SureWest Sees Growth in Digital Video and High Speed Access

SureWest Communications, which serves the Sacramento, California region, reported Q3 revenue of $56.9 million, up 2% YoY, and consolidated net income of$2.2 million, up 10%. Broadband segment revenues were up 17% to $15.2 million.



Total subscribers in the Broadband segment increased to more than 55,000 subscribers at September 30, 2006, a 15% increase over the year earlier date. Average Revenue Per User (ARPU) is an average of composite revenues provided by subscribers on the fiber network who are offered a triple play of voice, digital video and hyper-speed data and subscribers on the copper network who are offered DSL service and, in some cases, digital video. Third quarter ARPU was $76.12, a 3% increase over the third quarter of 2005 and a sequential increase of almost 3%. The increase in ARPU was partially the result of the acceptance of HDTV, first introduced late in 2005. Subscribers to HDTV increased 33% during the third quarter.



Wireless segment subscriber counts were affected in the third quarter of 2006 by the company's decision to discontinue its pre-paid calling plan option. Customers with a pre-paid plan may continue that plan, but new subscribers are not offered the pre-paid option. While this is reducing pre-paid subscriber counts, contract subscribers have increased by 2% over the prior year period and more than 1% sequentially. Wireless segment revenues for the third quarter totaled $8.6 million, a decline of 3% over the prior year period, but an increase of more than 2% sequentially.



SureWest capital expenditures were $12.8 million in the current quarter, a decrease of 5% over the same period last year and essentially flat on a sequential basis. The company has consciously targeted its capital commitments since 2004 to concentrate on success-based capital projects, slowing the pace in growth of new marketable homes. Full-year 2006 capital expenditures are expected to be under $60 million, with approximately $20 million dedicated to support the planned fiber network build out and up to $30 million to be driven by new customer demand.

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