General Communication Suffers Revenue and EBITDA Decline

Image source: Ian D. Keating

Continue Reading Below

Alaskan telecommunications company General Communication (NASDAQ: GNCMA) reported its second-quarter results after the market close on Aug. 2. Revenue and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization)slumped year over year, driven by long-term roaming and backhaul agreements that promise to reduce the seasonality in the company's results. Here's what investors need to know about General Communication's second-quarter earnings report.

General Communication: The raw numbers

Q2 2016

Continue Reading Below

Q2 2015

Growth (YOY)


$233.8 million

$247.5 million


Adjusted EBITDA

$79.0 million

$88.0 million


Net income

$3.3 million

($15.6 million)


<3>More From

    Warren Buffett Tells You How to Turn $40 Into $10 Million

    LeBron James: The Next Warren Buffett?

    Social Security: 3 Things to Know Before Taking Benefits Early

    3 Social Security Secrets You Probably Don't Know

    Data source: General Communication Q2 earnings report. YOY = year-over-year

    What happened with General Communication this quarter

    Growth in the GCI business segment, comprised of business services and managed broadband, wasn't enough to offset weakness elsewhere.

    General Communication reiterated its guidance for 2016 and provided details about its 2017 capital spending plans.

    What management had to say

    The significant decline in year-over-year revenue during the second quarter was in part due to the company's new long-term roaming and backhaul contracts:

    As previously reported, GCI recently entered into long-term roaming and backhaul agreements that smooth roaming and backhaul revenues more evenly throughout the year and over the life of our contracts, which makes year-over-year comparisons less meaningful this year.

    The company also provided an update on the previously announced sale of its urban wireless tower and rooftop sites:

    Our previously announced agreement to sell our urban wireless tower and rooftop sites to Vertical Bridge closed on August 1st. We received proceeds of approximately $90 million in the transaction.

    Looking forward

    While total revenue was down year over year due in part to the new agreements, subscriber numbers were a mixed bag as well. Consumer cable-modem subscribers rose by 4,700 compared to the prior-year period, but basic video subscribers dropped by 2,900, and consumer voice subscribers declined by 2,500. On the business side, data subscribers declined by 1,400 and voice subscribers fell by 1,000. Average monthly revenue from data subscribers rose by 5.2%, helping to offset the drop in subscribers.

    A secret billion-dollar stock opportunity
    The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them,
    just click here

    Timothy Greenfree for 30 daysconsidering a diverse range of insightsdisclosure policy