ACS reports $7 million loss

Posted: Wednesday, November 06, 2002

ANCHORAGE (AP) -- Alaska Communications Systems Group Inc. has reported a third-quarter loss of $7 million, compared with a $1.4 million loss during the same three months of last year, according to financial filings with the U.S. Securities and Exchange Commission.

Revenue grew 2 percent to $84.3 million.

ACS is the main local phone company in Alaska, serving Anchorage, Fairbanks, Juneau and about 70 other communities. Local phone business accounted for 63 percent of ACS' third-quarter revenue and the bulk of its operating profits, according to the SEC filing.

But its market share in the state's three biggest cities, where it competes with General Communications Inc., is eroding. ACS argues that it is locked into unfair rates for its services that give GCI a competitive advantage. It has asked state regulators to approve a rate increase.

ACS also competes in the wireless phone, long-distance phone and Internet service businesses and has yellow-pages advertising. Its local, wireless and yellow-pages arms showed operating profits while its Internet and long-distance businesses had operating losses.

The company has pinned short-term improvements in its finances to hope for a favorable ruling from state regulators on local phones and to a contract that kicked in this year to provide telecom services to the state. That contract largely accounted for ACS' Internet revenue rising to $6.4 million during the quarter from $3.6 million a year earlier, ACS said.

ACS was launched in May 1999 when it bought the local phone companies in Anchorage and elsewhere for $695 million. The company bought Anchorage-based Internet Alaska in 2000 to boost its customers from 17,000 to 42,000. It now has about 47,000 customers, according to financial statements.

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