GCI closes ‘17 with quarterly profit, but loses $25M for year
After a year of reporting losses, General Communications Inc. posted a fourth quarter profit of $48 million in the final stretch of 2017, a factor the telecom attributes in large part to tax reform just as it finalizes its acquisition by Colorado-based Liberty Interactive Group.
GCI took in $236 million in consolidated revenue in its fourth quarter and $919 million in revenue for the year. Despite net income of $48 million for the quarter, the company still reported a net loss of $25 million for the year.
The fourth quarter financial report came as GCI expects to close its deal with Liberty on March 9, just less than a year since Liberty announced last April it would buy GCI’s assets for $1.12 billion.
After the merger is complete, GCI executives have repeatedly said there will be “very few” changes that consumers will notice.
“The corporate legal structure of the company is changing a little in the reorganization but the management, employees and our commitment to Alaska remains,” said Senior Vice President and Chief Financial Officer Peter Pounds.
A change customers will notice is in the name from GCI to GCI-Liberty Inc.
The fourth-quarter revenue was up $3 million year-over-year, and consumer revenues made up two-thirds of that increase despite significant subscriber losses.
During the quarter, GCI reported it lost 500 cable modems, 2,600 video subscribers and 4,100 wireless subscribers.
“The recession in Alaska is a significant contributing factor in our subscriber headwinds,” GCI wrote in the report.
Pounds said tax reform passed in late December made a difference in the fourth quarter report.
“The move from a net loss of $9 million in (third quarter) to net income in (fourth quarter) was due, primarily to the Tax Reform Act, which reduces our federal tax rates going forward,” he said. “Effectively, our deferred tax liabilities in the future went down significantly given the lower future tax rates and that flowed through the income statement.”
In total, consumer revenue “is still a little behind business,” but there was an increase from the previous quarter driven by the sales of the latest iPhone, Pounds said.
GCI also connected nearly 20 communities to the internet in the last quarter. GCI finished its northwest Alaska portion of the 3,289-mile communications network known as Terrestrial for Every Rural Region in Alaska, or TERRA network.
“Every new community that we bring on board helps us to grow revenues,” Pounds said.
Business revenues of $122 million in fourth quarter were up $1 million or 1 percent on both a sequential and year-over-year basis.
Earnings before interest, taxes, depreciation and amortization or EBITDA was $76 million, after the one time GCI-Liberty transaction costs were added in. This amount is down $4 million from the previous quarter and up $8 million year-over-year.
In the upcoming completion of the GCI-Liberty transaction, Pounds said what’s ahead now should be relatively seamless with most of the work of merging behind them.
“There should not be any changes that consumers should see that relate to the transaction,” Pounds said.
“We are always striving to be better so there will continue to be change as there is in any healthy company.”
Naomi Klouda can be reached at [email protected]