General Communication's Complex Merger Is Almost Complete

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Alaska telecommunications company General Communication (NASDAQ: GNCMA) reported its fourth-quarter results after the market closed on Feb. 28. The company is just one week away from officially closing its merger with certain assets of Liberty Ventures Group in a complicated transaction that will create a new company called GCI Liberty. Here's what investors need to know about General Communication's fourth-quarter results.

General Communication results: The raw numbers

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Metric

Q4 2017

Q4 2016

Year-Over-Year Change

Revenue

$235.5 million

$232.3 million

1.4%

Adjusted earnings before interest, taxes, depreciation, and amortization

$75.3 million

$67.7 million

11.2%

Net income

$48.2 million

($16.2 million)

N/A

What happened with General Communication this quarter?

  • The agreement to combine General Communication with certain assets of the Liberty Ventures Group is expected to be completed on March 9.
  • Consumer revenue was $113 million in the fourth quarter, up 3% sequentially and 2% year over year. Consumer wireless and data revenue were up slightly compared to the prior-year period, while consumer video and voice revenue were down.
  • The consumer segment saw subscriber declines of 500 cable modems, 2,600 video subscribers, and 4,100 wireless subscribers. The company blamed the recession in Alaska and seasonal prepaid disconnects in the wireless business. General Communication also shed subscribers during the third quarter.
  • Business revenue was $122 million, up 1% both sequentially and year over year. Within the business segment, data revenue jumped 4.8% year over year.
  • Pro forma adjusted EBITDA, which adds back charges related to the merger transaction with Liberty Ventures Group, was $76 million during the fourth quarter, up 12.2% year over year.
  • Selling, general, and administrative expenses were $90 million, flat sequentially and down 4% year over year after excluding one-time transaction costs.
  • Net income was boosted by a $44 million tax benefit.
  • The company expects capital expenditures of roughly $170 million in 2018.
  • General Communication opted to not hold a conference call due to the pending transaction with Liberty Ventures Group.

Looking forward

When the merger with Liberty Ventures Group closes later this month, the resulting company will have increased scale and be diversified beyond Alaska. That's good news given the economic challenges in the 49th state.

Once the deal is complete, management will likely provide a more detailed outlook for the new company.

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends General Communication. The Motley Fool has a disclosure policy.