GCI REPORTS
FIRST QUARTER 2015 FINANCIAL RESULTS
Consolidated Revenue of $231
million
Adjusted EBITDA of $82 million
Before Transition Costs
May 5, 2015, Anchorage, Alaska -
General Communication, Inc. ("GCI") (NASDAQ: GNCMA) today reported
financial and operational performance for the first quarter of
2015.
Significant
Recent Events
-
Closed on the Alaska Wireless Network (AWN)
transaction
-
Refinanced $425 million in bonds
-
Successfully transitioned former ACS wireless
customers onto the Company's customer care and billing system on
April 12th
Consolidated revenues for the
first quarter of 2015 were $231 million, an increase of $15 million
or seven percent when compared to the first quarter of 2014, and an
increase of $2 million or one percent over the fourth quarter of
2014. This growth is attributable to continued strong growth in
high speed data service as well as growth in wireless.
Adjusted EBITDA before one-time
transition costs for the quarter were $82 million, an increase of
$7 million or ten percent compared with the first quarter of 2014
and $11 million or 16 percent compared to the fourth quarter of
2014. One-time transition costs associated with the AWN transaction
noted above were approximately $7 million during the quarter.
"I am pleased with the Company's
performance during the quarter," said Ron Duncan, GCI's president
and chief executive officer. "Revenue and EBITDA growth were
strong, driven by outperformance in data and wireless. In addition,
the Company achieved a significant milestone with the closing of
the AWN transaction and the smooth transition of the acquired ACS
wireless customers. I am proud of the effort put in by the
transition team. We also made improvements in our capital structure
by refinancing a large portion of our high yield debt, which
reduced annual interest expense and extended the Company's debt
maturities."
Operating Statistical
Highlights
|
1Q15 |
1Q14 |
4Q14 |
Wireless Subscribers |
238,600 |
142,400 |
149,600 |
Wireless ARPU |
$48.23 |
$50.01 |
$50.16 |
Cable Modem Subscribers |
135,800 |
130,400 |
133,200 |
Data ARPU |
$83.93 |
$75.93 |
$83.01 |
The large increase in wireless
subscribers was driven by the acquisition of the ACS wireless
customer base as well as growth in the underlying GCI base. Cable
modem growth and ARPU increases continue to be driven by the
popularity of GCI's new pricing plans and faster download speeds.
Wireless ARPU has declined largely due to the growing adoption by
customers of GCI's new "bring your own device" plans and bundling
discounts.
Operating and
Financial Highlights
Wireless:
The Wireless segment posted
revenues of $59 million for the quarter, representing a five
percent decline over the first quarter of 2014 and a four percent
decline over the fourth quarter of 2014. The decrease in revenue
was related to a simplification in how we internally allocate
revenues between segments, which became possible after the AWN
transaction. Total wireless revenues between the wireless and
wireline segments actually grew on both a year-over-year and
sequential basis by $7 million and $6 million respectively.
Approximately $4 million of that growth was due to the success of
"bring your own device" plans with handset financing.
The Wireless segment revenue detail is as
follows:
($ millions) |
1Q15 |
1Q14 |
4Q14 |
Wholesale Wireless |
21 |
25 |
25 |
Roaming and Backhaul |
24 |
25 |
23 |
USF Support |
14 |
13 |
14 |
Total Wireless Revenue |
59 |
63 |
62 |
Wireless segment adjusted EBITDA
was $37 million for the quarter, a decrease of $1 million or two
percent over the first quarter of 2014, but a sequential increase
of $5 million or 14 percent over the fourth quarter of 2014. But
for the election of the wireline segment to not take handset
subsidies in the first quarter of 2014 of approximately $5 million,
Wireless EBITDA would have been up $4 million on a year-over-year
basis.
Adjusted EBITDA for the quarter was improved by a
decrease in roaming costs, primarily due to better management of
permanent and high roaming customers, and a decrease in
distribution and capacity costs.
Wireline:
The Wireline segment posted
revenues of $172 million, an $18 million or 12 percent increase
over the first quarter of 2014 and a $5 million or three percent
increase over the prior quarter.
Adjusted EBITDA for the quarter
was $45 million before one-time transition costs of $7 million.
That compares favorably with $38 million in the fourth quarter of
2014 and approximately $42 million in the first quarter of 2014
adjusted for the handset subsidies.
Wireline -
Consumer:
Consumer revenues were $85 million
for the quarter, a year-over-year increase of $15 million or twenty
one percent, and a sequential increase of $8 million or 11
percent.
Revenue growth has been driven in
part by growth in high speed data products, which continue to grow
year-over-year at a double digit rate. The quarter included the
addition of 2,600 cable modem subscribers, and an increase in ARPU,
reflecting the popularity of GCI's market-leading high speed data
product, re:D.
Consumer wireless also showed
consistent growth, even after taking into account the acquisition
of the ACS wireless subscriber base. In addition to the ACS
subscribers acquired, the Company added 2,000 new consumer wireless
subscribers.
GCI has seen growing adoption of
the consumer wireless plans that incorporate equipment installment
plans and shared data. For the quarter GCI had $4 million in net
financed handset revenue.
Wireline -
Business Services:
Business Services revenues, which
includes broadcast and cable advertising revenues, were $53 million
for the quarter, representing a slight increase over the first
quarter of 2014 and a $5 million or nine percent sequential
decline.
On a sequential basis, there was a
$6 million decline in video revenues, driven in large part by a
decline in advertising revenues after a robust political season in
2014.
Wireline -
Managed Broadband:
Managed Broadband revenues were
$34 million for the quarter, representing a $3 million or nine
percent increase year-over-year and a $2 million or five percent
increase sequentially.
The FCC recently increased the
nationwide funding cap for the federal E-Rate program, from $2.4
billion to $3.9 billion, stabilizing support for many of Managed
Broadband's school and library customers.
Significant Events
On April 12, 2015, GCI
transitioned the former ACS wireless customers to its billing and
customer care platform. The reaction has been positive.
Since last fall, GCI has increased its customer service,
front line sales and support staff by 165 full time positions.
On April 1st GCI closed on $450
million in senior unsecured notes, with a 6.875 percent coupon
maturing in 2025. These notes replace the Company's 8.625% 2019
bonds, providing cash interest savings of approximately $5 million
per year. The company's capital structure is now in a more secure
position, with 80 percent of the debt maturities' occurring in five
or more years.
Capital expenditures for the
quarter totaled $37 million, in line with expectations.
During the quarter, GCI
repurchased 1.1 million shares of its Class A common stock, at a
cost of $16.1 million.
Over the past two years, GCI's
Cycle30 subsidiary has been working on the development of a
next-generation billing platform to serve the needs of
quadruple-play providers like GCI. After a detailed
assessment earlier this year, GCI elected to wind down the
development effort because of scope, schedule, and budget
risks. GCI has also decided to stop marketing a
machine-to-machine billing platform developed by Cycle30.
These actions will result in an aggregate write-off of $26.4
million. Cycle30's day-to-day operations have been
reintegrated into GCI, and GCI is proceeding with an RFP to select
a proven, packaged billing solution to meet its needs, and is
continuing to seek ways to simplify plans and processes to benefit
the eventual billing conversion.
Guidance
GCI reiterates the following
guidance for 2015 financial performance:
-
Revenues will be in the range of $920 - 970
million.
-
Adjusted EBITDA of $310 - 335 million, which
excludes one-time costs for the transition of ACS wireless
customers and network assets to GCI.
-
Core capital expenditures will be approximately
$170 million, of which approximately $45 million will be on
wireless network projects, and approximately $85 million will be on
other network and infrastructure projects.
Conference Call
The Company will hold a conference
call to discuss the financial results on Wednesday, May
6th, at 2:00
p.m. (Eastern). To access the call, call the conference operator
between 1:50-2:00 p.m. (Eastern) at 800-779-5739 (International
callers should dial +1-203-827-7046) and identify your call as
"GCI".
In addition to dial-up access, GCI
will make available net conferencing. To access the call via net
conference, log on to gci.com and follow the instructions.
A replay of the call will be
available for 72-hours by dialing 866-359-6494, access code 7461
(International callers should dial +1-203-369-0151).
Forward-Looking Statement Disclosure
The foregoing contains forward-looking statements regarding GCI's
expected results that are based on management's expectations as
well as on a number of assumptions concerning future events. Actual
results might differ materially from those projected in the
forward-looking statements due to uncertainties and other factors,
many of which are outside GCI's control. Additional information
concerning factors that could cause actual results to differ
materially from those in the forward-looking statements is
contained in GCI's cautionary statement sections of Forms 10-K and
10-Q filed with the Securities and Exchange Commission.
About GCI
GCI is the largest Alaska-based
and -operated, integrated telecommunications provider, offering
wireless, voice, data, and video services statewide. Learn more
about GCI at www.gci.com.
#
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Press Release Financials 3-31-15
v4
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information contained therein.
Source: General Communication Inc via Globenewswire
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