Alaska Communications’ bottom line boosted after sale
Alaska Communications System Group Inc. revenue is down after selling off its wireless business to its fellow Alaska telecom GCI, but net income through nine months has sharply increased.
Net income through three quarters of the year for Alaska Communications was $12.6 million compared to just $2.6 million for the same nine months of 2014. That is despite total operating revenues declining to $54.7 million from $78.4 million in the third quarter of 2014.
In the third quarter ended Sept. 30, net income was $1.2 million compared to $1.9 million in the same period of 2014.
Adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, of $12.6 million in the third quarter of 2015 decreased 46.5 percent, from third quarter 2014 from $23.5 million to $12.6 million.
CEO Anand Vadapalli said Alaska Communications is essentially a different company than it was last year during the same time, and third quarter results reflect what the business focuses on now. Comparing current revenues to last year’s is like comparing apples and oranges, he said.
“We see ourselves as a fiber-based broadband and managed IT services company focused on business and wholesale customers,” said Vadapalli. “Our income now reflects that.”
In this light, ACS presents the 2015 third quarter as a success. Broadband revenue grew of 7.6 percent from $17.3 million to $18.6 million in 2015, making four straight quarters where its broadband revenue has surpassed the industry average.
Business broadband average revenue per user, or ARPU, was key in revenue growth. Business broadband ARPU increased to $218.54 in the third quarter of 2015 from $195.04 in the third quarter of 2014. Consumer broadband ARPU also increased to $59.16 versus $54.18 year-over-year.
Business and wholesale, which make 54 percent of ACS’s total revenue, grew 6.2 percent from $28 million to $29.6 million. Vadapalli said during a conference call that the company’s entry into the oil and gas industry was paying off.
In December 2014, Alaska Communications agreed to sell its wireless subscriber business and its 33 percent share of Alaska Wireless Network to GCI for $300 million in cash. Alaska Communications and GCI launched the network jointly in July 2013, intending the combination of their wireless networks to compete more effectively with national carriers AT&T, which accounts for roughly 50 percent of the current Alaska wireless market, and Verizon, which entered the market in September 2014.
Alaska Communications closed the sale on Feb. 2 and completed the transition April 17. After taxes, Alaska Communications received $276.4 million from the wireless sale, and used $240.5 million to pay down its debt. Alaska Communications now has a comparatively low debt level among other telecommunications companies.
ACS net debt stands at $156.6 million for the third quarter, down from $162.7 million in June. This resulted from a debt restructuring largely authored and coordinated by Chief Financial Officer Wayne Graham, who is leaving ACS to be replaced by Laurie Butcher.