Investors felt a little chill in the market last week as the S&P index surrendered almost 5%, but Alaska Communications (Nasdaq: ALSK) did its part to help warm things up with its second-quarter results. The company reported continued progress in expanding wireless and broadband services in the 49th state, growing revenue and operating income as well.
Revenue increased 9.6% to $93.2 million year over year, while net income was $7.1 million, down from the $13.5 million reported last year. When $8.7 million of one-time gains in 2006 are factored out, however, net income actually rose significantly on higher operating income of $14.4 million.
As with other integrated telecom carriers, wireless service is a key asset to Alaska Communication Systems (ACS). The company increased its subscriber base 3.2% to 142,000. Churn remained stable at 1.4%, while average revenue per user (ARPU) increased 9% to $61.62 as more customers made use of third-generation broadband wireless features. More than 20% of ACS' customers have data plans, and use of these features contributed to 5% of the total ARPU.
The improvements in wireless metrics from ACS compare favorably against those from other carriers in the U.S., such as Sprint Nextel (NYSE: S), with its strong ARPU, and Verizon Wireless -- a joint venture of Verizon Communications (NYSE: VZ) and Vodafone (NYSE: VOD) -- which sports an industry-low churn rate. The company also captured $4.5 million in roaming revenue from users coming in from the lower 48 states, which is up 22.8% from last year.
On the wireline side of ACS' business, the company grew revenue by 3% to $59.9 million. Even though the number of access lines dropped 2.7%, the loss was partly made up for by a 27% increase in Internet revenue, mostly coming from new enterprise customers. Upselling other wireline services also helped ACS limit the bleeding in traditional telephony services.
ACS will face a new challenge in the Alaskan market next year, however -- one that may provide formidable competition. If AT&T (NYSE: T) is able to close on its purchase of Dobson Communications (Nasdaq: DCEL), the AT&T brand will take over ACS' main competitor, Cellular One. ACS management believes the company has the edge in terms of service features and quality, but AT&T could be more of a threat if the company pumps significant investment into the area.
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Fool contributor Dave Mock is so cool he's hot, and so hot he's cool. He owns no shares of companies mentioned here. He is the author of
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