Hawaiian Telcom’s net income falls amid network costs

Hawaiian Telcom Holdco Inc. said Monday that net income for the first quarter was $1 million, down 59 percent from the prior year as the company continued to invest in a broadband network.

"We’ve really transformed this company from the phone company to Hawaii’s technology leader," said Hawaiian Telcom CEO Eric Yeaman. "We’ve gone from selling phone services to selling high-bandwidth data services, broadband services, TV service, managed services, co-location data center services and a bunch of cloud offerings."

The company earned 9 cents per share compared with 21 cents per share in the year-earlier period, when it made $2.4 million. The lower earnings were primarily due to investments in the company’s broadband network and a trans-Pacific cable.

Revenue for the company was $97.1 million for the quarter, consistent with the same period a year ago.

"Our investment is about 25 percent of our revenue," Yeaman said. "We’ve been investing more than any company in our industry. We’ve been doing it because we believe it is going to drive growth, but we also believe it is the right thing to do for Hawaii."

The company added 6,000 homes that are capable of receiving Hawaiian Telcom’s broadband services for a total of 166,000 homes enabled on Oahu.

Hawaiian Telcom reported an increase of 1,600 Hawaiian Telcom TV subscribers during the first quarter with a subscriber base of approximately 29,700 for its TV service.

Consumer revenue for the first quarter totaled $37.5 million, up 4.8 percent year-over-year due to revenue growth from Hawaiian Telcom TV and high-speed Internet services.

The revenue growth in video and HSI services offset the year-over-year decline in revenue of the company’s landline phone services. Landline use declined 1.6 percent in the quarter as Hawaiian Telcom lost 5,745 lines.

As the company continues to upgrade its network, it will spend an estimated $90 million per year to bring fiber to homes, commercial buildings and the cell sites in Hawaii, Yeaman said.

"We’ll be spending 90 million a year on our network here on Oahu and on the neighbor islands," he said.

Hawaiian Telcom expects to continue this large-scale network investment on Oahu for the next two years, Yeaman said.

"We believe we’re doing the right thing for Hawaiian Telcom and our community," Yeaman said. "Every wireless mobile call or data transaction actually goes through a wired network, and in Hawaii that wired network is our wired network."

To help expand the fiber network, the company was awarded approximately $4 million per year from the Federal Communications Commission to expand its broadband network on neighbor islands over the next five to six years.

In August, Hawaiian Telcom pledged to invest $25 million over the multiyear construction period for fractional ownership of a trans-Pacific submarine cable system that would link Hawaii, Indonesia, the Philippines, Guam and Cali­for­nia by the end of 2016.

The cable would help increase Hawaii’s bandwidth and would be completely paid for after three years, Yeaman said.