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Alaska Communications (ALSK) Estimates Cut By RBC Capital For Expected Impact From iPhone Sales

 April 05, 2012 02:50 PM

RBC Capital Markets analyst David Coleman lowered his estimates for Alaska Communications Systems Group Inc. (NASDAQ:ALSK) for an anticipated impact of Apple Inc.'s (NASDAQ:AAPL) iPhone 4 and 4S launch on April 20.

The brokerage, which maintained its "Sector Perform" rating and $4 price target, reduced its 2012 adjusted EBITDA estimate to $122.8 million from $126.3 million and its 2013 estimate to $114.1 million from $117.8 million.

Coleman said his 2012 revenue estimate of $359.1 million is in-line with guidance midpoint ($360 million); however, his EBITDA estimate is below guidance (more than $125 million) on his expectation of greater handset subsidies associated with iPhone sales.

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The analyst's 2013 revenue/adjust EBITDA estimates are $349.6 million/$114.1 million (32.6% margin). In addition to an expected loss of about $5 million of high-margin wireless CETC revenue in 2012 and 2013, his estimates also provide for an about $5 million decline of high-margin, wireless roaming revenue as a result of Verizon's LTE network launch in late 2012/early 2013.

Annual Verizon CDMA roaming revenue totals $25 million to $30 million, which the analyst expects to decline inversely proportional to the rate that Verizon seeds its base with LTE handsets.

Alaska's iPhone service plans are available on a nationwide and statewide basis with 2GB and 5GB data caps. One of the company's primary competitors, GCI Communications (NASDAQ:GNCMA), will also launch the iPhone 4 and 4S on April 20. In general, ACS's iPhone service plans are priced at a premium to those of GCI.

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Coleman estimates that ALSK's Nationwide and Statewide iPhone plans with 5GB data caps are priced at 11% and 23% premiums to GCI's most comparable plans; however, GCI does impose a lower data cap (3GB).

ALSK is trading down 1.58% at $2.81 on Thursday.

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