WINNIPEG – Led by double-digit gains among its growth services (including the addition of 6,600 new TV customers, bringing its total to over 66,000, or nearly 30% of the Winnipeg TV market), MTS reported a solid fourth quarter of 2006, ended December 31st.
"Our fourth quarter results demonstrate the progress we have made in improving our business fundamentals and creating a sound platform for long-term growth," said Pierre Blouin, CEO, in the press release. "We delivered strong free cash flows, double digit growth in each of our growth services, improved margins and sales activity in our Enterprise Solutions division, and exceeded our cost reduction target for the year. In addition, through the work of the business review, we established a clear and achievable plan for creating and delivering value to our shareholders as one of the highest-yielding stocks on The Toronto Stock Exchange.
Thanks to continued local line losses, for the fourth quarter and full year ended December 31, 2006, MTS reported EBITDA of $156.7 million and $649.7 million, respectively, while revenues, as expected, declined on a year-over-year basis by approximately 3% to $479.1 million and $1,916.5 million, respectively, for the fourth quarter and full year ended December 31, 2006. The year over year change in revenues is in line with the Company’s outlook and reflects the ongoing transition of the company’s business mix from legacy services to growth services.
During the fourth quarter, the company continued to generate strong growth in each of the growth services provided by its major operating subsidiary, MTS Allstream Inc. ("MTS Allstream"). "Collectively, revenue from our wireless, high-speed Internet, digital television, business IP connectivity and unified communications services grew by approximately 12%. Growth services contributed 36% of total revenues in 2006, which is up from 29% in 2005 and on pace to meet our earlier guidance to exceed 40% of total revenues in 2007," says the press release.
This growth contributed to an 18.3% increase in free cash flow, which grew to $286 million in 2006 from $241.7 million in 2005.
"These results support our continued confidence in our ability to meet our guidance for 2007, while keeping with our strategy of paying out 70% to 80% of cash flow via share buybacks and dividends and continuing to grow our business over time," said Wayne Demkey, CFO. "We also continue to see opportunities to make MTS a more focused and profitable company through an additional $40 million to $50 million in cost savings in 2007, over and above the $120 million in savings expected from our Transition Phase 2 cost reduction program."
