WINNIPEG – Regional telecom MTS Allstream reported fourth quarter revenues dropped by 6% to $413.1 million from $439 million in the same quarter in 2011. Net profit remained nearly unchanged at $37 million up slightly from $36.9 million in 2011. The company said its corporate review, which analysts believe could include its sale, is still ongoing with no news to report. In 2013 it expects to “deliver significant increases in free cash flow and growth” across its strategic product lines.
Wireless data drove growth in the quarter and was up 29.7% to $116.3 million for fiscal 2012. Revenue for its Internet protocol TV services were up 11.2%, or $78.5 million, year-over-year, and high-speed Internet revenues were up 8.4% or $110.1 million, in 2012.
MTS Allstream also expects consolidated revenues in 2013 to be slightly lower than 2012, as revenue growth from strategic services such as wireless, broadband and converged IP “will not fully offset the expected and planned reductions in legacy services.” But it expects EBITDA growth in 2013 will come from a combination of cost savings achieved during the prior year and gross margin improvement. The telecom plans additional cost reductions in 2013 in the range of $30 million to $40 million, having achieved $33.6 million in cost savings in 2012.
It expects total capital spending to be lower in 2013 compared to 2012, due to the completion of several significant capital projects, such as the 4G LTE wireless network launch and improvements to billing systems.
In fiscal 2012 revenues fell to $1.7 billion, down 3.5% compared to 2012, mostly “due to legacy revenue declines including $33.3 million in planned legacy reductions at Allstream, partly offset by strong revenues from most strategic lines of business.” When excluding legacy lines of business, revenue increased by 2.2 % over 2011 on the strength of increased revenues across most strategic lines of business said the company.
It reported EBITDA of $609.5 million, up 2.5% in 2012 due to improving margins, particularly at Allstream, which achieved a $62.4-million decrease in direct costs and an $11.9-million decrease in operating expenses.
Capital expenditures were up 17.4% in 2012 to $338.0 million, mostly due to its investment in Long Term Evolution ("LTE") wireless technology and the “favourable one-time $20.7-million impact of the scientific research and experimental development investment tax credit recorded in 2011.”
"MTS Allstream continued to advance its strategy and market position in 2012 by launching the first and only 4G LTE wireless network in Manitoba, extending Allstream's national fibre network to another 335 buildings, and achieving our annual cost reduction target for the eighth consecutive year," said Pierre Blouin, Chief Executive Officer. "We are proud of what we have accomplished and the value we are creating for shareholders. With increasing EBITDA and EPS, nine quarters in a row of profitability improvement at Allstream and several strategic projects completed, we expect to deliver continued performance gains and increased free cash flow in 2013."
The company reported net profit for 2012 rose to $175.4 million, up from $167.1 million in 2011. It noted that its $33.6 million in annual cost savings in 2012 was the eighth consecutive year in which the company achieved its target.
Wireless services
• Wireless revenues: $362.1 million, up 1.6%, driven by a 1.2% increase in year-to-date blended wireless ARPU, partly offset by a decline in wholesale wireless revenues.
• Wireless data revenues: $116.3 million, up 29.7%, driven by a 28.9% increase in wireless data ARPU.
• Handset expansion: iPhone 5 on September 28, 2012, Sony Xperia™ T on November 23, 2012 and Samsung Galaxy S III on December 13, 2012.
• First to launch LTE technology in Winnipeg and Brandon, on August 28, 2012.
• 4G LTE/HSPA+ coverage: Over 97% of Manitoba's population – is expected to drive continued strong demand for wireless data services.
Internet and IPTV services
• Internet revenues: $110.1 million, up 8.4%, due to a growing subscriber base and higher ARPU.
• IPTV revenues: $78.5 million, up 11.2%, driven by increased ARPU and subscriber growth.
• In 2012, MTS deployed MTS fibre-to-the-home ("FTTH") in four more communities: IPTV service is now available to 95% of Winnipeg households, to 98% of Brandon households, to 94% of Portage La Prairie households and to a growing number of homes in nine other communities.
• 77% of IPTV customers subscribe to the higher-ARPU Ultimate TV service, up from 64% in 2011.
Internet and IPTV statistics
• Local access revenues: $266.5 million, down 3.9%, mainly due to price changes on features and to line losses from wireless substitution and some local competition.
• Long distance revenues: $44.4 million, down 11.4%, mainly due to customers replacing long distance calling with email, text messaging and social networking.
• Legacy data revenues: $31.7 million, down 6.8%, mainly due to a decrease in wholesale data services.
