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Regional telecom operator Centennial Communications (CYCL) reported results for the first quarter of fiscal year 2010 with earnings per share (NYSEARCA:EPS) of 17 cents exceeding the Zacks Consensus Estimate of 15 cents and the year-ago EPS of 7 cents.

The company reported net income of $19.5 million for the quarter compared to $7.5 million reported in the year-ago quarter driven by 8% year over year decline in operating expenses. Consolidated adjusted operating income increased 6% year over year to $107.2 million.

Revenue for the quarter, however, dipped 2% year over year to $258.9 million which reflects signs of slowdown across its US and Puerto Rican wireless operations, partly offset by growth in the Puerto Rican broadband business. Service revenue accounted for 95% of the consolidated sales with equipment representing the rest.

Centennial exited the quarter with 1,078,200 total mobile subscribers (overall retail penetration of 8.2%), down from 1,090,400 and 1,078,200 reported in the year-ago quarter and the previous quarter, respectively. Total access lines and equivalents were 789,100, up from 596,700 registered a year ago.

The company’s US wireless business registered revenues of $145.9 million, reflecting a 1% year over year decrease due to the decline in retail revenue resulting from contraction in the total subscriber base. Roaming revenue, which increased 36% year over year, was boosted by growth in data roaming revenue, partly offset by sustained decline in voice roaming revenue.

Reported ARPU (average revenue per user) of the US wireless business grew 3% year over year to $76 on the strength of healthy data ARPU which increased 31% on an annualized basis. Postpaid churn (customer switch) increased sequentially and year over year to 2.8%.

U.S wireless operations ended the quarter with 633,100 subscribers reflecting a decline from 652,000 and 659,800 subscribers reported in the previous and year-ago quarters, respectively. The company lost 22,100 subscribers in the postpaid segment.

With respect to the Puerto Rican wireless business, revenue declined 6% year over year to $79.7 million, primarily due to persistent erosion in legacy voice revenue, partially offset by growth in instant Internet broadband data revenue. Total subscriber base for the segment was 424,400, representing a decline from 426,200 and 430,600 reported in the last quarter and the prior-year quarter, respectively. This decline is attributable to increase in postpaid churn which rose to 3.3%.

The Puerto Rican broadband operation remained on the growth track with reported revenue of $36.2 million in the quarter, up 2% year over year. This growth was fueled by healthy additions in access lines which increased by 9,600 (10% year over year) to 107,900 lines.

Centennial’s broadband business prospect remains encouraging as the company leverages its 10 gigabits of undersea transport infrastructure to effectively address increasing bandwidth demand of its customers.

Centennial is set to be acquired by AT&T Inc (T) in the fourth quarter of calendar year 2009 for approximately $2.8 billion in cash and net debt. The acquisition received a conditional approval of the Department of Justice and is now subject to the approval of the Federal Communications Commission and other closing conditions. Successful completion of the transaction will allow Centennial’s wireless customers access to AT&T’s high-speed network.

Source: Centennial Communications Q1: Tops on Lower Cost