Enterprise and Data Revenue Grow in 2Q11
Alaska Communications (Nasdaq:ALSK) headed into 2Q11 armed with a new ceo and cfo tandem, and a streak of quarterly wireline and wireless connection losses dating back to 3Q08. If there was any uncertainty regarding the new team's growth strategy for ACS going forward, recent announcements and the presentation of its 2Q11 results put all questions to bed. The company is betting on its wireless and enterprise segments to get it out of the red.
While ACS operated at a loss in 2Q11, revenue ticked up slightly to near $85m in the quarter and the highlights presented were concentrated in its wireless and enterprise units. Wireless churn was down a half percent to 2.1%, and postpaid data revenue jumped 49%, or $16m, YoY—likely a byproduct of its efforts to brand its wireless sales force as “the Smartphone experts.” ACS was also able to post wireless customer gains in 2Q11 for the first time in nearly three years. Elsewhere, strong performances in data hosting, video conferencing and managed services drove enterprise revenue up 7% YoY to $12.6m, while retail, wholesale and access wireline revenues declined nearly 6%.
Prior to reporting a solid performance from its wireless business in 2Q11, ACS made distinct moves to strengthen the segment. It announced new prepaid wireless plans, and a more flexible set of tiered postpaid data plans in an effort to further reduce churn and attract new customers. Also representative of ACS’s wireless-centric strategy was its announcement that it will invest $20m in building Alaska’s first 4G LTE network. The $20m investment comes on top of the $12m ACS will spend on building the necessary backhaul infrastructure for network. After losing 12% of its customers in 2010, ACS management is committing to grow its wireless business.
Any guesses as to where ceo Anand Vadapalli focused his comments on ACS' second quarter results? If you picked residential wireline customers, you’d be wrong.
"With sales and retention efforts (for wireless) showing results during the quarter, we also launched tiered data plans repositioning our postpaid offering, and completely refreshed our prepaid plans. With our announcement to build a 4G LTE wireless network in Alaska, we build on our track record of providing advanced and differentiated wireless service for Alaskans," said Vadapalli, adding “We remain focused on driving top line growth for our Enterprise business.”
Frequently, companies will force you to read between the lines with regards to performance, outlook or corporate strategy, but ACS did not pull any punches while discussing its 2Q11 results. There was no half-hearted praise for its traditional wireline segment, and no question about the provider’s future. It’s doubling down on wireless and growing its enterprise business—straight and simple.