Learn more about MTS Allstream's 2012 results by visiting the "Investors" section of our website at www.mtsallstream.com.
Stock symbol: MBT
WINNIPEG, Feb. 13, 2013 /CNW/ - Manitoba Telecom Services Inc.
("the Company" or "MTS Allstream"), including its two primary operating
subsidiaries, MTS Inc. ("MTS") and Allstream Inc. ("Allstream"), today
reported fourth-quarter and full-year results. MTS Allstream met 2012
financial guidance on all metrics and its 2013 financial guidance
demonstrates continued progress.
Highlights
- MTS Allstream
- Consolidated EBITDA up 2.5% to $609.5 million
- EPS up 3.1% to $2.63
- Annual cost reduction target reached, with $33.6 million in cost savings
- Prefunded $70 million into MTS pension plan
- Board of Directors declares $0.425 per share Q1 2013 cash dividend
- MTS
- Wireless data revenues up 29.7%
- Wireless data ARPU up 28.9%
- IPTV revenues up 11.2%
- IPTV ARPU up 7.3%
- High-speed Internet revenues up 8.4%
- High-speed Internet ARPU up 8.0%
- Allstream
- Ninth consecutive quarter of year-over-year EBITDA growth
- Increased EBITDA margin to 15.2%
- Best-ever quarter for IP sales wins, including $55-million contract to
provide IP services to Shared Services Canada
- Outlook
- Continued strength at MTS and Allstream
- Significant increase in free cash flow expected from EBITDA growth and
lower capital expenditures
"MTS Allstream continued to advance its strategy and market position in
2012 by launching the first and only 4G LTE wireless network in
Manitoba, extending Allstream's national fibre network to another 335
buildings, and achieving our annual cost reduction target for the
eighth consecutive year," said Pierre Blouin, Chief Executive Officer.
"We are proud of what we have accomplished and the value we are
creating for shareholders. With increasing EBITDA and EPS, nine
quarters in a row of profitability improvement at Allstream and several
strategic projects completed, we expect to deliver continued
performance gains and increased free cash flow in 2013."
MTS Allstream - annual results
MTS Allstream's increased profits and 2012 performance are the result of
diligent execution and investments the Company has made in recent years
in MTS's wireless and broadband networks in Manitoba, and Allstream's
converged Internet protocol ("IP") network nationally.
Consolidated financial results
|
|
|
|
(in millions $, except earnings per share and capital expenditures) | 2012 results |
2012 outlook
|
2011 results
|
Revenues
| 1,704.1 |
1,675 to 1,775
|
1,765.6
|
EBITDA1 | 609.5 |
590 to 630
|
594.4
|
EPS2 | $2.63 | $2.20 to $2.65 | $2.55 |
Free cash flow3 | 117.6 |
110 to 150
|
129.8
|
Capital expenditures/revenues
| 19.8% |
18% to 20%
|
16.3%
|
1 MTS Allstream defines EBITDA as "earnings before interest, taxes,
depreciation and amortization, and other income (expense)". See the
"Notes" section of this news release for further information.
2 EPS is defined as "earnings per share" and is based on weighted average
shares outstanding of 66.6 million and 65.5 million for the twelve
months ended December 31, 2012 and December 31, 2011, respectively. The
increase in the number of weighted average shares outstanding is mainly
due to participation in the Company's dividend reinvestment program.
3 MTS Allstream defines free cash flow as "cash flows from operating
activities less capital expenditures, and excluding changes in working
capital". See the "Notes" section of this news release for further
information.
- Revenues: $1,704.1 million, down 3.5% in 2012, mostly due to legacy revenue declines, including
$33.3 million in planned legacy reductions at Allstream, partly offset
by strong revenues from most strategic lines of business. Excluding
declines from legacy lines of business, revenue increased by 2.2 % over
2011 on the strength of increased revenues across most strategic lines
of business.
- EBITDA: $609.5 million, up 2.5% in 2012 due to improving margins, particularly at Allstream,
which achieved a $62.4-million decrease in direct costs and an
$11.9-million decrease in operating expenses.
- EPS: $2.63, up 3.1% in 2012, mostly attributable to EBITDA growth and lower income
tax expense.
- Free cash flow: $117.6 million, down 9.4% in 2012, mainly due to higher capital expenditures for
strategic 2012 investments, partly offset by EBITDA growth and lower
pension funding.
- Capital expenditures: $338.0 million, up 17.4% in 2012, mostly due to our investment in Long Term Evolution
("LTE") wireless technology and the favourable one-time $20.7-million
impact of the scientific research and experimental development
investment tax credit recorded in 2011.
- Annual cost savings: $33.6 million, marking the eighth consecutive year in which the Company achieved its
annual cost savings target.
MTS - annual results
MTS produced EBITDA growth of 1.1%, while maintaining a leading EBITDA
margin of 50.5% in 2012. Wireless data, high-speed Internet and IPTV
services generated strong revenue growth, which offset declines in
local, long distance and legacy data revenues. In 2012, MTS increased
the number of customers with bundled services by 8.5%, to 96,503, and
had average revenue per user ("ARPU") growth in all strategic product
lines.
Operating revenues
|
|
|
|
(in millions $) | 2012 |
2011
|
% change
|
Wireless
| 362.1 |
356.3
|
1.6%
|
Broadband and converged IP
| 212.9 |
195.3
|
9.0%
|
Unified communications, security and monitoring
| 36.2 |
35.0
|
3.4%
|
Local access
| 266.5 |
277.3
|
(3.9%)
|
Long distance and legacy data
| 76.1 |
84.1
|
(9.5%)
|
Other
| 26.8 |
28.3
|
(5.3%)
|
Total MTS operating revenues
| 980.6 |
976.3
|
0.4%
|
|
|
|
|
Wireless services
- Wireless revenues: $362.1 million, up 1.6%, driven by a 1.2% increase in year-to-date blended wireless
ARPU, partly offset by a decline in wholesale wireless revenues.
- Wireless data revenues: $116.3 million, up 29.7%, driven by a 28.9% increase in wireless data ARPU.
-
Handset expansion: iPhone 5 on September 28, 2012, Sony Xperia™ T on
November 23, 2012 and Samsung Galaxy S III on December 13, 2012.
-
First to launch LTE technology in Winnipeg and Brandon, on
August 28, 2012.
-
4G LTE/HSPA+ coverage: Over 97% of Manitoba's population - is expected
to drive continued strong demand for wireless data services.
Wireless statistics
|
|
|
|
| 2012 |
2011
|
% change
|
Total wireless subscribers
| 497,367 |
496,432
|
0.2%
|
Post-paid subscribers
| 402,824 |
390,889
|
3.1%
|
Post-paid subscribers with data plans
| 229,478 |
173,837
|
32.0%
|
Wireless ARPU - blended
| $60.35 | $59.66 |
1.2%
|
Wireless data ARPU
| $19.69 | $15.28 |
28.9%
|
Wireless churn - blended
| 1.66% |
1.59%
|
.07 pts
|
|
|
|
|
Internet and IPTV services
- Internet revenues: $110.1 million, up 8.4%, due to a growing subscriber base and higher ARPU.
- IPTV revenues: $78.5 million, up 11.2%, driven by increased ARPU and subscriber growth.
-
In 2012, MTS deployed MTS fibre-to-the-home ("FTTH") in four more
communities: IPTV service is now available to 95% of Winnipeg
households, to 98% of Brandon households, to 94% of Portage La Prairie
households and to a growing number of homes in nine other communities.
-
77% of IPTV customers subscribe to the higher-ARPU Ultimate TV service,
up from 64% in 2011.
Internet and IPTV statistics
|
|
|
|
| 2012 |
2011
|
% change
|
High-speed Internet subscribers
| 193,690 |
189,366
|
2.3%
|
High-speed residential ARPU
| $41.65 | $38.56 |
8.0%
|
Total television customers
| 101,550 |
99,865
|
1.7%
|
Total IPTV subscribers
| 97,232 |
95,476
|
1.8%
|
Ultimate IPTV subscribers
| 75,008 |
60,667
|
23.6%
|
IPTV ARPU
| $66.92 | $62.38 |
7.3%
|
|
|
|
|
Unified communications, security and monitoring
- Unified communications revenues: $23.9 million, up 5.3%, due to increased equipment sales.
- Security and monitoring revenues: $12.3 million, in line with the prior year.
Local access, legacy data and long distance services
- Local access revenues: $266.5 million, down 3.9%, mainly due to price changes on features and to line losses
from wireless substitution and some local competition.
- Long distance revenues: $44.4 million, down 11.4%, mainly due to customers replacing long distance calling
with email, text messaging and social networking.
- Legacy data revenues: $31.7 million, down 6.8%, mainly due to a decrease in wholesale data services.
Allstream - annual results
Allstream's performance in 2012 demonstrated continued progress on its
strategic objective to drive growth in on-net IP-based services and
improve profitability, as demonstrated by nine consecutive quarters of
year-over-year EBITDA growth and a $6.8-million increase in EBITDA as
compared to 2011. Allstream revenue for the year reflected a 1.6%
increase in high-margin on-net IP revenues, which was offset by legacy
revenue declines. The continuing focus on on-net services improved
gross margins to 59.5% in 2012 and, along with diligent cost
management, contributed to strong overall EBITDA growth.
Operating revenues
|
|
|
|
(in millions $) | 2012 |
2011
|
% change
|
Converged IP
| 243.6 |
239.8
|
1.6%
|
Unified communications, hosting and security
| 78.3 |
86.7
|
(9.7%)
|
Local access
| 179.7 |
196.6
|
(8.6%)
|
Long distance and legacy data
| 186.0 |
210.9
|
(11.8%)
|
Other
| 70.6 |
91.7
|
(23.0%)
|
Total Allstream operating revenues
| 758.2 |
825.7
|
(8.2%)
|
|
|
|
|
Converged IP
- Converged IP revenues: $243.6 million, up 1.6%.
-
Allstream's converged IP revenue growth continues to be partially offset
by an increase in disconnects related to a decision by a Government of
Ontario department to change its procurement policy on
telecommunications services for individual doctors' offices and
clinics. Excluding the impact of this contract, converged IP revenues would have grown 6.5% in 2012.
-
Converged IP gross margins: 73.5%, up from 71.3% in 2011.
-
335 buildings added to national IP fibre network - totalling 2,723
fibre-fed buildings at December 31, 2012, for an increase of 14.0% over
2011.
-
IP sales for the year were up 15.8% over the prior year with significant
contract wins with Shared Services Canada and Loblaw Companies Ltd.
Unified communications, hosting and security
- Unified communications, hosting and security revenues: $78.3 million, down 9.7%, due to decreases in one-time product sales and management's
shift away from stand-alone low-margin security product sales, partly
offset by a 5.1% increase in hosting revenue.
Legacy services
- Local access revenues: $179.7 million, down 8.6%, due to Allstream's decision to accelerate its exit of
low-margin wholesale resold business lines.
- Long distance revenues: $91.8 million, down 14.0%, mainly due to decreased volumes and lower rates.
- Legacy data revenues: $94.2 million, down 9.6%, reflecting customers' continued transition to broadband and
other IP-based services.
Corporate update
The strategic review process announced on September 13, 2012 is ongoing.
As previously stated, the Company does not intend to disclose any
developments with respect to this strategic review process until such
time as the Board of Directors approves a particular course of action
or otherwise determines that further disclosure is appropriate or
required. There is no assurance or expectation that any changes will be
made as a result of this process.
Pension funding
As the strategic review in ongoing, the Company prefunded $70 million
into the MTS pension plan from short-term debt. Allstream pension
solvency requirements will continue to be funded from letters of
credit. As a result, we expect no further impact on free cash flow in
2013.
Dividend
The Company's Board of Directors declared a quarterly cash dividend of
$0.425 per share for the first quarter of 2013, payable on
April 15, 2013 to shareholders of record at the close of business on
March 15, 2013.
The first-quarter dividend is designated an "eligible" dividend under
the Income Tax Act (Canada) and any corresponding provincial legislation. Under this
legislation, individuals resident in Canada may be entitled to enhanced
dividend tax credits that reduce income tax otherwise payable.
2013 Outlook
MTS Allstream's 2013 financial guidance reflects continued improvement
on its strategic objectives. MTS Allstream expects to deliver
significant increases in free cash flow and growth across the Company's
strategic product lines in 2013. The company's financial guidance for
2013 is as follows:
2013 financial outlook
|
|
|
|
|
(in millions $, except earnings per share and capital expenditures) | 2013 outlook |
2012 adjusted results1 |
2012 results
|
2012 outlook
|
Revenues
| 1,630 to 1,730 |
1,704.1
|
1,704.1
|
1,675 to 1,775
|
EBITDA
| 590 to 630 |
585.1
|
609.5
|
590 to 630
|
EPS
| $1.75 to $2.15 | $2.19 | $2.63 | $2.20 to $2.65 |
Capital expenditures/revenues
| 17% to 19% |
19.8%
|
19.8%
|
18% to 20%
|
Free cash flow2 | 160 to 200 |
117.6
|
117.6
|
110 to 150
|
1 The non-cash impact of International Accounting Standard ("IAS") 19 on
reporting of defined-benefit pension plans as described in our 2012
MD&A, in note 4 of our 2012 consolidated financial statements, and with
quarterly adjustments in our supplementary information package.
2 Free cash flow excludes the $70 million prefunded MTS pension solvency
payment. Allstream's 2013 pension solvency funding requirement will be
met using letters of credit.
MTS Allstream expects consolidated revenues in 2013 to be slightly lower
than 2012, as revenue growth from strategic services such as wireless,
broadband and converged IP will not fully offset the expected and
planned reductions in legacy services.
EBITDA growth in 2013 will come from a combinaton of cost savings
achieved during the prior year and gross margin improvement. The
Company plans additional cost reductions in 2013 in the range of
$30 million to $40 million, having achieved $33.6 million in cost
savings in 2012.
MTS Allstream is anticipating 2013 EPS to be lower than that in 2012 as
the favourable impact of EBITDA improvements will be more than offset
by higher fixed asset amortization. For comparison purposes, 2012 EPS
included $0.15 for a non-cash tax rate adjustment. When normalized for
this tax impact and the effect of IAS 19 changes, 2012 EPS would have
been $2.04.
Total capital spending is expected to be lower in 2013 compared to 2012,
due to the completion of several significant capital projects, such as
the 4G LTE wireless network launch and improvements to billing systems.
The Company's 2013 capital program includes FTTH deployment to three
more Manitoba communities and Allstream's success-based IP fibre
expansion nationally.
The expected significant increase in 2013 free cash flow over the prior
year can be attributed to planned EBITDA increases and lower capital
expenditures as noted above.
A discussion of the material risks and assumptions associated with this
outlook can be found in our 2012 annual MD&A.
Investor Day & 2013 Outlook Event
MTS Allstream will hold an Investor Day & 2013 Outlook Event for the
investment community on February 14, 2013 at 8:00 am (Eastern Time) in
Toronto, in lieu of a quarterly results conference call. Investors,
media and the public are invited to participate on a listen-only basis
by dialing 1.888.231.8191 or 1.647.427.7450. A replay will be available
until midnight (Eastern Time) on February 28, 2013, and can be accessed
by dialing 1.855.859.2056 and entering access code 85365835.
There will also be a live audio webcast of the presentation, available
on MTS Allstream's website www.mtsallstream.com or at http://event.on24.com/r.htm?e=582602&s=1&k=7D0BABA15BC1E036CC45BE0DD4C14CD7.
A replay of the audio webcast will be available following the event on www.mtsallstream.com for a period of one year.
Fourth-quarter financial information
MTS Allstream - fourth-quarter results
Consolidated financial results
|
|
|
|
(in millions $, except earnings per share) | Q4 2012 |
Q4 2011
|
% change
|
Revenues
| 413.1 |
439.4
|
(6.0%)
|
EBITDA
| 150.3 |
146.9
|
2.3%
|
EPS1 | $0.55 | $0.56 |
n.a.2 |
Free cash flow
| 37.1 |
18.3
|
102.7%
|
Capital expenditures
| 73.6 |
84.6
|
(13.0%)
|
1 EPS is based on weighted average shares outstanding of 67.0 million and
65.9 million for the three months ended December 31, 2012 and
December 31, 2011, respectively. The increase in the number of weighted
average shares outstanding is mainly due to participation in the
Company's dividend reinvestment program.
2 n.a. is defined as not applicable.
MTS - fourth-quarter results
Operating revenues
|
|
|
|
(in millions $) | Q4 2012 |
Q4 2011
|
% change
|
Wireless
| 89.9 |
92.8
|
(3.1%)
|
Broadband and converged IP
| 53.3 |
50.7
|
5.1%
|
Unified communications, security and monitoring
| 9.2 |
9.5
|
(3.2%)
|
Local access
| 65.4 |
68.6
|
(4.7%)
|
Long distance and legacy data
| 18.9 |
20.5
|
(7.8%)
|
Other
| 6.8 |
7.1
|
(4.2%)
|
Total MTS operating revenues
| 243.5 |
249.2
|
(2.3%)
|
|
|
|
|
Allstream - fourth-quarter results
Operating revenues
|
|
|
|
(in millions $) | Q4 2012 |
Q4 2011
|
% change
|
Converged IP
| 61.0 |
61.1
|
(0.2%)
|
Unified communications, hosting and security
| 18.9 |
20.7
|
(8.7%)
|
Local access
| 41.6 |
48.7
|
(14.6%)
|
Long distance and legacy data
| 44.3 |
48.8
|
(9.2%)
|
Other
| 12.5 |
19.5
|
(35.9%)
|
Total Allstream operating revenues
| 178.3 |
198.8
|
(10.3%)
|
|
|
|
|
-
New customers to be connected to Allstream's 30,000-kilometre IP fibre
network include: Artifex Studios Ltd, Ceratec, Dialogic Corporation,
Ehvert Engineering, Gree Canada Inc, Influitive Corporation,
Keller Williams VIP Realty, Kernaghan Adjusters Ltd,
Novarex Canada Inc, Pulse Energy Inc and The Suburban.
-
Adjusting for the impact of the Government of Ontario contract
reduction, converged IP revenues would have grown 4.9% over Q4 2011.
Notes
(1)
|
MTS Allstream defines EBITDA as "earnings before interest, taxes,
depreciation and amortization, and other income (expense)". The term
"EBITDA", as it relates to 2012 and 2011 results prepared using
International Financial Reporting Standards ("IFRS"), does not have any
standardized meaning according to IFRS. It is therefore unlikely to be
comparable to similar measures presented by other companies.
|
|
|
|
|
|
|
|
(in millions $) | Q4 2012 |
Q4 2011
|
$ change
| 2012 |
2011
|
$ change
|
Operating revenues
| 413.1 |
439.4
|
(26.3)
| 1,704.1 |
1,765.6
|
(61.5)
|
Operating expenses
| (347.3) |
(371.9)
|
24.6
| (1,417.4) |
(1,470.1)
|
52.7
|
Depreciation and amortization
| 84.5 |
79.4
|
5.1
| 322.8 |
298.9
|
23.9
|
EBITDA
| 150.3 |
146.9
|
3.4
| 609.5 |
594.4
|
15.1
|
(2)
|
MTS Allstream defines free cash flow as "cash flows from operating
activities, less capital expenditures and excluding changes in working
capital". Free cash flow is the amount of discretionary cash flow that
the Company has for purchasing additional assets beyond its annual
capital expenditure program, paying dividends, buying back shares
and/or retiring debt. The term "free cash flow", as it relates to 2012
and 2011 results prepared using IFRS, does not have any standardized
meaning according to IFRS. It is therefore unlikely to be comparable to
similar measures presented by other companies.
|
|
|
|
|
|
|
|
(in millions $) | Q4 2012 |
Q4 2011
|
$ change
| 2012 |
2011
|
$ change
|
Cash flows from operating activities
| 102.3 |
126.6
|
(24.3)
| 439.4 |
386.6
|
52.8
|
Changes in non-cash working capital
| 8.4 |
(23.7)
|
32.1
| 16.2 |
31.2
|
(15.0)
|
Capital expenditures
| (73.6) |
(84.6)
|
11.0
| (338.0) |
(288.0)
|
(50.0)
|
Free cash flow for the period
| 37.1 |
18.3
|
18.8
| 117.6 |
129.8
|
(12.2)
|
(3) |
More information can be found in MTS Allstream's 2012 Management's
Discussion and Analysis ("MD&A"), 2012 Financial Statements and 2012
Annual Information Form, which are available in the "Investors" section
of the MTS Allstream website at www.mtsallstream.com and will be available on SEDAR at www.sedar.com.
|
|
|
Supplementary information for the year ended December 31, 2012 is also
available in the "Investors" section of the MTS Allstream website at www.mtsallstream.com.
Forward-looking statements disclaimer
This news release includes forward-looking statements and information
(collectively, "statements") about the Company's corporate direction,
business opportunities, operations, financial objectives and future
financial results and performance that are subject to risks,
uncertainties and assumptions. As a consequence, actual results in the
future may differ materially from any conclusion, forecast or
projection in such forward-looking statements. Therefore,
forward-looking statements should be considered carefully and undue
reliance should not be placed on them. Examples of statements that
constitute forward-looking information may be identified by words such
as "believe", "expect", "project", "should", "anticipate", "could",
"target", "forecast", "intend", "plan", "outlook", "see", "set",
"pending" and other similar terms.
Factors that could cause anticipated opportunities and actual results to
differ materially include, but are not limited to, matters identified
in the "Risks and uncertainties" section and elsewhere in the Company's
2012 MD&A, which is available in the "Investors" section of the
MTS Allstream website at www.mtsallstream.com and on SEDAR at www.sedar.com.
Please note that forward-looking statements reflect Management's
expectations as at February 13, 2013. The Company disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by law. This news release and the
financial information contained herein have been reviewed by the
Company's Audit Committee and approved by the Company's
Board of Directors.
Manitoba Telecom Services Inc. (MTS Allstream)
MTS Allstream is one of Canada's leading national communication
solutions companies, providing innovative communications for the way
Canadians live and work today. The Company has more than 100 years of
experience, with 5,500 employees across Canada. MTS Allstream's
business is dynamic and consists of two operating divisions. In
Manitoba, MTS is the leading full-service telecommunications provider
for residential and business customers. MTS's suite of services
includes the latest in wireless technology, broadband services, IPTV,
voice services, home security and an extensive range of business
solutions. Across Canada, Allstream is a leader in IP communications
and the only national provider that focuses exclusively on the business
telecommunications market. MTS Allstream has nearly two million
customer connections, spanning business customers across Canada and
residential consumers throughout the province of Manitoba. The
Company's extensive national fibre optic network spans more than 30,000
kilometres. MTS Allstream has spent 11 consecutive years on the Jantzi
Social Index for leadership in social responsibility, and is the
recipient of the 2011 Governance Gavel Award from the Canadian
Coalition of Good Governance, recognizing clear and effective public
disclosure and leading governance practices. MTS Allstream's common
shares are listed on the TSX (trading symbol: MBT). Customers,
stakeholders and investors who want to learn more about MTS Allstream
are encouraged to visit www.mtsallstream.com. For more information about MTS's products and services, please visit www.mts.ca. For more information about Allstream's products and services, please
visit www.allstream.com.
SOURCE: MTS Allstream
<p> <b>Investors: </b><br/> Paul Peters<br/> Investor Relations<br/> (204) 941-6178<br/> <a href="mailto:investor.relations@mtsallstream.com">investor.relations@mtsallstream.com</a><br/> <br/> <b>Media: </b><br/> Selena Hinds<br/> Corporate Communications<br/> (416) 345-3576 or<br/> (204) 941-8576<br/> <a href="mailto:media.relations@mtsallstream.com">media.relations@mtsallstream.com</a> </p>