Source: Otelco Press Release

Otelco Inc. (Nasdaq:OTT) announced results for its first quarter ended March 31, 2012.

“First quarter results produced Adjusted EBITDA of $11.5 million, which represented a 6% increase over the fourth quarter of 2011 and a 0.6% increase over the same period last year,” said Mike Weaver, president and ceo of Otelco. “Some of the other positive aspects of the quarter were an increase of 1% in access line equivalents in the CLEC operations as well as a 1% growth in broadband subscribers. Our cash balance increased by $3.6 million to $16.0 million, primarily due to lower capital expenditures in the quarter. For the year, we expect the investment in our business to be in the $7.0 million range.

“On April 20, 2012, we announced that Time Warner Cable has indicated it will not renew its existing contract for wholesale network connections provided by Otelco. Revenue received directly from Time Warner represented approximately 11.7% of Otelco’s consolidated revenue for 2011 and 11.8% in first quarter 2012. Additionally, the Company receives access revenue from long distance carriers for calls destined to Time Warner customers in Maine and New Hampshire. This access revenue represents approximately 3% to 4% of Otelco’s consolidated revenue for both the year 2011 and first quarter 2012. The Time Warner contract expires on December 31, 2012 and includes a transition period into 2013. Under the terms of the contract, the revenue stream is unaffected though the end of this year. During the transition period in 2013, the revenue will decline as customers are moved from the Otelco service platform to Time Warner’s systems. The length and specific terms of the transition agreement are currently being negotiated,” Weaver explained.

“Also on April 20, 2012, the Board of Directors decided to suspend the dividends on the common stock portion of the Income Deposit Securities,” noted Weaver. “Holders of the Income Deposit Securities continue to receive quarterly interest payments on the $7.50 subordinated note which amounts to $0.975 per unit per year or $0.24375 per unit per quarter. The interest for the second quarter will be paid on Monday, July 2, 2012, to holders of record at the close of business on June 15, 2012. The dividend amounted to $.705 per unit for 2011 which equates to approximately $9.3 million for a twelve month period. The immediate suspension of the dividends will conserve approximately $7.0 million cash in 2012.

“In addition to the dividend suspension, we are conducting a thorough review of our operations and cost structure and anticipate taking aggressive actions to lower costs over the coming months in anticipation of the changes in revenue expected next year. Over the last few months, we have undergone a number of changes including office consolidation in Alabama, staff reductions in New England and Missouri and the acquisition of Shoreham Telephone in Vermont that will help us address the loss of the Time Warner Cable contract. We will continue to make the capital investments necessary to serve our customers and support our growth projects. The existing $162.0 million senior debt has a maturity date of October 2013. We may explore the possibility of refinancing this debt before the end of this year. We are in compliance with all of the terms and covenants contained in the credit agreement and associated with the subordinated notes that are part of the IDSs,” Weaver concluded.

Source: Otelco Press Release

Otelco Inc. (Nasdaq:OTT) announced results for the fourth quarter and year ended December 31, 2011. The company reported operating revenues of $101.8 million in 2011, compared to $104.4 million in 2010. Net income available to stockholders for 2011 was $0.024 million, compared to $596 million in 2010.

Otelco said its fourth quarter performance was adversely affected by approximately $0.4 million from non-operating items, including Shoreham deal expenses, write-off of obsolete inventory and RLEC cost study adjustments. On an annual basis, after a particularly strong performance in 2010, delays experienced in adding eight new CLEC collocation sites in Maine and New Hampshire dampened 2011 results. The company said its CLEC markets in New England have become more competitive, including downward pressure on market pricing trends. Otelco said it is responding to this and has made changes in its sales organization and leadership and adjusted its product offering to better position the company for growth in 2012.