WINNIPEG – Manitoba Telecom Services Inc. reported Monday what it called “solid” third quarter results, with its Board of Directors declaring a fourth quarter cash dividend of $0.65 a share.
Revenues declined by 3 per cent in the nine months ending Sept. 30, 2006, with a year over year decline in revenues of about 4.8% in the third quarter.
“Our third quarter results clearly demonstrate that we are making good progress in positioning our business for long-term success in the Canadian communications industry. After nine months, our financial results are tracking right on plan,” said Pierre Blouin, Chief Executive Officer.
“We have delivered significant, tangible results from our business review. Importantly, the Enterprise Solutions division continues to make solid progress.”
He said the year over year change in revenues is in line with MTS’s outlook and “reflects managing the ongoing transition from legacy services to growth services”.
Free cash flow was up in the third quarter by 24.3% to $70.7 million, and by 25.1% to $248.9 million in the first nine months of 2006.
The company said its efforts to align its cost structure are achieving results.
“When we initially established our cost reduction program, we had a target of $100 million in annualized cost savings after two years,” said chief financial officer Wayne Demkey. “Through very diligent efforts, we have been able to accelerate the program, and we now expect to achieve $120 million in annualized cost savings by the end of 2006 – $20 million more in savings, a year ahead of plan.”
In the Consumer Markets Division, wireless revenues and cellular customers grew by 12.8% and 12.4% respectively, digital television customers increased by 27.2%, and high-speed Internet customers rose by 16.6% from a year earlier.
The company reported strong net ads from TV in October. At 2,300, it is the highest monthly increase so far in 2006, and gives MTS a TV market share of about 25%. An additional 3,700 customers were added in the third quarter through the acquisition of Valley CableVision in southern Manitoba. At the end of September, 73% of MTS TV customers were also MTS high-speed Internet customers.
Over the first 9 months of 2006, digital TV revenues increased by 44.4% to $23.1 million, and its subscriber base increased by 27.2% to 59,442.
The Enterprise Solutions division had flat revenues in the third quarter, generating revenue of $262 million, about the same as in the second quarter.
MTS’s 2006 financial outlook from continuing operations remains unchanged, it said, noting the sale of its directories business closed on Oct. 2, 2006.
In January, MTS announced it would conduct a comprehensive business review. Since then, “the company has delivered three quarters of financial performance that are solidly on track in relation to its outlook for the year.”
As part of that review, the company has been looking at multiple scenarios, Blouin said. “In light of last week’s announcement regarding income trusts, we will be fully analyzing the implications of the proposed new legislation as it has implications for some of the scenarios.”
The company continues to benefit from its substantial $4 billion in accumulated tax deductions. MTS Allstream does not anticipate paying cash taxes until 2014.
