Tags: Bishop Communications Corporation, Iowa Telecom, Minnesota

Iowa Telecommunications Services, Inc. (NYSE: IWA) today announced operating results for the second quarter ended June 30, 2008. Quarterly highlights for the Company include:

Operating revenues were $58.2 million.
Operating income was $16.6 million.
Net income was $5.3 million or $0.16 per diluted share.
Adjusted EBITDA (as defined herein) was $30.3 million.

“We are very pleased with our second quarter performance, which was solid despite the weather challenges that we faced in June,” said Alan L. Wells, Iowa Telecom chairman and chief executive officer. “Our operations were only minimally impacted by the historic flooding we experienced, largely because our employees went beyond the call of duty to avoid disruption to our customers’ communications services.

“Adjusted EBITDA for the quarter was $30.3 million, compared with $32.2 million a year ago,” added Wells. “Adjusted EBITDA for the quarter was negatively impacted by a $1.5 million revenue reduction related to a network access billing matter in the quarter, while comparatively, the 2007 quarter included a $980,000 favorable revenue impact from the settlement of a similar matter. Sales of our DSL product remained steady as we added 1,800 new customers during the quarter. Our rate of access line loss for the quarter was 3,700 lines, and was flat with the first quarter of the year.

“Subsequent to quarter end, we closed our acquisition of Bishop Communications Corporation, a local exchange carrier in Minnesota. We expect the Bishop transaction to be cash flow accretive on a per share basis, and are excited about the opportunity to grow our operation into a contiguous state.

As a result of the Bishop transaction, we are slightly modifying our previous guidance. We expect capital expenditures for the year to be similar to 2007 levels, and will be between $27.0 million and $29.0 million. This is a $1.0 million increase over our prior guidance, and is due to both capital expenditures at Bishop Communications, as well as to capital expenditures related to the historic flooding we experienced. We continue to expect cash interest expense to be between $29.0 million and $31.0 million, but expect our expense will be toward the higher end of our range as a result of the additional interest costs on debt related to the acquisition of Bishop,” Wells continued. “For the first six months of this year, capital expenditures were $13.0 million, and our cash interest expense was $14.9 million.

“We are pleased with our results for the first half of 2008. As we move into the balance of the year, our focus will be on continuing to expand our data and CPE business, growing our DSL subscriber base, and retaining access lines through innovative bundled product offerings,” Wells concluded. “We will also continue to identify and evaluate acquisition opportunities, like Bishop, that are accretive and that are strategically beneficial to our rural telecommunications business.”