SureWest adds video subs, beats Q4 earnings estimates by 57 percent

SureWest Communications (Nasdaq: SURW), which is in the process of being acquired by Consolidated Communications (Nasdaq: CNSL), surprised analysts by reporting earnings per share of 11 cents on net income of $1.48 million, 57 percent higher than Wall Street's anticipated 7 cents per share, but down from a year ago when the company had net income of $1.95 million and EPS of 13 cents.

The company said strong growth in its broadband product line, which now accounts for 77 percent of its revenue, helped it to a 2 percent increase year over year for the fourth quarter.

SureWest said revenue for the quarter came in at $63.54 million versus the consensus estimate of $62.69 million.

The stock was up 7 cents in mid-morning trading to $22.57. Its 52-week range has been $9.12 to $22.81.

"Our strong 2011 results were highlighted by top-line business and residential services revenue growth, driving an increase in adjusted EBITDA," said Steve Oldham, SureWest's president and chief executive officer. "SureWest's business services revenues continue to be an important part of delivering long-term, sustainable growth due to positive trends in Kansas City and increased bandwidth demands for backhaul services to wireless carriers."

Oldham said SureWest continued to increase the take rates of its residential products like Advanced Digital TV, high-speed Internet and Broadband Voice over IP. During the year, he said, SureWest also added 15,400 new fiber homes in Kansas City.

During the quarter, the Sacramento region's Advanced Digital TV product continued to drive growth, helping to increase net video RGUs by 2,230 year-over-year and 530 sequentially.

SureWest had 66,400 video subscribers at the end of the year, a 4,600, or 7 percent, increase from a year ago, and up 1,500, or 2 percent sequentially.

SureWest said 98 percent of its ADTV subscribers bundle Internet and 79 percent subscribe to a triple-play with ARPU of $148.

The telco also attributed a drop in churn from 1.6 percent to 1.4 percent in large part to its Advanced Digital TV video upgrades.

The company said voice line loss was slowing; it lost 3,800 lines compared to 4,800 a year ago, and said telecom revenues dropped 12.5 percent to $14.5 million.

Earlier this month, SureWest agreed to be acquired by Consolidated for $340.9 million in cash and stock. The deal will give Consolidated a presence in the suburbs of Kansas City, Kan., and in the Sacramento, Calif. area, and brings together two Tier 2 companies with different IPTV middleware solutions.

Consolidated is using Siemens Communications subsidiary Myrio for its IPTV delivery--which includes features like client personal video recording, pause live TV, video on demand, on-screen caller ID, favorites and reminders and Web portal capabilities, SureWest, meanwhile, currently uses Microsoft's (Nasdaq: MSFT) Mediaroom to deliver its product.

For more:
- see this release

Special Report: IPTV 4Q 2011 earnings

Related articles:
SureWest, Consolidated CFOs to run transition team for merger
Consolidated will evaluate Mediaroom, Myrio IPTV middleware after SureWest purchase
Rumor: SureWest may be a Google acquisition target

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