WINNIPEG – Manitoba Telecom Services posted a 13.2% increase in “growth services” revenues and a 17.7% increase in EPS from continuing operations in its third quarter report issued today.
Growth services are considered to be wireless, broadband and MTS TV. The company’s traditional land line service continues to see decline.
"MTS continued to build strong and sustainable momentum in the third quarter," said Pierre Blouin, CEO, in the press release. "Results are in line with our business plan at all levels as we continue to capitalize on strong customer relationships and our ability to bring innovative new services to market. On the strength of this performance, we are pleased to once again be in a position to raise our 2007 EPS guidance range and confirm that we expect our EBITDA and free cash flow to be at the high end of their established 2007 guidance ranges."
In the third quarter, EBITDA from continuing operations increased by 1.3% to $164.8 million, and for the first nine months of 2007, EBITDA increased by 1.5% to $500.3 million as compared to last year. This higher EBITDA reflects strong performance in growth services revenues and lower expenses resulting from cost reduction initiatives. “Overall, these solid results contributed to free cash flow of $63.8 million and $241 million for the quarter and nine-month period, respectively. On a year to date basis, free cash flow is stable and essentially flat compared to last year,” says the release.
Revenues from continuing operations declined by 0.4% to $475.9 million in the third quarter of 2007, and by 1.4% to $1,417.4 million in the first nine months of the year compared to the same periods last year. “These results reflect the company’s business strategy to increase growth services revenues, offsetting declines in legacy services and the loss of business revenue as Rogers Communications and AT&T Corp. continue to migrate their communications traffic to their own networks. If the revenues from Rogers and AT&T were excluded, third quarter and year to date revenue from continuing operations would be positive by 1.9% and 0.8%, respectively.”
Growth services revenues, which include wireless, high-speed Internet, digital television, converged Internet protocol ("IP") and unified communications services, were up by 13.2% to $194.7 million in the third quarter of 2007, and by 11.8% to $554.8 million in the first nine months of 2007, adds the release. Growth services contributed approximately 41% of total revenue in the third quarter of 2007 and 39% in the first nine months, which is well ahead of the 36% and 35% contributions respectively, for the same periods last year.
The 2007 cost reduction program has achieved approximately $33 million in annualized savings as at September 30, 2007. This is in line with the objective to achieve annualized expense savings of $40 million to $50 million. Actual in quarter realized savings from this program were $13 million and $28 million for the nine months ended September 30, 2007.
