WINNIPEG – MTS Allstream saw third quarter profits climb 44.9% year-over-year on the strength of broadband growth at MTS and double-digit IP growth at Allstream.
For the period ended September 30, 2014, consolidated revenues of $402.4 million were down 1.5% from $403.3 million in Q3 2013. The company said that this was mostly due to Allstream legacy revenue declines, along with wireless wholesale declines and lower wireless voice revenues, partly offset by strong revenue growth from converged IP, broadband, wireless data and EPIC Information Solutions
Consolidated EBITDA of $140.1 million decreased 1.8% from $142.5 million year-over-year. Declines in Allstream legacy services, lower wireless wholesale and voice revenues and an unexpected one-time $2.4-million charge resulting from a CRTC decision on the local contribution subsidy were partly offset by reduced restructuring costs and 5.8% growth in strategic lines of business. Net income for the period was $36.8 million, up from $25.4 million in the third quarter of 2013.
The company's MTS division, which includes its wireless, Internet and television services, had operating revenues of $252.1 million, down 0.2% from $252.7 million in the same period last year. Overall growth in revenues from strategic services (wireless, broadband and converged IP, and information solutions), was up 4.1% over Q3 2013, offset by declines in legacy lines of business.
Total wireless revenues of $93.5 million dropped 1.8% compared with $95.2 million year-over-year, while Internet revenues grew 7.9% to $32.7 million from $30.3 million in the same quarter last year. Revenues from the company's IPTV service were $21.3 million, a 6% lift over $20.1 million in the third quarter of 2013.
MTS added 10,875 post-paid wireless subscribers, 10,996 high-speed Internet subscribers and 5,402 IPTV customers since Q3 2013. The company said that its strong growth in subscribers is reflected in its increased number of customers with bundled services, which grew 6.0% to 104,463 year-over-year.
The company's business unit, Allstream, posted total operating revenues of $158.7 million, a 3.3% decrease from $164.1 million last year. Allstream's Q3 2014 performance reflects its continuing transition to an IP-based company, with strong growth in IP revenues, offset by declining legacy services revenues.
Revenues from IP services this quarter were up 10.1% and IP sales wins were up 4.9% over Q3 2013. IP revenues now represent 42% of Allstream's total operating revenues, and the company said that it remains on track to deliver high single-digit IP revenue growth in 2014.
“MTS Allstream generated solid free cash flow in the third-quarter on the strength of broadband growth at MTS and double-digit IP growth at Allstream”, said CEO Pierre Blouin, in the report’s news release. “We also proved the resiliency of our Manitoba wireless franchise, as we delivered very low churn and maintained industry-leading market share against aggressive pricing by competitors. At Allstream, we've signed national customers such as Canadian Tire, Yellow Pages and the Heart & Stroke Foundation. These wins build on the momentum of four consecutive quarters of year-over-year IP growth, partially offsetting declines in legacy and demonstrating that we are continuing to make good progress on the IP transformation.”
The company has yet to name a successor for Blouin, who announced in August that he will retire from the company later this year. MTS Allstream said that its search for a new CEO “is progressing and is on schedule”.
