Hawaiian Telcom Holdco Inc. reported Tuesday that company profits fell 77 percent in the second quarter from the year prior due to significant investments in the company’s broadband network.
Net income for the second quarter was $500,000, or 4 cents per share, down from $2.2 million, or 20 cents per share, in the second quarter of 2014.
Revenue for the utility was $96.2 million for the second quarter, down from $96.8 million in the second quarter the year prior. The company had a 9.6 percent drop in its landline business from a year earlier.
Hawaiian Telcom’s lower earnings due to investment in its broadband network were anticipated as the company works to transform to a TV, Internet, data center and cloud-based services business from its legacy business as the state’s largest phone company. Hawaiian Telcom’s capital expenditures for the second quarter totaled $23.7 million, with more than 90 percent being invested in its fiber- optic network expansion.
“We are confident in our ability to continue to execute on our strategic plan and fully committed to increasing long-term value for our shareholders,” said Scott Barber, Hawaiian Telcom’s president and CEO.
Driven by increasing customer demand for higher bandwidth services, next-generation services now represent 31 percent of the business revenue, up 2 percentage points from the same period a year ago, Hawaiian Telcom said in a news release.
The company saw consumer revenue growth with its Hawaiian Telcom TV and high-speed Internet services, the utility said. Consumer revenue increased 4.2 percent year-over-year to $37.9 million.
The growth was driven by an increase in video and high-speed Internet revenue.
“Our second-quarter operating fundamentals are strong, laying a firm foundation for future revenue growth,” Barber said. “We continued to see industry leading growth in our consumer channel with healthy demand for our Hawaiian Telcom TV and high-speed Internet services, now up to 1 Gig, made possible by our next-generation fiber optic network.”
The utility added more than 2,200 subscribers to Hawaiian Telcom TV during the quarter. The company has a total of 31,900 subscribers.
Hawaiian Telcom is gradually adding to the neighborhoods where its TV service is available for purchase. The service was offered to 175,000 homes on Oahu, for an increase of 9,000 households in the second quarter.
