GCI reports record 1Q revenue, TiVo stems video losses


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General Communications Inc. reported record revenue of $216 million in the first quarter of 2014 and net income of $2 million.

The company revenue was its best ever in a first quarter, and a sharp increase from the 2013 first quarter when it took in $186.2 million. Net income decreased, however, compared to $3.2 million in the first quarter of 2013.

 “It was the best first quarter that we have ever had,” said GCI Senior Vice President and Chief Financial Officer Pete Pounds during a May 8 investor call to discuss the results released May 7.

GCI’s stock was at $11.32 per share May 12, near the 52-week high of $11.75, and up from $9.32 on May 13, 2013. The GCI share price was $9.09 on July 23, 2013, at the closing of the Alaska Wireless Network infrastructure merger with Alaska Communications Systems Group Inc.

The company’s adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization was $75 million.

That’s a 28 percent increase compared to the prior year, and a 10 percent increase compared to the prior quarter.

The increase over the first quarter of 2013 is attributable to the AWN deal, which merged the GCI and Alaska Communications infrastructure into one network although they sell separate retail products.

Pounds said that the sequential increases were in part the result of a regular seasonal shift: lower subsidies for wireless handsets in the first quarter compared to the fourth quarter.

Pounds said the company also showed strong performance in other areas.

GCI added 1,100 cable modem subscribers, and 1,000 new wireless customers, Pounds said.

That was attributed partially to speed increases for internet customers, and the build out of the TERRA network, which added new fiber-optic cable throughout much of Southwest and Northwest Alaska, as well as additional microwave towers.

Juneau and Fairbanks also both received increased internet speeds in early May, Pounds said.

The TERRA work is continuing, and Pounds said the company plans to reach Kotzebue by the first quarter of 2015. Eventually, the plan is to create a complete ring by going to Prudhoe Bay.

GCI launched its fastest data service, long-term evolution, or LTE, in Fairbanks April 30. Bethel received 3G service in April as a result of $2.2 million in federal funding that upgraded an AWN cell tower. Nine other nearby villages will also be upgraded to 3G service later this year as a result of the work.

The company also received a preliminary award from the Federal Communications Commission to upgrade several other communities to 3G and 4G services, although the details of the upgrades have not yet been made public.

The upgrades are “being welcomed by our customers,” Pounds said, noting that the company has also increased its Turbozone wi-fi, and now has one hotspot for every 400 people in the state.

The company also reversed the trend of losing video subscribers, he said, in part because it began bundling its cable package with TiVo.

The first quarter of 2014 was also GCI’s first full quarter with ownership of new television stations, including Anchorage’s KTVA, or channel 11, which is now the first local station with HD news, Pounds said.

Not all metrics performed as well.

Business services revenues were $52 million for the first quarter, down sequentially and year-over-year.

According to the company, that decrease was driven by a decline in voice products and professional services; data transport/storage, video and wireless demands grew.

AWN challenges persist

GCI and ACS are also still working out bumps in the new Alaska Wireless Network.

According to GCI counsel Tina Pidgeon, ACS disagreed with the rates for wholesale services set by AWN, and now the two companies are in arbitration regarding how rates are set. GCI owns two-thirds of the combined AWN and Alaska Communications owns one-third.

In the meantime, however, ACS continues to pay AWN for services, Pidgeon said during the May 8 call.

The two companies are also still working on integrating their networks.

Customers have access to networks that are working well, according to GCI, but there’s work left rationalizing the cell sites so there are fewer duplicative sites.

That will likely take one to two years, and the networks want to maintain customer experience and the ability to take on roaming traffic.

Pounds said GCI is also evaluating the handset subsidies that are available under AWN, and did not accept any in the fourth quarter of 2013 or first quarter of 2014. The company plans to use them by the end of the year, once it can figure out a better tracking system, Pounds said.

GCI plans shareholder meeting

GCI also announced May 12 that its 2014 shareholders meeting is scheduled for 6 p.m. June 23 in Juneau.

The business meeting will include election of three individuals to the company’s board of directors, and then GCI President Ron Duncan will give a presentation regarding the company’s performance and outlook. A question and answer session is also planned.

The meeting will be held at the Juneau Yacht Club.

Molly Dischner can be reached at molly.dischner@alaskajournal.com.

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