Axia Releases Results for Q2FY11

  • European revenue for the second quarter totalled $6.9 million, an increase of $2.4 million (55%) from $4.5 million for the prior quarter.

  • Consolidated revenue for the second quarter was $20.1 million, an increase of $0.2 million (1%) from $19.9 million for the prior quarter.

  • Net income for the current quarter was $1.3 million ($0.02 per fully diluted share) as compared to $2.0 million ($0.03 per fully diluted share) for the prior quarter.

  • Covage's total bandwidth grew to 89 Gbps from 85 Gbps at the end of the previous quarter.

  • Axia and its Spanish partner, Imagina signed a 20 year project agreement with the Generalitat of Catalonia to carry out the Xarxa Oberta NGN in Catalonia.

  • Covage was awarded the Chevry-Cossigny Fibre to the Home Pilot Project in Seine-et-Marne on December 17, 2010.

  • On February 11, 2011 Covage signed a concession agreement with the Collectivité Territoriale de Corse (CTC) to activate and operate the submarine cable between Corsica and the mainland of France.

  • Network construction in Singapore has now been completed to over 60% of premises.

CALGARY, Feb. 14 /CNW/ - Axia NetMedia Corporation (Axia) today announced the results for Q2FY11 for the period ended December 31, 2010.

Operational Highlights

North America

Alberta

The Alberta SuperNet Next Generation Network (NGN) continues to perform on plan. Total revenue from Axia's North American business segment was $13.1 million for the current quarter, a decrease of $2.3 million (15%) from $15.5 million for the prior quarter.  Compared to the same six month period last year, revenue increased $3.5 million (14%) from $25.1 million. Broadband Services revenue for this NGN from other than Bell Canada has continued to grow.  Other Services revenue, which is project driven was $2.3 million lower than the prior quarter.

Europe

France

In France, Covage's network deployment schedule and initial market adoption remain on track and this NGN's addressable market penetration reached 4.3% at quarter end. 

Revenue from the European business segment was $6.9 million for the second quarter, an increase of $2.5 million (55%) from $4.5 million for the previous quarter.  Compared to the same six month period last year, revenue increased $3.9 million (51%), to $11.4 million

Broadband Services revenue was $4.9 million for the second quarter, an increase of $1.3 million (35%) from $3.7 million for the previous quarter. Compared to the same six month period last year, Broadband Services revenue increased $3.1 million (58%) from $5.4 million. Second quarter Broadband Services revenue and gross profits benefited from a surge in new customer connections. Continued growth in Broadband Services revenue is anticipated and the average quarterly growth rate for the fiscal year is expected to be in the range of 17% to 22%. Covage's average gross profit from Broadband Services is expected to be in the range of 16% to 18% in the current fiscal year.

Covage was awarded the Chevry-Cossigny FTTH Pilot Project in Seine-et-Marne on December 17, 2010. The capital for the Chevry-Cossigny Pilot Project will be government funded while Covage is responsible for executing the business and commercial aspects of the pilot project. New fibre will be deployed in existing ducts which are mainly owned by the municipality.  The Chevry-Cossigny Pilot Project will connect 1,250 residences to Covage's existing Sem@for77 network segment. 

On February 11, 2011 Covage signed a concession agreement with the Collectivité Territoriale de Corse to activate and operate the submarine cable between Corsica and the mainland of France.  The Corsica concession agreement is for 15 years and Covage's total investment will be €850,000. Deployment is expected to be completed by the end of 2011. Covage intends to offer wholesale bandwidth services to operators between its existing network infrastructure on the mainland of France and Corsica which will contribute to increased competition in the Corsica telecom services marketplace. 

As of today, Covage has six outstanding bids for regional network segments and decisions are expected on most of these bids in 2011.

Spain

Recently, Axia and its Spanish partner, Imagina Media Audiovisual (Imagina), were awarded a 20 year contract by the Generalitat of Catalonia (the Generalitat) to carry out the Xarxa Oberta (Open Network) project in Catalonia.  The project agreement with the Generalitat was signed on November 18, 2010.  Xarxa Oberta, a Spanish company jointly controlled by Axia and Imagina, will connect 696 Generalitat sites in the fields of health, education, justice and safety in 95 municipalities of Catalonia.

During the second quarter, Xarxa Oberta began the logistics and planning for the deployment of electronics and the activation of services on the Generalitat's existing fibre infrastructure which will reach 20% of the Generalitat's 696 sites over the next two years.

Asia Pacific

Singapore

Currently, construction to over 60% of premises has been completed. While the network is being constructed, OpenNet has also begun selling its services on completed portions of the network. Currently, Nucleus Connect and SingTel are purchasing wholesale fibre services from OpenNet.  These companies, in turn, sell bandwidth services to Retail Service Providers (RSPs). The RSPs selling retail and commercial broadband, phone and video services on the OpenNet NGN include, among others, Singapore's fixed line and mobility carriers such as SingTel, StarHub, and M1.

Q2FY11 Consolidated Financial Information

Consolidated revenue for the second quarter was $20.1 million, an increase of $0.1 million (1%) from $19.9 million for the prior quarter.  Compared to the same six month period last year, consolidated revenue increased $7.4 million (23%) to $40.0 million.

Consolidated gross profit for the second quarter was $7.7 million or 38% of revenue, a decrease of $0.2 million (2%) from the prior quarter.  As compared to the six month period last year, gross profit increased by $3.4 million (28%) to $15.6 million or 39% of revenue. Other Services gross profit for all NGNs can be expected to fluctuate significantly quarter over quarter due to its project nature.

Net income for the current quarter was $1.3 million ($0.02 per fully diluted share) as compared to $2.0 million ($0.03 per fully diluted share) for the prior quarter. The net income for the six month period was $3.3 million ($0.05 per fully diluted share) compared to $1.1 million ($0.02 per fully diluted share) for the same six month period of the prior year.

As at December 31, 2010, Axia's working capital was $25.7 million as compared to $21.8 million at June 30, 2010.  This increase of $3.9 million is primarily attributable to cash provided by operating activities.  As at December 31, 2010, Axia had $25.3 million in cash and unrestricted short-term investments.

Outlook

Axia's business is based on NGNs that are increasingly seen as critical infrastructure to enable end users to improve their productivity and efficiency.  Most of the digital based technology being developed depends on next generation network connectivity.  These characteristics are becoming better understood by progressive jurisdictions and as a result, the related public policy and telecom regulation is being reviewed and adjusted to enable deployment of this critical infrastructure. Axia continues to invest business development funds to investigate and assess the best available opportunities globally. 

Conference Call Scheduled

A conference call for the investment community will be held Monday, February 14, 2011 at 3 p.m. (Eastern) and 1 p.m. (Mountain). Axia Chairman and CEO Art Price, Axia North America President and Executive Vice-President Murray Sigler, and Chief Financial Officer Peter McKeown will participate.

To participate in the conference call, please dial (647) 427-7450 in Toronto and internationally. To connect from other parts of Canada, dial 1-888-231-8191.  Please call ten minutes prior to the start of the call. A live webcast (listen only mode) of the conference call will be available at:

http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3376120

A replay of the conference call will be available at (416) 849-0833 or 1-800-642-1687, passcode 38240252 from 6 p.m. (ET) Monday, February 14, 2011 to midnight (ET) Monday, February 21, 2011, or through the webcast archives at http://www.newswire.ca.

About Axia

The unaudited Consolidated Financial Statements for the quarter ended December 31, 2010 and related Management's Discussion & Analysis have been reviewed and approved by Axia's Audit Committee and Board of Directors.  These reports have been filed on SEDAR at www.sedar.com and also posted at www.axia.com.

Axia sells Real Broadband™ and passive services on Next Generation Networks that have implemented the Axia NGN Solution. To date, the Axia NGN Solution has been implemented in Alberta, France, Singapore and Spain. Axia trades on the Toronto Stock Exchange under the symbol "AXX".

This News Release contains forward-looking statements, including, without limitation, statements containing the words "should", "believe", "anticipate", "may", "plan", "will", "continue", "intend", "expect", "estimate" and other similar expressions which constitute "forward-looking information" within the meaning of applicable Canadian securities laws.  These statements are based on our current expectations, estimates, forecasts and assumptions about the operating environment, economies and markets in which we operate and are subject to important assumptions, risks and uncertainties that are difficult to predict.  Examples of these statements would include those where Axia forecasts its success and timing in winning new NGN business, the timing of completion and estimated total costs of our networks, the revenues and operating costs associated with these networks over time, and Axia's ability to generate future cash flows and avail itself of other financing alternatives given current market conditions.  The assumptions, risks and uncertainties that could cause actual results to differ materially from the forward-looking information, include, but are not limited to, changes in customer markets, changes in demand for our services, our inability to deliver services in a timely and cost efficient manner, technological change, general economic conditions and other risks detailed from time to time in our ongoing filings with the Canadian securities regulatory authorities, including those in our Annual Information Form, which filings can be found at www.sedar.com.  Given these assumptions, risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.  Unless otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise.

SOURCE Axia NetMedia Corporation

For further information:

For further information, please visit Axia's website at www.axia.com, or contact:

Dawn Tinling
VP, Investor Relations and Communications
Axia NetMedia Corporation
(403) 538-4074
dawn.tinling@axia.com

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