[May 01, 2012]

Alaska Communications Systems Reports First Quarter 2012 Results

Alaska Communications Systems Group, Inc. ("ACS") (NASDAQ:ALSK) today reported financial results for its first quarter ended March 31, 2012.

"We are in the early stages of executing on our business plan and our results reflect the impact of initial investments we have made in our business. This quarter also saw the launch of several new products, including the most recent launch of the iPhone. We remain focused on executing to our business plan which is all about driving top line growth and de-levering the balance sheet," said Anand Vadapalli, Alaska Communications president and CEO.

Financial Highlights: First Quarter 2012 Compared to First Quarter 2011

• Excluding $5.2 million of out-of-period access and CETC revenue recognized in Q1 2011, revenues of $85.9 million increased $4.5 million, or 5.5 percent.
  • Business and Wholesale revenue increased by $2.2 million, or 9.0 percent. Broadband revenue increased $1.1 million, or 15.6 percent, partially offset by a $0.4 million decrease in voice revenue. Wholesale and other increased by $1.5 million benefiting from a $0.6 capacity exchange with another carrier.
  • Consumer revenue decreased by $0.3 million, or 3.0 percent due primarily to lower voice revenue.
  • Wireless revenue increased by $1.8 million, or 6.6 percent, with increased roaming revenue of $2.6 million partially offset by $0.8 lower net retail service, equipment and other revenue.
  • Excluding the prior year benefit from the release of $3.4 million CETC reserves and $1.8 million other out-of-period revenue, Access and CETC revenue increased by $0.9 million.
• Exclusive of the out-of-period revenue recorded in the first quarter of 2011, EBITDA of $26.0 million decreased $0.5 million.
  • Costs of services and sales increased $2.3 million, or 6.9 percent, due in part to increases of $1.8 million in Intrastate access expense, and the impact of the capacity exchange arrangement.
  • Selling, general and administrative expenses increased by $2.2 million, or 9.5 percent. The increase was in-line with management expectations and was related to $1.7 million higher selling, marketing and advertising expenses, and $0.6 million in process improvement and other strategic initiatives.

Metric Highlights: First Quarter 2012 Compared to Fourth Quarter 2011

• Wireless connections decreased from 117,559 to 117,156 and churn was relatively unchanged at 2.3 percent.
• Retail wireless ARPU decreased by 3.2 percent to $51.83. Decrease in voice ARPU was partially offset by an increase in broadband ARPU to $17.35.
• Broadband consumer connections decreased by 294 to 38,449, while ARPU increased from $36.52 to $37.56.
• Broadband business connections decreased by 67 to 19,076, while ARPU increased from $140.37 to $141.60.

"We are reporting our results to reflect the way we manage ACS. The press release presents revenue categorized by our targeted customer groups. These customer groups consist of business and wholesale, consumer, wireless, and access and CETC. We are reporting EBITDA on a consolidated basis and are no longer reporting wireline and wireless segments. We also began the process of delevering our balance sheet, and reduced our level of debt by $5.3 million in the first quarter," said Wayne Graham, ACS chief financial officer.

"We are pleased with the early success of the iPhone, which was launched April 20, 2012. Given higher equipment subsidies associated with this device we believe previous guidance on EBITDA and free cash flow will be impacted. Once we have a more extended selling period to make an accurate assessment, we will provide updated guidance numbers," concluded Graham.

Conference Call

The Company will host a conference call and live webcast today at 5:00 p.m. Eastern Time. Parties in the United States and Canada can call 800-762-8779 to access the conference call. Parties outside the United States and Canada can access the call at 480-629-9866. The webcast will be archived for a period of 90 days. A telephonic replay of the conference call will also be available two hours after the call and will run until Tuesday, May 8, 2012 at midnight Eastern Time. To hear the replay, parties in the United States and Canada can call 800-406-7325 and enter pass code 4531650. Parties outside the United States and Canada can call 303-590-3030 and enter pass code 4531650.

Revenue Mix - Schedule 5 Enhancements

Additional information regarding an illustrated mapping of Q1 2012 revenues is available in the Frequently Asked Questions (FAQs) section of the Alaska Communications website. Select the question: How can I find more information on Alaska Communications enhanced Q1 2012 revenue mapping?

About Alaska Communications

Headquartered in Anchorage, Alaska Communications Systems Group, Inc. (Nasdaq: ALSK) is a leading provider of high-speed wireless, mobile broadband, Internet, local, long-distance and advanced broadband solutions for businesses and consumers in Alaska. The Alaska Communications network includes advanced broadband and voice networks and the most diverse undersea fiber optic system connecting Alaska to the contiguous United States. For more information, visit www.alaskacommunications.com or www.alsk.com.

Forward-Looking Guidance

This press release includes information related to management's estimate of EBITDA and Free Cash Flow (FCF) for the year ending December 31, 2012. EBITDA and FCF, as defined by the Company, may not be consistent with EBITDA and FCF measures used by other companies are not measurements under generally accepted accounting principles (GAAP), and should not be a considered a substitute for other measures of financial performance recorded in accordance with GAAP. Management believes that EBITDA provides useful information to investors about the Company's performance because it eliminates the effects of period-to-period changes in costs associated with , interest income and expense, stock-based compensation expense, losses and gains associated with the extinguishment of debt and disposal of assets, gift of services, income tax expense and depreciation and amortization that are not directly attributable to the underlying performance of the Company's business operations. Similarly, FCF provides useful information about the ability of the Company to pay dividends and reduce its outstanding indebtedness. Due to the difficulty in forecasting and quantifying the amounts that would be required to be included in the most comparable GAAP measure, "net cash provided by operating activities" the Company is not providing an estimate of the year-end 2012 amount for that measure.

Forward-Looking Statements

This press release includes certain "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's beliefs as well as on a number of assumptions concerning future events made using information currently available to management. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside ACS' control. Such factors include, without limitation, Verizon's entry into the Alaska market, Universal Service Fund reforms, the outcome of on-going IRS audits, adverse national economic conditions, adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing, adverse local economic conditions, including an unexpected downturn in the Alaskan oil and gas or tourism markets, changes in capital expenditures, the effects of competition in our markets, the entry of one or more additional facilities-based carriers into the Alaska market, or other factors affecting the Company's ability to generate sufficient earnings and cash flows to continue to make dividend payments to its stockholders; the Company's ability to complete, manage, integrate, market, maintain, and attract sufficient customers to the products and services it may derive, adverse changes in labor matters, including workforce levels, labor negotiations, and benefits costs; disruption of our suppliers' provisioning of critical products or services; the impact of natural or man-made disasters; changes in Company's relationships with large carrier or enterprise customers or its roaming partners; changes in revenue from universal service funds; unforeseen changes in public policies; changes in accounting policies, including the Company's application of regulatory accounting rules, which could result in an impact on earnings; or disruptive technological developments in the telecommunications industry. For further information regarding risks and uncertainties associated with ACS' business, please refer to the Company's SEC filings, including, but not limited to, the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of the Company's SEC filings may be obtained by contacting its investor relations department at (907) 564-7556 or by visiting its investor relations website at www.alsk.com.

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