Preliminary year-end results at the town-owned MI-Connection Communications System are out, and the system’s general manager says they’re headed in the right direction.
Expenses fell, revenues grew, and so did profits from operations in the fiscal year that ended June 30. The total number of customers at the town-owned MI-Communications Communications System was up slightly in June, compared with a year earlier, as the system continued to sign up new telephone and internet customers. But the decline in cable TV customers continued, and the system continued losing money after debt payments.
General Manager Alan Hall reported those results in a presentation to the Davidson Town Board on Tuesday night.
Profits from operations – excluding interest payments, depreciation and amortization – were $1.26 million, up 302.9 percent from a year earlier, when the operating profit was $312,000.
“That is a 302.9 percent improvement. And that is trending in the direction that it needs too,” Mr. Hall told the board.
Still, the company had a net loss for the year of $6.8 million. That was 5.7 percent more last year’s loss of $6.4 million.
Expenses in the 2009-10 budget year totaled $13.3 million, down 0.8 percent from 2008-9. Revenues grew 6.1 percent, to $14.6 million, mainly because of sales of telephone and internet.
At the end of June, MI-Connection had 812 additional internet customers and 1,387 more phone customers, compared with a year earlier. But cable customers continued to leave, falling 232 from June 30, 2009, to June 30, 2010.
The system lost 67 cable customers in June – the latest month for which sales data is available. And the total number of customer relationships fell 45, to 15,212. But it added 24 new internet lines and 55 telephone customers. Overall revenue generating units – the total number of individual services purchased – totaled 24,644, up from 24,632 in May.
CHANNEL CHANGES
In addition to an operational and financial report, he also announced a series of recent channel changes at the system, as of Aug. 2. Those include moving the Major League Baseball channel from the higher-priced digital tier to Channel 74 on the “expanded basic” package; introduction of the new WBTV-produced “thisTV” network to basic digital, Channel 102; and the addition of four new HD channels: E! HD, two HD channels from Mid-Atlantic Sports Network, and Planet Green HD. He said the channel shuffling will not result in any price increases.
The company also is reviving its “We owe you a deal” promotion, which he said offers discounts for new subscribers. The deals include basic internet access (384 megabit upload by 1 megabit download) for $9.95 a month for the first year, plus installation, which he said equals the price of a cable modem. If the customer also orders phone service, the installation drops to $49.95 total.
Mr. Hall also reminded the board and the audience of the Aug. 16 joint public meeting between the Mooresville and Davidson town boards and the MI-Connection board. It’s at 6 p.m. at Mooresville Town Hall and will include a review of MI-Connection’s history and a status update for taxpayers. (See more in our Tuesday news item.
RELATED DOCUMENTS
Public statistics and financial results from MI-Connection for May and June 2010 and 4th quarter 2009-10 fiscal year. (PDF)
It might also be worth noting that some of the increased internet customer base may be coming from the fact that other providers are at capacity in some of the local service area. When trying to get internet service with AT&T recently we were told that there was no more room left on the switch, and thus we ended up with MI-Connection.
The headline on this story should not say “Operating Profits Rose at MI-Connection.” The town has strong-armed taxpaying citizens for $6.5 million dollars to cover their actual losses in the past year.
Consider these facts from the June Monthly Operating Report: MI-Connection lost 232 cable customers in the 12 months ending Jun 30, but 67 in the month of June itself. They’ve gained 812 Data customers (an average of 68 per month) but only 24 in the month of June. They’ve gained 1,387 Voice customers (an average of 116 per month) but only 55 in the month of June.
What does this imply? June was a horrible month in terms of aggressively growing the company’s business. I guess the Marketing Plan is waiting for the new Fiscal Year to kick off (lol!) What this really shows is MI-Connection’s inability to grow their business, except by offering additional service (Data and Voice) to a slowly decreasing number of existing cable customers. More ominously, it shows that they’ve already passed the point where existing customers WANT the additional services, as evidenced by the declining trends in these categories.
Most discouraging of all, however, is the fact that revenues in the 4th Quarter of this Year are only $125,000 better than the 4th Quarter of last year, showing hardly any growth at all (heavy discounting of services and promotional offers may be actually reducing average sales per revenue generating units). No way will this trend correct the cash flow problems of MI-Connection.
Of course, something must explain the “increase in operating profits” headlined in this story. On a positive note, Operating Expenses are less than last year….$821,000 less in theQquarter to Quarter comparison. Will MI-Connection be able to cut expenses yet another $800K next year? I Doubt It! These cost reductions may be impacting the company’s vaunted Customer Service…..the June numbers indicate nearly 20 % of Tech Support and 17% of Customer Service calls went unanswered (ie, customer tired of waiting), and average times to answer the remaining callers went up significantly, taking almost 2 minutes to answer Tech support and 1 minute to answer Customer service calls in June! Dont forget, just within the last few weeks MI-Connection had a major Data outage that affected nearly all Internet and phone customers for almost a whole day! Even worse, MI-Connection claimed their incoming phones linesto Customer Service were out. Is this a sign of things to come as they operate on a shoe-string budget?
Mr. Cobles of the Mooresville MI-Connection Advisory Board (Cheerleading Club?) recently stated that the time for griping is over. He’s right, and next week’s combined meeting of the Town Councils of Mooreville and Davidson would be an excellent opportunity for Town Officials to let their citizens know that continued ownership of MI-Connection will result in tax increases necessary to sustain $5 to 6 million dollars or more of recurring losses for many years to come. Its time to stop the promising substantial and exponential growth when 3 years now of actual results show its just not going to happen.