Hawaiian Telcom struggles for independence

Hawaiian Telcom’s revenue grew and its net loss shrank in the third quarter, but the former Verizon subsidiary admitted it is struggling with efforts to adjust to life as a standalone company.

Hawaiian Telcom reported a nearly $44-million loss for the third quarter, a 25% improvement from a year earlier. Though its operating revenue grew 17% from a year earlier to nearly $142 million, the company attributed the growth mainly to “the application of purchase accounting,” adding that revenue dropped more than 2% sequentially.

At nearly $155 million, Hawaii Telcom’s third-quarter operating expenses were up nearly 3% from a year earlier, driven mostly by a 21% year-over-year increase in depreciation and amortization costs. The company also spent $3.4 million during the quarter to continue its transformation from a Verizon subsidiary to a standalone entity, including facilities renovation, system changes, relocation, training and residual contractor costs.

“There remains a lot of hard work ahead to overcome the cutover-related systems issues we still face,” Michael Ruley, Hawaiian Telcom’s chief executive officer, said in a statement issued Tuesday, adding that the company has brought in “significant external resources” to assist it.

“Resolving these matters is the company’s number-one near-term priority,” he said.

Hawaii Telcom gained its independence last year when Verizon sold the company to the Carlyle Group, a private equity investment firm.

The carrier is planning to deploy a mix of fiber to the curb, fiber to the node and (for greenfields) fiber to the premises networks early next year.

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