General Communication Inc (NASDAQ:GNCMA) Q2 2016 Earnings Conference Call - Final Transcript

Aug 03, 2016 • 02:00 pm ET

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General Communication Inc (NASDAQ:GNCMA) Q2 2016 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good day, and welcome to the GCI Second Quarter 2016 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference call over to Mr. Peter Pounds, GCI's CFO. Please go ahead.

Executive
Peter Pounds

Thank you, Alison and thank you all for joining us today. I'm Pete Pounds, the company's CFO, Ron Duncan, our President and CEO is on the call today, as well as other members of the management team. We will all be available to participate in the question-and-answer session that will follow my initial comments. This conference call is being recorded and will be available for playback. To access the call via net conferencing, log on to our website at www.gci.com and follow the instructions. The webcast will be available for replay for the next two weeks. (Forward-Looking Cautionary Statements)

First, an update on the state of Alaska economy. As we noted last month in the 8-K, the state's failure to enact a workable long-term fiscal plan means that we will be reducing our 2017 capital expenditures by 20% to 25%, as compared to our 2016 budget of $210 million. This implies the capital budget of $158 million to $168 million in 2017. These capital expenditures are still significant and should our state's failure to enact a fiscal plan further slow our economy, we may make further cuts.

Now for some general commentary. We are half way through the year now and our three major capital projects are on track. Our projects to complete a second fiber to the North Slope and to bring our terrestrial network are on track for 2017 completion. We are also making significant progress on our new billings system. Already this year we have shut down three legacy billing systems, which provide near term benefits to our customers and positions us well for our 2018 billings system conversion.

During the quarter, we combined our legacy managed broadband business with business services forming our new GCI business through, which is headed up by SVP, Martin Cary. Martin joined GCI in 1997 and has been instrumental in building our managed broadband business.

On the financial front, revenue of $234 million for the quarter was down $14 million on a year-over-year basis and up $3 million sequentially. The year-over-year declines were primarily due to reductions in wireless ARPU from handset financing and our new roaming and backhaul agreements. This was partially offset by growth in data. Adjusted EBITDA in the quarter was $79 million, down $9 million or 10%, compared with the second quarter of last year, and up $1 million or 1% compared to the prior quarter. The decline from last year is from lower roaming and backhaul revenues due to our long term agreements, in addition to increased SG&A spending on our billings system conversions.

Turning to the wireless segments. The wireless segment posted revenues of $54