XFONE Reports EBITDAS Growth of 24% With Strong Growth From Fiber Business
Quarterly EPS of $0.04 Due to Significant Favorable Currency Fluctuation and Improved EBITDAS
LUBBOCK, Texas--(BUSINESS WIRE)-- XFONE, Inc. (NYSE Amex and TASE: XFN) (“Xfone” or “the Company”) announces results for the three and nine months ended September 30, 2011.
Revenue
Revenue from the Company’s Fiber-To-The-Premise (FTTP) business grew 30% to $3.4 million in the quarter ended September 30, 2011, as compared to approximately $2.6 million in the third quarter of 2010. Sequentially, FTTP revenues increased 12.4% as compared to the second quarter of 2011. FTTP revenues represented 23.4% of total revenues for the third quarter of 2011 as compared to 17.6% of total revenues for the third quarter of 2010.
Consolidated revenues for the quarter ended September 30, 2011 were $14.6 million, a decrease of 2.5%, compared to $15.0 million in the quarter ended September 30, 2010 but up 3.6% from $14.1 million in the second quarter of 2011. The year over year revenue decline is related to attrition in non-FTTP residential customers and legacy wholesale business.
For the first nine months of 2011, revenue from the Company’s FTTP business grew 29% to $9.4 million from $7.3 million in the first nine months of 2010. Consolidated revenues for the nine months ended September 30, 2011 were $43 million, a decrease of 2.3% compared to consolidated revenues of $44.0 million in the nine months ended September 30, 2010.
Customer Expansion
The Company’s total number of FTTP customers as of September 30, 2011 was 6,620 compared to 5,433 FTTP customers as of September 30, 2010 with sequential growth of 8% from 6,111 FTTP customers as of June 30, 2011.
Average Revenue Per User (ARPU) for all of the Company’s fiber markets is approximately $392 per month for business customers and approximately $95 per month for residential customers.
Xfone has continued to make progress on construction of its PRIDE Network, a project almost entirely financed by $99.9 million in funds from the Federal Broadband Stimulus Program, of which 45.9% is in the form of grants and 54.1% is in the form of low cost long-term loans. Following the end of the quarter, the Company signed its first PRIDE Network customers in Brownfield and Whitharel, Texas.
During the quarter, Xfone announced the acquisition of Reach Broadband’s approximately 1,800 cable customers and equipment in Brownfield, Anton, Abernathy, Hale Center, Idalou, O’Donnell, Olton and Tahoka, Texas. The transaction is expected to close, pending various approvals, on December 1, 2011. This transaction complements the acquisition of Cobridge Telecom which included approximately 2,400 cable customers and was closed on July 1, 2011. Cobridge contributed revenues to the Company’s non-FTTP results in the third quarter of 2011. Xfone plans to offer these non-FTTP customers the opportunity to upgrade their service to include high speed internet, voice and enhanced video services.
New Market Progress
During the quarter, Xfone brought its FTTP network to two new markets, Burkburnett and Brownfield, Texas and has seen robust customer acceptance of the Company’s triple play offering. Likewise, Xfone continued to make excellent progress in the Littlefield, Texas market where it established its FTTP network during the second quarter and has sold to more than 30% of that market as of the end of the third quarter.
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EBITDAS
EBITDAS (earnings before interest, taxes, depreciation, amortization and stock-based compensation) for the third quarter of 2011 was $2.4 million, a 23.9% increase over the same quarter last year and a 12.5% increase sequentially when compared to the second quarter of 2011. EBITDAS margin in the quarter ended September 30, 2011 was 16.2% compared to EBITDAS margin of 12.7% for the quarter ended September 30, 2010.
Net Income
The Company had net income of $871,000 or $0.04 per diluted share assuming 21,119,488 shares outstanding for the quarter ended September 30, 2011 compared to a net loss from continued operations of $1.5 million or a loss of $0.07 per diluted share assuming 21,169,288 shares outstanding for the quarter ended September 30, 2010.
For the nine months ended September 30, 2011, the Company reported a net loss from continued operations of $443,000 or a loss of $0.02 per diluted share, assuming 21,119,488 shares outstanding compared to a net loss of $2 million or a loss of $0.10 per diluted share, assuming 20,295,714 shares outstanding for the nine months ended September 30, 2010.
The Company recorded a net financing income of $421,000 for the three months ended September 30, 2011 compared to net financing expense of $2.3 million in the three months ended September 30, 2010. The net financing benefit is related to the valuation of the U.S. Dollar to the New Israeli Shekel.
Balance Sheet
Following the close of the third quarter, Xfone announced that it had raised $6 million in a successful rights offering to shareholders. Taking into account the oversubscription privileges, there was a demand for 95% of the offered shares. In connection with the consummation of the rights offering, on November 2, 2011, the Company issued 20,067,108 shares of its common stock at a purchase price of $0.30 per share.
In addition, also subsequent to the close of the quarter, Xfone received long-term funding of $7.5 million related to its loan agreement with ICON Agent LLC. This financing will be used in part to pay off the Company’s short term debt.
Mr. Guy Nissenson, Xfone’s President and CEO, commented, “The build out of our high margin fiber network is proceeding on schedule and below budget. We are particularly pleased by the acceptance rate for our services in our new market, Littlefield, Texas where we’ve sold to more than 30% of that market since we launched in June. Likewise, we have made strategic customer base acquisitions to further augment our organic growth through the addition of the cable customers of Cobridge Telecommunications last quarter and through the anticipated close of Reach Broadband next month.
“We are very pleased to have recently completed our rights offering, which resulted in raising approximately $6 million for our Company. The successful completion of the rights offering and the funding of our $7.5 million loan agreement with ICON, significantly strengthens our capital structure and enhances our liquidity. This funding has dramatically fortified our working capital and we intend to use the additional resources to pay down our debt and to expand our FTTP sales and marketing efforts with the goal of increasing our presence in new and existing markets.”
