MDU Communications International, Inc.
OTC Bulletin Board : MDTV

MDU Communications International, Inc.

November 19, 2009 09:30 ET

MDU Communications Announces Preliminary Fiscal '09 Year End Results; Continued Increases in Revenue, EBITDA, ARPU; Acquisition Plan Underway

TOTOWA, NEW JERSEY--(Marketwire - Nov. 19, 2009) - MDU Communications International, Inc. (OTCBB:MDTV)

  • Preliminary fiscal year end '09 revenue of $24.8M up 5% over fiscal '08 despite loss of revenue from sale of non-core subscribers to CSC Holdings early in fiscal year
  • Preliminary fiscal year end '09 EBITDA (as adjusted) of $8.5M up 16% over fiscal '08, inclusive of $5.0M and $1.9M gains in fiscal '09 and fiscal '08, respectively, from sale to CSC Holdings
  • ARPU up 12% fiscal year to date to $33.08, due mainly to new DIRECTV® HD services
  • Company upgraded 367 properties containing 72,263 units to new DIRECTV HD platform by fiscal year end
  • Company acquired certain assets of Rocket Broadband Networks, Delrey Technologies and DirecPath; pursuing others

MDU Communications International, Inc. today reports preliminary results for its fiscal year ended September 30, 2009. Preliminary revenue for the fiscal year ended September 30, 2009 was $24,753,128, a 5% increase over the prior fiscal year's revenue of $23,650,725. The Company's preliminary average revenue per unit ("ARPU") across all billable subscriber types was $33.08 at fiscal year end, a 12% increase over the ARPU of $29.55 reported at the end of fiscal '08. The Company's fourth fiscal quarter was the main contributor to the Company's overall fiscal growth, during which revenue increased from $5,784,778 in the quarter ended June 30, 2009 to $6,513,403 in the quarter ended September 30, 2009, with a corresponding increase of 3,324 net new subscribers.

Sheldon Nelson, President of MDU Communications, stated, "The Company maintained a conservative financial approach during fiscal '09 resulting in preliminary EBITDA (as adjusted) for the fiscal year end of $8,457,062, compared to EBITDA (as adjusted) for fiscal '08 of $4,334,927. Exclusive of the gain from the sale of assets to CSC Holdings from both fiscal years, the Company still realized preliminary EBITDA (as adjusted) of $3,418,223 for this fiscal year, compared to EBITDA (as adjusted) of $2,474,334 for fiscal '08. These revenue and EBITDA advances were achieved despite the significant sale of subscribers between the periods."

The Company's continued focus on improving its financial results also resulted, preliminarily, in lower, as a percent of revenue, operating expenses during the fiscal year - specifically direct costs, customer service and general and administrative expenses - when compared to the prior fiscal year ended '08. The Company's sales and marketing expenses, however, increased 1% (as a percent of revenue) year over year as the Company began new marketing campaigns, hired new sales department personnel and retained several teams of independent direct sales representatives to spur organic growth in fiscal 2010.

The Company's property upgrade program to the new DIRECTV HD platform is now complete and resulted in the upgrade of 367 DIRECTV properties containing 72,263 units. This large undertaking resulted in a significant number of Company access agreement extensions and renewals, increased penetration rates, increased sales of advanced services and an increase in the Company's DIRECTV subscriber residual, all of which have positively impacted the Company's financial results and competitive status. DIRECTV currently offers over 130 national HD programming channels (moving to over 200) and has HD local programming in 92% of all U.S. household markets. The continued launch and advertising campaign for the new DIRECTV HD programming and associated services will continue to provide incremental revenue and improved penetration rates within Company properties. Due mainly to new HD and DVR service fees and recent price increases, DIRECTV recently reported an ARPU increase of 2.1% in its third fiscal '09 quarter to $85.32 per subscriber.

The Company reports 65,262 net subscribers at fiscal year end '09 compared with 65,552 subscribers at fiscal year end '08, which was anticipated due to the sale of subscribers at the beginning of the fiscal year. As of September 30, 2009, the Company also had 3,961 units in work-in-progress for which the Company expects a minimum of 1,327 of these units (under contract subscribers) to become billable subscribers in the next few quarters. The Company has embarked on a bold subscriber growth program in fiscal 2010 that includes (i) acquisition of system operators severely constrained by the credit crisis, (ii) organic subscriber growth through new property right of entry agreements, and (iii) increased penetration rates from within properties recently upgraded to the new DIRECTV HD platform. The Company has placed in motion all aspects of this plan. With the new sales personnel now established, the Company has built up an organic sales pipeline of properties already under proposal that should result in a number of new right of entry agreements in the next few quarters.

Acquisitions will play an integral role in the Company's growth in fiscal 2010, and this growth started on June 30, 2009 when the Company executed an agreement to acquire certain assets from New York based Rocket Broadband Networks, Inc., which included 31 multi-family properties representing over 9,100 total units passed by wire. As of October 9, 2009, the Company had fully closed and transitioned all 31 properties. On September 14, 2009, the Company executed an agreement with Delrey Technologies, LLC to acquire certain of its assets including 871 units and 472 subscribers to its Internet and DIRECTV services in New Jersey. Finally, on September 30, 2009, the Company executed an agreement with a subsidiary of DirecPath, LLC to acquire certain of its assets in Florida, including 1,839 units and 2,103 subscribers to its private cable, DIRECTV and Internet services. Approximately 700 of these units with 890 subscribers transitioned on September 30, 2009, with the remaining properties closing as assignment documentation is obtained. The Company is in negotiations with several other entities regarding asset acquisitions that the Company anticipates will close, but makes no representation regarding such, during the next few fiscal quarters.

The Company is also investing in technology that provides more versatility (and economy) in delivering its high-speed Internet service, including plug and play capabilities (eliminating professional installation and truck rolls), tiered bandwidth services, wireless point-to-point property broadband delivery and splash pages directing residents to an Internet service webpage where they can sign-up online, pay their monthly bill online and report most service problems online. To facilitate the bundling of its video, broadband and VoIP services, the Company converted to a new and more robust billing and subscriber management system as of August 30, 2009.

"Being fiscally conservative in fiscal 2009 and instilling the Company mantra of "doing more with less" during the recession has put MDU Communications in a strong position out of the gate in fiscal 2010," commented Mr. Nelson. "We have a technologically upgraded and advanced subscriber base providing a higher ARPU, revenue that is trending up with associated expenses trending down as a percent of that revenue, the completion of three acquisitions with negotiations concluding on several other near term acquisitions, and the expertise to execute on a significant growth plan in 2010. We look forward to great success in the upcoming fiscal year," added Nelson.

The Company expects to file its annual report on Form 10-K for the year ended September 30, 2009 with the Securities and Exchange Commission on or before December 31, 2009. The Company will be hosting a conference call in the next few weeks to discuss the fiscal year end results. Specific information will be provided at a later date and call information will be available on the Company's web site at www.mduc.com.

About MDU: MDU Communications International, Inc. (OTCBB:MDTV) is a leading provider of premium communication/information services, including digital satellite television and high-speed (broadband) Internet services, exclusively to the United States multi-dwelling unit (MDU) marketplace - estimated to include 26 million residences. Through its wholly owned subsidiary, MDU Communications (USA) Inc., MDU Communications delivers DIRECTV® digital satellite television services and high-speed (broadband) Internet systems and is committed to delivering the next generation of interactive communication services to MDU residents. For additional information, please see www.mduc.com or contact Investor Relations.

"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements relating to financial information, property upgrades, strategic partner relationships, subscriber sales, acquisitions, subscriber and revenue growth, implementation of new programs and other developments of the Company. Such statements involve risks and uncertainties which may cause results to differ materially from those set forth in these statements, including, but not limited to, changes in financial condition, efforts on behalf of the Company to finalize and deploy certain programs and close certain acquisitions, fluctuations in operating results and operating plans, deployment of new subscriber growth plans and conversion of existing subscribers, market forces, supplier negotiations and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, including, but not limited to, the Company's 10-K for the year ended September 30, 2008, filed on or about December 23, 2008.

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