Shares of Alaska Communications Systems (Nasdaq: ALSK) shot up close to 20% the morning after the company released its fourth-quarter earnings. Top-line and bottom-line results both improved on the same period last year: Revenue is up 3.2%, and net income is up 277%. Earnings per share, at $0.05, was $0.02 a share lower than the analysts polled by Bloomberg Businessweek estimated. For the year, revenue increased by 2.3% to $349.3 million. EPS for 2011 was $0.10, compared to 2009's loss of $0.39 a share.

Winning segments for the year for ACS were wireless, up 6.8%, and enterprise, up 7.5%. Wireline, as a whole, was a sea anchor holding back the company's growth, with revenue declining 3.5% year-to-year.

However, new CEO Anand Vadapalli said in the quarterly conference call, "Even though there are secular declines in voice traffic, the double-digit growth in data consumption is driving growth in the Alaska market." This was an area on which he said the company had unfortunately not spent enough effort in the past. But getting a bigger slice of the wireline broadband pie is shortsighted. "To walk away from that market is a little bit of throwing the baby out with the bathwater," he said.

Looking ahead, the company has several threats. First, Verizon's (NYSE: VZ) upcoming entry into the Alaskan market will pose two problems. Besides adding a fourth company competing for the 710,000 residents -- AT&T (NYSE: T) and General Communication (Nasdaq: GNCMA) are already in place --Verizon has been contributing roaming fees to ACS's revenue intake. Since Verizon is expected to enter the market at the end of the year, those fees are likely to disappear.

Then there is the regulatory change that will be reducing the funds the company -- as well as the other Alaskan telecoms -- has been getting from the federal government to help defray the costs of serving a widely dispersed rural population.

The Verizon fees and the federal subsidy combined provided ACS with $84 million, 24% of the company's 2011 revenues.

And, finally, there is the effect that the company's recent drastic dividend-cutting will have on investors grown accustomed to a high yield. As Vadapalli said on the call, "We've traditionally operated with high leverage and dividend payout ratios which constrain our ability to manage a period of transition."

The company plans on using its cash to spend between $55 million and $60 million on capital expenditures in 2012. That includes $15 million to $20 million toward its 4G LTE network, the first such network to come to Alaska. So I wouldn't hold my breath waiting for the dividend to jump 300% to its previous level.

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