiian Telcom's second-quarter earnings, although the company reported solid growth in its new Internet television service.
The state's largest phone company earned $5.5 million, or 51 cents a share, in the April-to-June quarter, down from $6.7 million, or 61 cents a share, in the same period a year earlier. It was the company's seventh consecutive quarter of profitability since emerging from bankruptcy in the fall of 2010.
The main factor behind the decline in second-quarter earnings was an increase in depreciation and amortization costs associated with "significant investments" Hawaiian Telcom made in its broadband network, company officials said.
Hawaiian Telcom quietly launched its television service in July 2011, creating a new revenue stream that would help offset losses in its traditional land-line business. The company had signed up 6,400 subscribers on Oahu for television service by the end of June, and revenue from the business doubled to more than $1 million from the previous quarter.
The TV service helped drive a 1 percent increase in overall revenue from its residential customers compared with the prior three-month period.
"The sequential growth in consumer revenues marks a key turning point for us, reversing long-standing secular declines on legacy services and positioning us to drive overall organic revenue growth," Eric Yeaman, Hawaiian Telcom chief executive officer, said in a conference call with analysts.
"Our early success demonstrates the strong customer demand for the product and positions us well to drive future growth in consumer revenues," he said.
Hawaiian Telcom has been installing more fiber-optic lines on Oahu to provide the bandwidth needed to deliver the TV service to customers' homes. By the end of the second quarter, Hawaiian Telcom had "enabled" 50,000 households to receive the service. That was up from 41,000 households enabled at the end of the first quarter.
Hawaiian Telcom also reported a 5 percent increase in business data revenue in the second quarter from a year earlier, driven by increases in services such as switched ethernet, IP-VPN and dedicated Internet access.
The number of Hawaiian Telcom's high-speed Internet subscribers rose 3.7 percent to 105,000 on a year-over-year basis, driven by video bundle sales and improvements to its broadband network.
Hawaiian Telcom said the number of land lines it provides fell to 402,735 at the end of the second quarter, a decline of 25,792 from a year earlier.
Hawaiian Telcom shares rose 22 cents, or 1.2 percent, to close at $18.62 on the Nasdaq Global Market. The company reported earnings before the market opened.
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www.staradvertiser.com Distributed by MCT Information Services
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UPDATED 11:13 PM EST - May 22, 2013
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