Alaska Communications posts 2018 revenue increase of 2.5%
Despite somesetbacks, Alaska Communications System Group Inc. reported financial gains for both the final quarter of 2018 and throughout 2018.
Alaska Communications clocked a 2.5 percent growth in annual revenue, from $227 million in 2017 to $232 million in 2018. The tail end of 2018 saw growth as well. The company’s fourth quarter revenue grew from $54.9 million to $58.7 year-over-year.
Alaska Communications’ business revenue accounted for the growth, increasing 3.9 percent from $139 million in 2017 to $145 million in 2018, offsetting flat annual revenue for the company’s consumer offerings.
Alaska Communications spokeswoman Heather Cavanaugh pinpointed the company’s success as the result of large enterprise and carrier customers.
“We have built a track record of performance in this area and we see very exciting opportunities for future growth,” wrote Cavanaugh in an email. “Serving customers in the carrier, federal, education and oil and gas verticals are all opportunity areas for us. Further, with the turn up of our partner’s fiber network serving select northwest Alaska communities, we are seeing new opportunities come our way in these communities.”
While Alaska’s economy continues to impact businesses across the state, Alaska Communications said growth in government and on the North Slope drove revenue.
“Our growth is driven by our larger enterprise and carrier customers,” wrote Cavanaugh in an email.
The business revenue grew solely due to voice, while business broadband revenue declined. Cavanaugh said this growth came from a long overdue price renovation.
“Our voice revenue increase is a function of us raising some of our prices in the last year where we had not seen any price adjustment for years, in some cases more than 10 years,” Cavanaugh wrote. “We had to get our revenues more aligned with market and costs.”
Two of Alaska’s internet providers, Alaska Communications and GCI Liberty, experienced a revenue shortfall from federal funding sources in 2018.
The Federal Communications Commission’s Rural Health Care program gives financial assistance to internet providers to expand and administer rural telemedicine options.
After the FCC ran out of its $400 million annual funding pool, Alaska Communications was due nearly $12 million in unpaid as of March 31, 2018, and the company cited the unpaid bills as a reason it had to lay off 30 workers in December 2017.
Cavanaugh explained that while the Rural Health Care program did negatively impact Alaska Communications, the company is making headway communicating with the FCC to recoup the costs.
“We are making progress with the FCC which has approved substantially all our customer contracts for the last two years and we remain in dialogue about expedient processing for upcoming years,” Cavanaugh wrote. “In this regard, we want to acknowledge the assistance of our congressional delegation in helping us and others who have been impacted with their advocacy on behalf of Alaskans.”
Furthermore, Cavanaugh said other federal programs have served as a pressure valve for Alaska Communications’ finances.
“In addition to Rural Health Care, we also receive support under the E-Rate program that funds schools and libraries, and the Connect America Fund program that supports expansion of internet service to underserved areas,” she wrote.
“These programs currently provide a stable level of support.”
For the coming year, Cavanaugh wrote the company will flesh out plans to expand wireless service.
“One opportunity for our company over the next several years is the provision of 5G wireless backhaul for a national carrier,” she wrote. “In 2018, we deployed about $2 million of capital toward this opportunity and expect to deploy between $7-8 million in 2019, all of which will substantially improve our fiber network in our major markets.”