WINNIPEG – Manitoba Telecom Services (otherwise known as MTS Allstream), reported second quarter 2012 net earnings of $44.5 million, down 10.6% compared to the same time frame in 2011.
"We made excellent progress on our strategic objectives in the first half of the year, and are in line with our plans for 2012," said Pierre Blouin, MTS Allstream's CEO, in the company’s official release. "Our focus on profitability is generating solid results, with EBITDA growth for both divisions driven by strong performance in MTS's growth lines of business, Allstream's on-net IP sales focus and diligent cost management.
"We also welcome the federal government's legislative amendments, passed during the quarter, which will allow increased foreign investment into smaller Canadian telecommunications providers, including MTS Allstream. We have advocated for this change over the past few years, as we believe it will drive more investment and greater innovation in Canada's telecommunications sector. This change could help strengthen Allstream, as it broadens available opportunities, including new sources of capital and stronger partnerships."
Most believe that the new rules on foreign investment are quite favorable for MTS Allstream and that it might finally be able to find a significant investor to sink funds into Allstream to really grow it as a national competitor. Either that, or one of the big incumbents, fearing such a thing, would step up and buy the company.
"Now that we know exactly how the new rules apply, we are assessing how to capitalize on these changes in the best interests of the company and its stakeholders,” added Blouin. “Currently, Allstream has a clear strategy and strong traction in the IP market, and is, in fact, the strongest it has been in years. We continue to focus on executing our strategy and to look for ways to improve performance and create value for our stakeholders.”
Also of note in the quarter, taken directly from the company’s report:
• Wireless data revenues grew 24.8% in the second quarter of 2012, ended June 30th, driving a 3.9% increase in year-to-date wireless ARPU, to $60.34. Year-to-date wireless data ARPU was $18.47, an increase of 32.6% over the prior year. At June 30, 2012, 50.5% of all postpaid wireless subscribers had data plans, up from 36.2% as of June 30, 2011.
• MTS's extensive 4G wireless network, together with the planned deployment of LTE technology in Winnipeg and Brandon later in 2012, is expected to drive continued strong demand for wireless data services.
• Postpaid subscribers totaled 396,918 in the second quarter of 2012, up 3.8% over the prior year. The postpaid wireless subscriber growth was partly offset by a decrease in lower-ARPU prepaid and wholesale customers. As a result, wireless subscribers were stable over the prior year and totaled 490,498 as of June 30, 2012.
• Postpaid wireless churn was a leading 0.80% in the second quarter of 2012, down from 0.92% in the same period of the prior year. Blended wireless churn was 1.63% in the second quarter of 2012, up from 1.50% in the second quarter of 2011.
• Broadband and converged IP lines of business delivered strong performance in the second quarter of 2012, driven by demand for high-speed Internet and premium IPTV services.
• Internet revenues grew 10.2% to $28.0 million in the second quarter, due to fewer subscribers on promotional plans, price increases and subscriber growth.
• Year-to-date high-speed residential ARPU was up 9.4%, to $41.27, due to fewer customers on promotional plans and price increases.
• High-speed Internet subscribers increased 1.8%, to 189,708, as at June 30, 2012.
• IPTV revenues grew 14.5% to $19.7 million in the second quarter, driven by fewer customers on promotional plans, subscriber growth and price increases.
• At June 30, 2012, MTS had a total of 100,626 television customers, of whom 94,743 are higher-ARPU IPTV subscribers, representing a year-over-year increase of 3.4% in IPTV customers.
• MTS maintained its market leadership position in local access, legacy data and long distance services, while facing aggressive promotional pricing from its main cable competitor, which is having an impact on some of its subscriber numbers. MTS remains disciplined in finding the right balance between financial performance and maintaining its market share.
• Local access revenues declined by 3.9% in the second quarter, mainly due to a 6.5% drop in residential local access lines resulting from wireless substitution and local competition, and a 3.0% decrease in business local access lines.
• Long distance revenues declined by 10.4% to $11.2 million in the second quarter, mainly due to customer migration to lower-priced long distance plans and reduced volumes, as customers continue to replace long distance calling with alternative methods of communication, such as email, text messaging and social networking.
• Legacy data revenues declined 4.8% to $8.0 million in the second quarter of 2012, mainly due to a decrease in wholesale data services and the decommissioning of legacy products.
• Allstream's performance in the second quarter of 2012 demonstrated continued progress on its strategic objective: to drive growth in on-net IP-based services and improve profitability. EBITDA increased by $0.8 million in the second quarter of 2012 compared to the same period of 2011, marking the seventh straight quarter of year-over-year EBITDA growth for Allstream. Allstream revenue for the period reflected a year-over-year increase in high-margin on-net IP revenues, which were offset by legacy revenue declines. The continuing focus on on-net services improved gross margins to 58.0% in Q2 2012 and, along with diligent cost management, contributed to overall growth in EBITDA.
