GTE Hawaiian Tel
doubles profit

The main reason for the increase
is higher rates, the company says

By Russ Lynch
Star-Bulletin

GTE Hawaiian Tel more than doubled its first-quarter profit this year over the year-earlier quarter because of higher rates, increased sales and tight cost control, the company says.

The company had a profit of $11.7 million for the three months that ended March 31, compared to a profit of $5.5 million for the 1996 quarter. Revenues were up 6.3 percent at $149.9 million for the latest three months, compared to $141 million in the year-earlier period.

The results were disclosed in a filing with the Securities & Exchange Commission. GTE Hawaiian Tel is a wholly owned subsidiary of GTE Corp. but files its own separate earnings reports.

Much of the telephone company's financial improvement came because of a Public Utilities Commission-approved increase in local telephone rates, which went up 8 percent last fall and another 2 percent in late February.

"The key reason of course is the rate case that was approved and that was the first rate increase in 10 years," said a company spokesman, Dan Smith.

Even with the higher profit the company still is well short of the PUC-approved rate of return on its investment, Smith said. "It is a significant increase (in profit) but it is an increase from a very low rate of return in previous years."

Smith said better returns help the company get lower interest rates when it borrows and that in turn allows it to invest more in plant and equipment. GTE Hawaiian Tel has about $2 billion invested in Hawaii, he said.

Charles Totto, state consumer advocate, said his office is still looking over the numbers but hasn't seen anything out of line. "We don't have any information yet to see if they're making more than their authorized rate of return," Totto said.

Revenues from local services, which provided 45 percent of the company's revenues in the latest quarter, were up 12 percent at $67.8 million $60.5 million a year earlier.

A large amount of that increase was from the higher rates but sales were also helped by added income from custom calling features such as its SmartCall service, the company said.

GTE Hawaiian Tel said its total first-quarter expenses were unchanged from last year at $122.4 million.