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Hawaiian Telcom Shows Growth in its FTTH Deployment

More than sixty percentage of the households in Oahu will get high speed broadband services at speeds of 1 Gbps, thanks to the Fiber to the home deployment that Hawaiian Telcom has been doing. The telecom service provider says it is making progress with its FTTH initiative. Hawaiian Telcom is also eyeing new technologies such as G.fast and VDSL2 to increase speeds on its existing copper network.

CEO of Hawaiian Telcom, Scott Barber was speaking to investors during the third-quarter earnings call and according to him the provider wants to create a two-pronged last-mile foundation that enables it to deliver higher speed broadband IP applications.

In terms of footprint at the end of the third quarter the operator had 183,000 next generation households enabled on Oahu approximately 60 percent of which are capable of utilizing fiber-to-home technology. Those households can receive an unmatched 1 Gbps internet speed. Hawaiian Telcom continues to see strong high speed Internet take rates in their next generation fiber footprint. The service provider is also preparing to roll-out technologies that will increase Internet speed over their existing copper network.

The CEO said that the operator plans to wrap up its FTTH rollout to between 230,000 to 235,000 homes, but provided no specific timeframe. It also expects to sign an additional 3,000 to 5,000 Greenfield homes or multi-dwelling units (MDU) over the next few years.

The operator will probably wrap up the program build in the early part of 2017, and there might a little bit of spillover at end of 2016. The operator also expects that there will be probably 3,000 to 5,000 new Greenfield homes or MDU bulk agreements that will come line over the remaining 3 or 4 years.

Driven by growth in its TV and high-speed Internet services, third-quarter consumer revenue was $38.1 million, up 2.5 percent year-over-year. The company noted that revenue growth from broadband Internet services continues to offset lower revenue from legacy services, and combined video and HSI services now represent 44 percent of consumer revenue, up from 38 percent in the same period a year ago, and 30 percent in the same period two years ago.

Video services revenue grew to $8.7 million, up 32.9 percent from $6.5 million in the third quarter of 2014 due to the addition of about 8,200 subscribers for a total of approximately 34,000 subscribers at the end of the third quarter. In tandem with the video services growth, Hawaiian Telcom enabled 8,000 additional households with fiber, increasing the total number of households enabled to 183,000 with approximately 59 percent of those households capable of using fiber-to-the-premise (FTTP) technology. Hawaiian Telcom TV penetration of households enabled increased to approximately 18.6 percent at the end of the third quarter.

Due to growing adoption of higher speed offerings, consumer HSI revenue rose 1 percent year-over-year while consumer HSI ARPU rose 4.6 percent as a result of increased adoption of higher speed offerings. Total consumer HSI subscribers rose 1 percent year-over-year to nearly 93,200 and a 4.6. As of the end of September, about 93 percent of all video subscribers had double- or triple-play bundles with HSI. Revenue increases from video and HSI continued to more than offset legacy revenue declines related to consumer voice access and long distance line losses.

Business revenue rose 3.9 percent year-over-year to $43.4 million, a factor it said was partly due to a $1.2 million increase in equipment and managed services revenue. Growth in next-generation services, including a 9.8 percent year-over-year increase in business data revenue, an 11.1 percent increase in data center revenue, and higher business HSI revenue as a result of a 1.4 percent year-over-year increase in business HSI customers, also contributed to total business growth.

As businesses increasingly adopt higher bandwidth services and integrated communications solutions, Hawaiian Telcom said that next-generation services now represent 31 percent of business revenue, up from 29 percent in the same period a year ago. The service provider said that the increases in next-generation services and higher speed HSI revenues “more than offset the year-over-year declines in legacy business access and long distance revenues.”

Hawaiian Telcom reported that wholesale revenue rose 9 percent to $17.2 million, a factor it said was due to $2.2 million in CAF-II support it got from the FCC. Similar to earlier quarters, wholesale carrier data revenues declined $200,000 year-over-year to $14.2 million, mainly due to certain wireless carriers disconnecting lower bandwidth legacy circuits on month-to-month contracts and moving to fiber-based, higher bandwidth Ethernet circuits on multi-year contracts.

Finally, switched carrier access and subsidies revenue increased $1.6 million year-over-year to $3 million, mainly from the CAF-II support, partially offset by the impact of the overall decline in voice access lines and minutes of use, along with the impact of intercarrier compensation reform.

Hawaiian Telcom reported that third quarter revenue of $101 million represented a 3.8 percent increase compared with $97.3 million in the third quarter of 2014. Revenue growth in the quarter, driven by video, equipment and managed services, and $2.2 million of CAF II support more than offset the impact from an expected 5.9 percent decline in access lines.

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