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MTS reports drop in income

But still beats expectations

By: Staff Writer

Friday, Aug. 3, 2012 at 8:26 AM | Comments: 0

MANITOBA Telecom Services Inc. is reporting a drop of nine cents in earnings per share for the second quarter compared to last year on higher depreciation and amortization expenses, but still managed to beat analysts' expectations.

The Winnipeg-based telecommunications company (TSX:MBT) reported net earnings of $44.5 million, or 67 cents per share, in its second quarter, down from $49.8 million, or 76 cents per share in the same period last year.

The increase in depreciation and amortization expense was mostly due to the impact of scientific research and experimental development tax recovery recorded in 2011, the company added.

Revenue for the three months ended June 30 came in at $431.6 million, down from $443.7 million year over year.

The average analyst estimate had been for earnings of 64 cents per share on $438.09 million in revenue, according to Thomson Reuters.

MTS Allstream operates two divisions, with some 5,500 employees.

In Manitoba, MTS is the leading full-service telecommunications provider for residential and business customers, including wireless technology, broadband services, IPTV, voice services, home security and an extensive range of business offerings. That segment's operating revenues rose 1.6 per cent to $246.8 million.

Nationally, its Allstream division provides IP communications and is the only national provider that focuses exclusively on the business telecommunications market. The Allstream segment saw operating revenues dip eight per cent to $193.5 million from $210.3 million.

The company says revenue growth from its wireless, high-speed Internet and IPTV services was offset by planned legacy revenue declines due to its decision to exit low-margin lines of business and legacy contracts.

Revenue was also impacted by an Ontario government decision to change its policy on the procurement of telecommunications services for individual doctors' offices and clinics, it said.

In the MTS segment, postpaid subscribers totalled 396,918 in the second quarter, up 3.8 per cent over the prior year.

Year-to-date wireless data average revenue per user was $18.47, an increase of 32.6 per cent over the prior year.

MTS said as of the end of the second quarter, 50.5 per cent of all its postpaid wireless subscribers had data plans, up from 36.2 per cent year over year.

Internet revenues grew 10.2 per cent to $28.0 million in the quarter, due to fewer subscribers on promotional plans, price increases and subscriber growth.

The Allstream segment's converged IP revenues were up $1.2 million in the second quarter, compared to the same period of 2011, partially offset by the Ontario government policy decision.

In June, MTS Allstream selected communications technology company Ericsson to supply its next-generation wireless network that will be launched this year in Manitoba.

Financial terms of the deal weren't released for the Long-Term Evolution (LTE) network that's faster than MTS's existing network -- able to handle large amounts of data as well as video conferencing and online gaming.

MTS said it plans to launch the service commercially during 2012 for customers in Manitoba.

-- The Canadian Press

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