HawTel continues to chip away at Oceanic’s TV business

Hawaiian Telcom signed up about  2,178 subscribers for its television service in the third quarter, boosting the service’s reach to 15,800 Oahu households as of the end of September, the company reported Tuesday.

Company officials also said the push to lay fiber-optic cable across the island has resulted in about 111,000 homes to date being "enabled" to receive the TV service launched two years ago. Once a neighborhood is enabled, Hawaiian Telcom begins to market the TV service to residents in that area.

State regulators approved Hawaiian Telcom’s license to provide TV service in 2011, clearing the way for it to compete with Oceanic Time Warner, which controls an estimated 94 percent of the roughly 300,000-home cable TV market on Oahu.

Hawaiian Telcom reported the latest numbers for its TV service as part of its third-quarter financial results released Tuesday. The company cited costs associated with developing the fiber-optic network, along with its acquisition of another telecommunications provider, as the main reasons behind a decline in net income during the quarter.

Hawaiian Telcom earned $2.1 million, or 18 cents a share, in the July-through-September period, down from $5.6 million, or 52 cents a share, during the same period a year earlier.

Hawaiian Telcom’s revenue increased to $97.7 million in the third quarter from $96.6 million a year earlier. The increase was driven primarily by revenue from its video and high-speed Internet service that more than offset a decline in equipment and managed-services revenue as well as a decline in land-line and long-distance telephone customers.

"As we’ve pointed out, this highlights how important it is for us to continue to make the necessary investments in broadband network to expand our capabilities and successfully reposition the company for the future," Robert Reich, Hawaiian Telcom’s chief financial officer, said in a conference call with analysts following the release of the earnings report.

"The growth from next-generation services like video and HSI (high-speed Internet) are more than offsetting the industry-wide structural declines in legacy services, and have positioned us to drive future revenue growth," Reich said.

The company had 388,882 residential, business and public land lines at the end of September, down 2.3 percent from 398,048 at the end of September 2012.

The growth in cellphone use in the past decade has cut into traditional land-line business across the country.

Hawaiian Telcom’s predecessor, Verizon Hawaii, had more than 700,000 land-line accounts before it sold the company to the Carlyle Group in 2005.

Hawaiian Telcom shares closed up 3 cents at $27.11 Tuesday on the Nasdaq Global Select Market.

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CORRECTION: Hawaiian Telcom signed up 2,178 subscribers to its television service in the third quarter. An earlier version of this story reported that about 1,500 TV subscribers were added during the quarter.