Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Welcome to Manitoba Telecom Services Inc. 2003 third quarter results conference call.
I would now like to turn the meeting over to Mr. Brad Woods, Director of Investor Relations of MTS. Please go ahead, Mr. Woods.
BRAD WOODS, DIRECTOR, INVESTOR RELATIONS, MANITOBA TELECOM SERVICES INC: Thank you operator. Good afternoon everyone and thank you for joining us. Earlier today MTS issued the third quarter results and announced the fourth quarter dividend, which has been set at 25 cents per share. Bill Fraser, President and CEO and Wayne Demkey, Executive Vice President, Finance and CFO are on our call today. Cheryl Barker, President and COO of MTS Communications is also here today to participate in the question and answer session.
The content of today's call may contain forward-looking statements and there are risks that actual results may differ materially from those contemplated by these forward-looking statements. For additional information on these risks, please consult MTS' filings with the Canadian Securities Commission. I now turn the call over the Bill.
BILL FRASER, PRESIDENT AND CEO, MANITOBA TELECOM SERVICES INC: Thanks Brad and good afternoon everyone. I am going to briefly comment on our progress to date in 2003 and then Wayne will provide details on the financial results. The business is delivering very solid profitable performance given the current market environment. Highlights from the quarter include continued strong growth from the wireless and Internet segments MTS TV has performing extremely well in fact exceeding our expectations.
And the traditional operations the foundation of our business continued to provide strength and stability. Our performances reflected our strategies. Strategies that focus on leveraging our confidence season in the core operations.
Its an approach we have always championed in one which we fully expect to continue. The results reflect a strength and resiliency of our operations in Manitoba. We consistently lead in our chosen markets. Our local market share is 98%, long distance is 75%, wireless is at 68% and our combined Internet is a solid 57%. Within the Internet our share of the high speed market has grown to approximately 48% nearly half of the total market and that's up from 42% at the beginning of this year.
Looking at the higher growth areas of the business wireless revenues increased by 17% in the third quarter and year to date Internet revenues increased by 23% in the quarter and by 26% year to date.
We are very pleased with these results and in particular with the success we are achieving in the Internet segment. Building on our broadband infrastructure investment we launched MTS TV in January of this year. The numbers speak for themselves.
At September 30, our subscriber count was 5800. Early on October we pushed through our original year-end target of 6000 and currently we are at 7100 and now expect to exceed 8000 customers by year end.
TV represents an incremental service offering using our broad band net work investment and leverages our market position, brand recognition customer care and back office capabilities. It provide us with the compelling customer proposition that includes telephony, high speed internet and TV. This together with the MTS high levels of customer service positions us well for continued success in the market place. We also announced earlier this month in MTS TV and Internet high-speed bundle. It's all about increasing revenues and reducing trend.
One stop shopping it satisfies all of our customer communications needs and it will not only increase revenues but also contribute to customer retention.
On the broader strategic issues of the Bell West put the use of its proceeds and potential conversion to an income trust, our position remains consistent with what we discussed that in our investors forum last month. And there is nothing new to report on this front.
The value of the Bell West put continues to grow as we approach February 2004; the decision to exercise remains premised on the economics. With this personal and the proceeds consist with the over all approach to actualization and the income trust operation continues to be under review. However, dealing with the put remains our first priority.
To conclude MTS as extremely well positioned to continue to deliver excellent value. The Manitoba operations are performing very well to a period of software market conditions. Our strategies for expanding the business are focused on areas we know well and the success been achieved in the wireless high speed Internet and TV sectors speaks for that focus. All over which is the (inaudible) ensuring the on going delivery of strong earnings and cash flow for our shareholders. Thank you and I will now turn the call over to Wayne.
WAYNE DEMKEY, EVP AND CFO, MANITOBA TELECOM SERVICES INC: Thank Bill and good afternoon everyone. Through the first nine-months of the year, the base line operations have continued to deliver profitable growth with EBITDA and earnings per share increasing by 3% and 5.2% respectively. Revenues are up by 1.4% on a year-to-date basis.
In the third quarter, earnings per share increased by 6.7% to 48 cents and EBITDA grew by 2.5% to $115 million. Revenues in the third quarter increased to $212.1 million with particularly strong performance coming from the wireless and the Internet segments partly offset by lower long distance revenues.
Wireless revenues grew by 16.9% to $42.8 million on continuing strong demand. Our customer base increased year-over-year by approximately 10%. Average monthly revenue for subscriber was also a positive for the quarter. At $55.63, it was up by 7.4% from a year earlier. This improvement in art group is due to the increased usage driven by value added features and for select pricing adjustments.
Overall, MTS's art group continues to rank as one of the best in the industry. This together with the year-to-date post-paid churn of only 1.1% and a leading market share of 68% combines to make for tremendous wireless franchise in Manitoba. We also had a great third quarter in the Internet segment.
Revenues were $11.2 million representing a year-over-year increase of 23.1%. Demand slides features continue to be very strong. The consumer customer base is growing to over 72,000 representing a 35.3% increase over last year. This place is such an excellent position our year-end target of 76,000 consumer customers as we head into the holiday season.
Kenar our e-business division had revenues of $4.3 million in the quarter, which compares with $4.7 million in the third quarter of 2002. Customers spending on IT related activity remains somewhat slow and is impacting on Kenar's results.
We have and continue to take the necessary actions that are within our control to position Kenar for the rebound in demand for concerns of our product portfolio and on the cost side. Through these actions, we have improved Kenar's EBITDA profile and anticipate continuing improvements going forward. The traditional operations including vocal, long distance and directory collectively were $146.4 million in the quarter and $446.9 million year-to-date down 4.9% and 2.9% respectively. Contributing to this decline is decreased long distance revenues.
In the third quarter, demand for MTS's cross-border wholesale long distance services decreased contributing to lower year-over-year long distance revenues. This wholesale long-distance traffic was lower large in business and as such the impact on EBITDA was …