Can The iPhone Boost Alaska Communications?

| About: Alaska Communications (ALSK)

Alaskan telephone company Alaska Communications (ALSK) has April 20 circled on its calendar for good reason. The company will begin selling the popular iPhone from Apple (AAPL).

Alaska Communications offers wireless and wired broadband services to residential and commercial companies in the largest state of the the United States. The company was the first to introduce 4G LTE wireless service to Alaska. The company is also connected to the lower 48 states and has its own hosting facilities. Alaska Communications' services cover 85% of the population of the state. The company's wired services cover 90% of towns with 5,000 or more people.

Alaska has a population of 722,000 people, with the largest city Anchorage making up over 25% of that population (296,000). The state has over 1.5 million tourists annually.

Several versions of the iPhone 4S will be offered to Alaska Communication's customers.

  • iPhone 16GB $150
  • iPhone 32 GB $250
  • iPhone 64 GB $350

The phones will be offered in 14 retail stores and online through Alaska Communications' website. These are the newer generation of the iPhone 4 complete with Siri, the voice command enhancement of the latest iPhone. The earlier version iPhone 4 will be sold for $50. All the phones prices are with a two-year agreement with Alaska Communications. The iPhone has a wholesale price of $600, so Alaska Communications will be counting on the monthly plan revenue to recoup the discounted phone prices. Monthly plans will range from $80 to $101 for Alaska Communications customers.

Revenue for Alaska Communications has been:

  • 2006 - $319 million
  • 2007 - $349 million
  • 2008 - $350 million
  • 2009 - $346 million
  • 2010 - $392 million
  • 2011 - $349 million

The revenue for 2011 represents $7.75 per share in revenue. Earnings per share came in at $0.01 for fiscal 2011. The company has $20.5 million in cash and a much higher debt rate with $578 million currently in long-term debt.

Fourth quarter revenue was $87.5 million for Alaska Communications. For the third straight quarter, Alaska Communications increased its subscriber base. The current subscriber count for wireless accounts is 117,559. The average monthly revenue for each wireless accounts was $53.54.

Analysts expect $0.06 for the current March quarter and a total of $0.24 for fiscal 2012. That number could shoot higher if any analysts decide that the ability to bring the iPhone to future customers will strengthen its subscriber base. Alaska Communications is forecasting 2012 revenue of $355-$365 million. Analysts are calling for $355.68 million for the fiscal year, which means investors could be catching a bargain with Alaska Communications shares before 2012 earnings.

The company pays an annual dividend of $0.20. The dividend currently represents a yield of over seven percent. The quarterly dividend of $0.05 is a decrease from the $0.215 paid quarterly from 2006 through the third quarter of 2011. The decrease allows the company to lower their payout ratio and keep their balance sheet healthy, while still offering a high yield.

Competition is present in the state of Alaska from several small privately held companies. Verizon Wireless (VZ) is also entering Alaska at a rapid rate. Privately held GCI of Alaska is also one of the smaller communications companies offering the cheaper price iPhones.

Shares trade at $2.60 at the time of writing. The fifty-two week range for shares is $2.58 to $10.36. Shares are trading at their lowest range since 2003. Now is the time to pick up shares of this high yielding telecommunications company. The iPhone is a huge seller and could do wonders for a company with such a low market capitalization.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in ALSK over the next 72 hours.