The company said much of the improvement came in the final quarter of 1996, the result of an 8 percent increase in basic telephone rates, which was approved by the state Public Utilities Commission. The increase was on Sept. 1.
The company, a subsidiary of GTE Corp., disclosed its financial results in a report filed electronically with the Securities & Exchange Commission. The filing was posted today on the SEC Internet site.
Hawaiian Tel spokesman Dan Smith said there was a spike in profit but all it did was bring the company to a more reasonable rate of return on its investment.
"Over the last few years, the return on our investment has been very low. In spite of that, we've continued to invest $140 to $150 million a year in the network," Smith said. He said the company has invested more than $1 billion in its network in the last 10 years.
Charles Totto, the state consumer advocate, said his office will study the numbers. "We are going to take a look at the figures to see that they don't over-earn," Totto said.
"Despite what Hawaiian Tel says about competition, there really is very limited competition in any local service -- none yet in local basic exchange service and very little even in interisland long distance," he said.
On paper, the company did not report a profit for 1995, because recalculations for an accounting change resulted in a $225.5 million net loss for that year. The $37.9 million profit for 1995 was calculated by putting aside that non-cash amount and counting only the company's actual business functions.
From operations alone, GTE Hawaiian Tel had a 27.5 percent profit increase, to $116.8 million in 1996 from $91.6 million in 1995.
Total 1996 revenues of $634.9 million were up 3.8 percent from revenues of $611.8 million in 1995.
The company's biggest increase in sales was in providing connections between Hawaiian Tel's system and those of long-distance companies. The financial report shows sales of $148.6 million last year in that business, up 10.4 percent from $134.6 million in 1995.
Local services, such as basic household and business telephone services, still provided the biggest part of the telephone company's revenues, $247.6 million in 1996, an increase of 4.3 percent from local services of $237.5 million sold in 1995. Included in that increase was about $6 million from PUC-approved higher rates.
Continued competition cut into the company's domestic long-distance business, helping to reduce toll-service revenues by $7.5 million, or 7.8 percent, to $88.8 million last year from $96.3 million in 1995. Some $1.7 million of the dip in toll-service revenues came from lower international calling business.
Total operating costs and expenses were down slightly at $518.1 million last year, a trim of $2 million from $520.1 million in 1995.