Hawaiian Telcom narrows its loss
The company is dealing with billing problems
Hawaiian Telcom continued to struggle in the third quarter of this year as operating expenses outpaced revenue, but the company managed to narrow its net loss over the same period last year.
Michael Ruley, Hawaiian Telcom's CEO, said the third quarter was a challenging one for the company on several fronts, and that a lot of hard work remains in smoothing out "cutover related systems issues."
Among the problems the telecommunications company faced during the quarter were slow customer service and billing system errors.
Ruley said the company has brought in external resources to help meet the needs of customers, as well as to improve systems and strengthen internal controls.
"Resolving these matters is the company's No. 1 near-term priority," Ruley said.
Operating expenses in the quarter ending in Sept. 30 increased to $154.7 million this year, versus $150.7 million the previous year. Earnings before interest, taxes, depreciation and amortization declined to $48.6 million compared to $50.2 million recorded in the second quarter of 2006.
Net losses were at $43.9 million in the third quarter of this year compared to $59 million in the third quarter of last year. In the second quarter, they were $32.2 million.
The company posted third-quarter operating revenues of $141.7 million, up 17.3 percent from $120.8 million a year earlier, but that increase was mainly due to the deferral of revenue from its directories business last year. Otherwise, operating revenues would have been 3.2 percent less than a year earlier.
Transitional costs in the third quarter amounted to $3.4 million, compared to $6.6 million in the second quarter, Hawaiian Telcom's first as a standalone company.
The Carlyle Group of Washington, D.C., acquired Verizon Communications' Hawaii assets in May 2005 for $1.6 billion, and changed the company name from Verizon Hawaii to Hawaiian Telcom.
While the number of customer land lines declined in the third quarter to 615,300 -- down 1.8 percent compared to the second quarter -- high-speed Internet connections were up 3.4 percent, for a total of 92,300.
In 2002, the company had 738,900 land-line subscribers.
Last quarter's earnings did not include the blackouts triggered by the Oct. 15 Big Island earthquakes. The company's land lines and basic corded phones continued to function during the blackouts because of Hawaiian Telcom's backup electricity system.