There Was Nothing Cold About General Communication, Inc. This Quarter

You'll need mobile coverage on the Alaskan tundra, too. Source: General Communication.

Alaskan telecom General Communication (GNCMA) reported third-quarter results on Wednesday night, sparking a wild market ride in the Thursday session. Here's how it all went down.

GCI results: The raw numbers

Source: SEC filings.

What happened with GCI this quarter?
This company is perhaps best understood as the sum of its parts. So let's have a closer look at GCI, segment by segment.

• The wireless segment was not the only strong performer in GCI's third quarter. Consumer wireline sales increased 21% thanks to customers acquired in last year's AWS transaction, plus strong interest in high-speed broadband services.
• Moreover, managed broadband revenues jumped 20% higher as business-grade customers in rural Alaska also responded to GCI's high-speed data investments.
• But it wasn't all wine and roses. A sharp decline in business-class video services led to 13% lower sales of business-grade wireline services.
• On the upside, political ad spending should reverse that trend in 2016, because that's where those incoming dollars will be accounted for.

GCI offered a brief update of its existing full-year guidance targets.

• In general, the guidance ranges didn't move. Revenues are still expected to land between $920 million and $970 million, and adjusted EBITDA profits should stop between $310 million and $335 million.
• Management now expects to hit the high end of these guidance ranges, not somewhere near the midpoint as before.

What management had to say
The Alaskan telecom runs its own wireless phone and data network services, but the majority of its wireless revenues actually come from reselling these services to the big nationwide carriers. GCI CEO Ron Duncan is pleased with this arrangement:

"We are pleased with our strong quarter led by roaming and backhaul revenues of $45 million," Duncan said in a press statement. "We have been working with our largest carrier customers to offer them a competitive alternative that will reduce their rates, eliminate the seasonality in our revenues, and retain significant traffic on our network. If we're successful, we will have the majority of our roaming traffic on long-term contracts but cash receipts from roaming and backhaul could decrease by approximately 20 percent for 2016 as compared to 2015."

In fact, roaming and backhaul sales provided the only real year-over-year growth in GCI's wireless portfolio this quarter.

Looking ahead
GCI shares have now gained a market-stomping 78% over the last year. The stock took a 2% step back on Thursday as investors digested this report, but only after reaching an all-time high in the early intraday action.

Interestingly, GCI gained a lot of fresh business when it bought out the AWS joint venture, but the seller was hardly crippled by the lost operations. There seems to be plenty of room for a couple of strong telecom options in the icy North.

The mild, but clearly optimistic, guidance update points to more good news in the next quarter, and then we'll see how 2016 shapes up. If nothing else, that political ad-spending boost should keep this stock interesting.