Alaska Communications posts positive net income to close 2015
Alaska Communications Systems Group Inc. posted strong final quarter for 2015 closing the year after the sale of Alaska Wireless Networks to General Communication Inc. in a move that reduced the company’s debt by $240 million and primed it to focus on increasing business revenues.
Balance sheets still reflect the sale and the departure of wireless revenue. Total operating revenue for fourth quarter 2015 declined, from $77.5 million in 2014 to $56.6 million in 2015. For the year, operating revenue declined from $315 million to $233 million.
Operationally, the divestiture of wireless expenses led to an income bump. Net income increased for the quarter compared to last year. In 2014, Alaska Communications had a $5.4 million loss, while fourth quarter 2015 produced a net income of $339,000.
For the year, ACS had a net income of $13 million in 2015, rising above a $2.8 million loss in 2014.
Since selling its one-third share of the Alaska Wireless Network, which combined the wireless infrastructure of Alaska Communications and GCI, the company made strides focusing on business broadband and managed IT services. Total broadband revenue reached $19.4 million from $17.5 million, up 10.4 percent. Business and wholesale service revenue grew to $32.2 million from $27.8 million, a 15.7 percent gain.
The company’s business services focus does come with a cost, as consumer revenues have dropped. Consumer revenue declined 6.3 percent and consumer broadband revenue declined 7.6 percent.
Alaska Communications expected the dip in customer revenue, CEO Anand Vadapalli said. Consumer services – less than 20 percent of the total revenue – rely heavily on consumer broadband. More and more households cut traditional broadband and cable connections in favor of streaming directly from their wireless connections.
Vadapalli said Alaska Communications’ consumer revenue drop comes in part from a service change. Rather than a host of packages, ACS now only offers one broadband package serving 10 megabytes per second, the fastest connection speed available.
“We have dramatically simplified our product,” said Vadapalli. “We have one product, one price, the maximum speed you can use, and all the data you can use.”
The trend of declining consumer revenue will continue in 2016, Vadapalli said, but he expects to stabilize in 2017.
Vadapalli said Alaska Communications’ contract as broadband provider for ConocoPhillips, in partnership with wireline provider Quintillion, has yielded positive results since it began in 2015. Alaska’s market is unlike Lower 48 broadband markets in that it has only two major providers, ACS and General Communications Inc. Vadapalli said the company hopes to leverage this market scenario for a greater presence in oilfield and state government operations.
DJ Summers can be reached at [email protected].