MTS Profit Up 58%

by Gaurav Kheterpal on May 5, 2011

Manitoba Telecom Services Inc. yesterday reported a 58% increase in profit for the first quarter of fiscal 2011. Net earnings for the quarter jumped to $43.4 million, or 67 cents a share, from $27.4 million, or 42 cents a share, a year earlier. Overall revenue fell marginally from $439.3 million from $442 million.

In February, the carrier’s average revenue per user (ARPU) was $58.42 for Q4 2010, driven by 50.4 per cent growth in wireless data revenues. The ARPU fell marginally to reach $56.73 in the first quarter of 2011, courtesy 40.5 per cent growth in wireless data revenues.

MTS has been pitching hard to the majority Conservative government in Ottawa to act quickly to ease foreign ownership restrictions on the Canadian telecom industry. MTS CEO Pierre Blouin says such a move will help new entrants to raise more money and form strategic partnerships to help improve network performance. He believes there’s a strong need to allow international players in the market to bring more competition, more innovation to the country.

Blouin says his company is focused on driving growth in wireless, IP television, broadband and IP-based services. ARPU increased by 3.6% from $54.76 in the same period of 2010, thereby leading to higher wireless data services revenues, partly offset by lower network charges resulting from the removal of system access fees on new plans. The increased number of subscriber additions was largely due to the launch of its 4G wireless network and the iPhone 4.

All in all, its been a solid quarter for the Winnipeg-based telecommunications firm as both its divisions – MTS and MTS Allstream divisions reported strong financial performances. Allstream earnings climbed by 14.7%, or $16 million, and its converged IP revenue increased by 7.9%. Blouin, though, believes the MTS division is of higher importance than Allstream given its greater contribution to profitability. In February, MTS Allstream announced it will cut costs by up to $35 million in 2011 but ruled out any job cuts. Allstream isn’t expected to report a positive growth until next year.

MTS wireless revenues shot up by 9.7% to $84 million and IPTV revenue went up by 7.2% to $47.7 million. The carrier managed to reduce its landline losses to 5.9 percent and witnessed a 6.1 percent rise in bundled service customers.

Whether MTS can sustain this impressive growth rate across the next couple of quarters remains to be seen.

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Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.comby: RSS,TwitterFacebook, or YouTube.

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