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GCI Liberty Muddles Through a Tough Quarter

By Timothy Green – Nov 9, 2018 at 3:34PM

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A weak Alaskan economy and a billing-system change led to slumping revenue and profit.

GCI Liberty (GLIBA) reported its third-quarter results after the market closed on Nov. 8. GCI, the telecommunications provider that accounts for the bulk of GCI Liberty's revenue, suffered from weak sales due to a tough Alaskan economy and a billing-system transition. Here's what investors need to know.

GCI Liberty results: The raw numbers

GCI Liberty is comprised of Alaska telecommunications company GCI as well as interests in a few other businesses. The company was formed earlier this year in a complex transaction, and GCI's results only began to be included in GCI Liberty's results in March. This makes year-over-year comparisons for GCI Liberty meaningless.

Here are the stand-alone results for GCI, which now accounts for essentially all of GCI Liberty's revenue:


Q3 2018

Q3 2017

Year-Over-Year Growth (Decline)


$215.6 million

$222.4 million


Operating income

$4.6 million

$7.9 million


Adjusted OIBDA*

$68.4 million

$72.5 million


Data source: GCI Liberty. *Operating income before depreciation and amortization..

What happened with GCI Liberty this quarter?

  • GCI produced $105.4 million of revenue in its consumer segment and $110.3 million of revenue in its business segment. Those numbers were down 4% and 2%, respectively, from the prior-year period.
  • Within the consumer segment, wireless revenue slumped 10% to $38.6 million, data revenue rose 7% to $39.7 million, video revenue fell 11% to $22.3 million, and voice revenue declined 10% to $4.9 million.
  • The number of consumer wireless lines in service fell 2% year over year to 197,800, while the number of consumer cable modem subscribers was flat.
  • Within the business segment, wireless revenue fell 9% to $24.4 million, data revenue rose 1% to $69.6 million, video revenue jumped 13% to $4.9 million, and voice revenue tumbled 8% to $11.3 million.
  • The number of business wireless lines in service fell 4% year over year to 22,000, while the number of business cable modem subscribers dropped 8% year over year to 9,200.
  • The company blamed the decline in the consumer business on its move to billing in advance from billing in arrears. The decline in the business segment was blamed on a reduction in roaming traffic.
  • Revenue from sources other than GCI totaled $5.1 million, down 7.2% year over year.
  • The fair value of GCI Liberty's public holdings in Charter, Liberty Broadband, and LendingTree was $6.1 billion at the end of the quarter.
Anchorage, Alaska.

Anchorage, Alaska. Image source: Getty Images.

What management had to say

GCI CFO Pete Pounds explained the impact of the billing-system change during the earnings call: "There was a one-time revenue, operating income, and adjusted OIBDA hit of approximately $4 million that we took as we moved from bill in arrears to bill in advance on certain services. We elected not to have the first bill from the new system result in a double bill to our customers."

Pounds also talked about the Alaskan economy: "We continue to see and hear signs of an economy that's going to exit the current recession ... While I don't expect a robust recovery, I do expect us to exit the recession in the next quarter or two."

Looking forward

The Alaskan economy is still causing trouble for GCI, and the billing-system change made the company's results look even worse during the third quarter. The data business was a bright spot, especially on the consumer side, but it wasn't enough to offset declines elsewhere.

Results should improve for GCI now that the billing-system change is in the rearview mirror, but it will likely take a recovery for the Alaskan economy to get the numbers moving in the right direction.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends GCI Liberty. The Motley Fool has a disclosure policy.

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