Alaska Communications Systems Group Inc. (ALSK)
Deutsche Bank Securities 21st Annual Leveraged Finance Conference
October 1, 2013 4:00 PM ET
Anand Vadapalli - President and CEO
Wayne Graham - Chief Financial Officer
Previous Statements by ALSK
» Alaska Communications Systems Group's CEO Discusses Q2 2013 Results - Earnings Call Transcript
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Thank you. Good afternoon. My name is Anand Vadapalli and I serve as the President and CEO of Alaska Communications. Thank you for joining us today. I wasn't sure if this room was open given all the festivities going on in the main ball room there with a lot of speakers and I was actually waiting outside and ended up coming a few minutes late.
Well, as a reminder, I would like to reference our Safe Harbor statement as noted on page two of this deck before I begin my presentation. I’ll pause here for a second.
All right. Moving on to slide three, this is an overview of Q2 2013, the most recent public information that’s available on our performance. There are several metrics on this slide and I would like to focus on a few.
One, the network and people section which is there in the bottom right hand corner there and we will talk more about this. We see our network and our customer service that’s’ delivered by our people as something that’s crucial and a point of differentiation for us in our growth plan.
And, I will go to the top right hand corner which is the financial metrics and the important thing there I would like to point out is the broadband growth. In the first six months of this year, we accomplished about 20% growth in broadband revenues, compared to about 11% that we did for full year 2012. So we are pleased that we are able to accelerate growth in broadband which is also central to our plan.
Now as I’ll note in our upcoming slides, with the closing of the Alaska Wireless Network or AWN transaction our revenue profile for wireless has changed, in particular as it pertains to roaming revenues, which are now part of the Alaska Wireless Network entity. So, some of the revenue mix elements that you see here will be different for us going forward.
Slide four, on this slide I would like to focus on the right side which talks about our view, our perspective of how we think about the rest of 2013. I will talk more about it but we are confident about the market opportunity for broadband in Alaska.
Our performance so far reflects our ability to seize this opportunity and our actions on a go-forward basis are targeted at this segment of growing broadband revenues. In particular, we have been talking about our investment in a fiber-to-the-node program.
We have indicated that this year we expect to invest about $10 to $15 million in this program as part of our CapEx for the year targeted primarily at business communities in Anchorage. We expect to see some benefit for the consumer segment but the investment is directed towards the business segment in the market.
I would like to dwell a little bit on LEAN as a process improvement program that we have initiated. I will cover more that later. This is central to how we do business and central to how we intend to provide quality customer service as source of differentiation while at the same time manage our cost structures.
In particular I would like to draw your attention to a recent announcement we made about an addition to our leadership team. We announced recently that we hired a new leader to lead our managed services area. We see that as an opportunity for growth again in the business segment. We view that as a logical adjacency for what we already do in broadband and this new leader will bring a lot of focus to what we already do in this area and drive more growth.
Additionally, our Board recently approved issuing up to 10% of our outstanding stock to buyback our convertible notes. I viewed about 40% of the way into this repurchase program and that’s the last bullet point on that box there. And as I noted in my investor letter from August of this year, our focus is on growing broadband revenues and paying down debt and we are committed to that approach.
Slide five will serve as a reminder and a refresher of our recently closed Alaska Wireless Network or AWN transaction. The right side of the screen there, gives you a brief overview of how the structure works.
In June of 2012, Alaska Communications and GCI announced that we were going to combine our two wireless networks into one entity called the Alaska Wireless Network. Alaska Wireless Network will operate the largest wireless network in the state of Alaska while the two retail parents Alaska Communications and GCI will continue to sell wireless services on an independent basis in our respective retail channels. That at a very high level is the structure of AWN.
Briefly, how does AWN make money, in four ways, one, from the wholesale revenues it gets from its two retail parents, Alaska Communications and GCI, that’s one. Two, roaming revenues, effective the close of this transaction in July of 2013, roaming revenues moved to AWN.