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SaskTel reports 2013 net income of $90.1 million

SaskTel reports 2013 net income of $90.1 million

SaskTel today reported  2013 net income of $90.1 million and operating revenues of $1.2 billion, up  $22.7 million from 2012.  The increase in  revenues are a result of significant increases in wireless ($17.6 million) and  maxTV, Internet and data revenues ($16.7 million), both due to increases in customers and average revenue per user.  The lower than budgeted net income was due to a decline in fair value of  our sinking fund investments.


“SaskTel continues to  deliver on its mandate to deliver high quality, accessible and affordable  services while investing in core business operations and services within  Saskatchewan,” Minister responsible for SaskTel Don McMorris said.  “To succeed going forward, SaskTel will  evolve and find new ways to use its networks and expertise to expand into the  burgeoning Information and Communication Technology (ICT) market.”


“SaskTel had a strong  financial year despite intensifying price competition in the Saskatchewan  market and regulatory changes in the wireless segment that added costs and  reduced revenues to the business,” SaskTel President and CEO Ron Styles  said.  “This will be a challenging year  for SaskTel from a financial perspective as both the unintended consequences of  federal policy and targeted pricing by our competitors in the Saskatchewan  market will significantly impact our bottom line.”


Financial Highlights

     
  • Net Income - $90.1 million
  • Revenues  - $1.2 billion
  • EBITDA Margin - 24.6 per cent
  • Return on Equity - 12.0 per cent
  • Dividend of $81.1 million declared to Crown Investments Corporation (CIC) in 2013
  • Debt ratio of 48.7 per cent

Operating Highlights


Wireless Services 

  • Wireless revenues increased by $17.6 million (3.9 per cent) to $471.8 million in 2013. 
  • Total wireless accesses increased to 615,694 at year end, up 8,035 due to organic growth and legacy wireline customers abandoning their traditional wireline services for a wireless alternative.
  • Customers continue to migrate from voice-only devices to data-capable devices such as smartphones.  In 2013, the number of data-capable devices increased to 412,993, up 16.8 per cent from 353,490 in 2012.
  • Adoption of data-capable devices such as smartphones, has also resulted in customer migration to more expensive and feature rich data plans, which increased the average revenue per subscriber from $62.99 in 2012 to $64.39 in 2013.

maxTV

  • maxTV reached a milestone in 2013, when it surpassed 100,000 customers.  This customer growth, coupled with an ARPU increase of $3.57, resulted in a year over year increase in revenues of $10.0 million.
  • Increases in average revenue per customer can be attributed to increases in rates to offset increase in content costs, increased adoption of high definition services, and increased penetration of digital video recorders.

Internet and Data Services

  • Internet and data services revenues are up $6.7 million in 2013.  Internet  revenues increased $3.8 million in 2013, as customers selected faster Internet service packages (High Speed Extreme, Advanced and Ultra) and were early adopters of SaskTel’s fibre-based service infiNET™, driving an increase in average revenue per access. Growth of 4,713 (2.0 per cent) Internet accesses during the year also contributed to the growth in revenues.

Advertising and Directory  Services

  • Advertising and directory services revenue decreased to $42.6 million in 2013, down from $43.4 million in 2012, a decrease of $0.8 million (1.8 per cent). In an industry that continues to experience significant financial pressures, including ongoing double-digit declines in revenues, the release of Mysask411 Solutions in 2013 (a simplified, packaged approach to online, mobile and print advertising for businesses) is expected to help keep revenue retention at industry-leading levels.

Security Monitoring Services

  • Security monitoring revenues increased $0.8 million to $20.7 million in 2013, due to acquired growth in customers.  SaskTel continues to actively seek out business growth both organically through existing customers, and externally through customer account acquisitions.

Software Solutions and  Consulting

  • Software and consulting service revenues decreased to $7.3 million in 2013, down $0.6 million (7.6 per cent) from 2012, primarily due to lower sales of customized software and consulting services in 2013.

Capital Spending

  • SaskTel’s total capital expenditures for 2013 were $355.8 million, up $26.0 million from 2012.
  • SaskTel’s net capital spending on property, plant and equipment in 2013 was $278.2 million, up $14.2 million from 2012, primarily due to increased spending on Fibre to the Premises (FTTP), infrastructure support, and continued enhancements to the wireless networks (4G and LTE).
  • SaskTel’s net spending on intangible assets was $77.6 million, up $11.8 million from the same period in 2012, primarily due to increased spending on Wireless Delivery Environment, Martens modernization, Customer Self Serve and Field Services Efficiency software.

Corporate and Business Highlights


Significant investments on  infrastructure in 2013 included:

  • $69.4 million in capital expenditures on FTTP to allow more functionality on the broadband network including significantly higher download and upload speeds, as well as continued improvement in maxTV services;
  • $62.9 million on continued enhancements to the wireless network to allow for increased coverage and capacity; and
  • $45.5 million to provide for network growth and enhancements.

Investment in intangible assets included:

  • $17.8 million to modernize the wireless billing environment. This upgrade will consolidate wireless services into one platform and allow for more effective billing and customer relationship management;
  • $14.1 million on security monitoring accounts to increase the customer base and allow for greater economies of scale;
  • $10.4 million on the Martens modernization project. This project will upgrade the Martens software to allow for better integration with current and future technologies as well as allow for more effective tracking of network facilities;
  • $6.7 million on Customer Self Serve to enhance the customer experience when accessing SaskTel products and services; and
  • $6.5 million on Field Services Efficiency program that modernized our operations work force management systems.

Awards and Recognition –  2013:

  • Canada’s Top 100 Employers - 14th consecutive  year
  • Canada’s Greenest Employers
  • Canada’s Best Diversity Employers
  • J.D. Power & Associates – SaskTel was ranked number one in overall customer satisfaction in the full service category for all of the major carriers

SaskTel’s full Corporate Social Responsibility Report is available online at http://sasktel.com/about-us/company-information/financial-reports/index.html.


For more information, contact:


Michelle Englot
SaskTel
Regina
Phone: 306-777-4476
Email: michelle.englot@sasktel.com