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Manitoba Telecom reports Q2 profit drops 33 per cent to $38M

WINNIPEG - Manitoba Telecom Services Inc. (TSX:MBT) confirmed its annual growth targets Monday, despite reporting a 33-per-cent drop in second-quarter profit due to restructuring and other expenses.

"We're on track to meet our guidance for 2008, and to date we have not been impacted by the negative forecasts around the economy," CEO Pierre Blouin, told a conference call Monday.

"Both our enterprise and consumer market divisions delivered solid gains and profitable growth in the second quarter."

MTS had a 15.4 per cent increase in growth services revenues, including wireless and high speed Internet, in the quarter, a key focus of the management team, he said.

Over the past two years, these growth services have grown from 35 per cent of MTS's total revenues to more than 44 per cent at the end of the second quarter, said Blouin.

"This was our third consecutive quarter of year-over-year revenue growth, with positive contributions coming from both operating divisions."

The Winnipeg-based firm, also known as MTS, reported a profit of $38 million or 58 cents per share in the quarter ended June 30, down from a profit of $57 million or 88 cents per share for the same quarter last year.

Revenues rose 2.6 per cent to $486.4 million compared to $474.1 million last year.

Cash flow from continuing operations decreased 18.3 per cent in the quarter to $72.4 million, which MTS said was primarily due to the timing of capital expenditures.

In the second quarter, the company also took a one-time charge of $10.3 million to move certain wireless service requirements away from Bell Mobility to new suppliers and to its wireless platform. It also said there were costs related to Ottawa's sale of bandwidth space in the recent wireless spectrum auction.

Last month, MTS said it bought 35 MHz of wireless spectrum covering 1.2 million people in Manitoba for about $41 million.

The company also said Monday it cut costs by about $20 million in the first half of the year, which is on target with its goal to curb expenses by up to $30 million in 2008.

Going forward, said Blouin, given MTS's "momentum in next generation services, our strong balance sheet, solid customer relationships, and the expertise of our employees, we are well positioned to capitalize on future opportunities in the fast-evolving Canadian telecom landscape."

Also on Monday, the board of directors approved a first quarter dividend which has been set at 65 cents per share.

On the TSX, MTS shares closed down 57 cents at $40.69.

 

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