MDTV has made some incredible progress over the last year and a half. They have refocused the business and cleaned up the balance sheet. I have put it back on my radar screen.
MDU COMMUNICATIONS INTERNATIONAL, INC. - Subscriber Growth Continues in Second Fiscal Quarter 2002 - Verizon Transfer of Properties and Subscribers Underway
New York, New York, May 10, 2002 (Market News Publishing from COMTEX) -- MDU Communications International, Inc. reports subscriber growth to its digital satellite and Internet services continued at a conservative pace during the second quarter of 2002. As of March 31, MDTV had 7,741 subscribers to its services in 165 properties as compared to 6,883 in 163 properties on December 31 and 6,067 subscribers in 151 properties as of September 30. Of the 7,741 subscribers, 675 are to the Company's high-speed Internet service. The Company realized revenue of approximately $690,000 during the second fiscal quarter ending March 31, 2002. The MDU Communications' Joint Venture gross revenue, of which the Company has a 50% interest, was $108,446 for the quarter. Of the 7,741 current subscribers, 1,125 are subscribers in the MDU Communications' Joint Venture.
Of MDTV's 165 properties, which represent over 20,000 units, 19 properties (4,792 units) have work in progress ongoing. A large number of these units are in bulk or exclusive/preferred marketing type properties where the Company expects to achieve high subscriber penetration rates due to the lack of competition. In addition, at quarter's end, MDTV had a backlog of approximately 20,000 units signed to letters of intent or access agreement.
The Company's average monthly operating expenses for the quarter, exclusive of capital expenditures and depreciation, is constant from the previous quarter's monthly average of $217,000, to a second fiscal quarter 2002 average of $216,000 per month. Newly implemented cost reductions and efficiencies should decrease average expenses in the third and fourth quarters. The Company is on track for positive EBITDA by fiscal year end 2002. The Company remains free of any long-term debt and as of March 30, the Company had 28 employees.
This quarter, the Company has been concentrating its efforts on providing a seamless transition of service to properties and subscribers acquired from Verizon Media Ventures and Verizon Entertainment Services. The first stage of properties transferred from Verizon to MDTV is now complete, including three properties totaling 1,005 units of Roseland Property Company, a large Northeastern property developer with whom MDTV already has a significant working relationship. Subscriber penetration rates in these properties are about 70%, resulting in approximately 680 subscribers transitioned to MDTV. In addition, the recent transfer included two properties totaling 306 units that although fully wired, have no current subscribers. MDTV successfully integrated the 680 subscribers into its DataMan subscriber management system and launched a new marketing initiative into the two properties that have no subscribers. The second grouping of Verizon properties has just recently been transferred, though not included in the March 30 subscriber numbers, giving MDTV an additional 35 properties comprised of 5,092 units and 931 subscribers. The remainder of the Verizon properties will be transferred in June.
The Company has been realizing operating expense savings from its proprietary "DataMan" subscriber management software system. By automating the subscriber acquisition, installation, management, marketing and billing process, the Company is able to reduce monthly operating expenses. Additionally, the Company will be able to accelerate its subscriber growth without the need for costly internal infrastructure development or the hiring and training of a substantial number of new employees. The Company's $1.5 million investment in DataMan, and in refining each of the critical processes and modules required to increase organic growth to 1,000 net new subscriber additions per month and beyond, will become more apparent in the third and fourth fiscal quarters of this year.
MDTV has test launched a new marketing initiative in select MDTV multi-family properties in the greater New York area market, including those recently transitioned from Verizon. The promotion targets residents living in apartment and condominium communities served by cable television providers that do not carry the YES (Yankee Entertainment and Sports) Network. Given the demand to watch televised New York Yankees games and the fact DIRECTV(R) offers the YES Network as part of its most popular program package, Total Choice(R), the demand for DIRECTV service has been significant. The special marketing program offers residents free use of satellite receivers and free installation when they subscribe to DIRECTV. Residents "plug in" to the MDTV network installed in the property, and are then able to access and purchase DIRECTV services. MDTV charges customers a fee of $8.50 per month or $99.00 per year for access to its satellite dish and building wiring network. From DIRECTV, MDTV receives an incentive for each net new subscriber added and a share of the monthly programming fees received from the subscriber.
During the quarter, MDTV privately raised $1.25 million in the form of convertible security instruments to fund, operate and provide marketing support to the Verizon acquisition. In addition, the Company recently announced the execution of a renewable and revolving Project Financing Agreement. The first "draw" on the funds of $300,000 will go toward final deployment of systems and marketing initiatives in seven new properties covering 1,854 units. The results of the first round of funding will be reflected in accelerated growth in our third fiscal quarter subscriber numbers. A second round of financing is currently being negotiated for a large potential project in Washington D.C.
During the quarter, management and a number of other employees continued their participation in the Employee Stock Purchase Program by redirecting a portion of their net monthly salary towards the purchase of MDTV common shares. All together, upper management purchased 108,660 shares during the quarter, while CEO Sheldon Nelson purchased 169,533 shares over the past two quarters.
Sheldon Nelson, Chairman and CEO of MDTV, commented, "We have achieved consistency in our revenues and subscriber growth and once the transition of Verizon subscribers is completed, we will be on track to achieve positive EBITDA. This milestone is the beginning of our business plan becoming self-funding. The upfront subsidy we receive from each new subscriber coupled with the monthly subscriber revenue streams will allow us to greatly accelerate deployment. In addition, changes in our marketing department will drive higher penetration rates and higher revenues per subscriber while a reorganization in our customer service and operations department have led to greater efficiency. The focus is on customer service and the bottom line, which requires the management of this Company to be aggressive and unrelenting in our pursuit for results."
The Company's Annual General Meeting is set for May 9, 2002 at the Company's offices. The Company's quarterly report on Form 10-QSB for the period ending March 31, 2002 will be filed with the SEC on or about May 15, 2002 and can be found on the EDGAR database at www.sec.gov.
About MDU: MDU Communications International, Inc. (OTCBB: MDTV chart, msgs) is a leading provider of premium communication/information services, including digital satellite television, high-speed (broadband) Internet and in-suite monitored security 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., MDTV delivers DIRECTV(R) 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 future deployment, subscriber and revenue growth 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, efforts on behalf of the Company to raise additional funds, fluctuations in operating results and operating plans, deployment of new subscribers, market forces 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-KSB for year ended September 30, 2001 filed on or about December 24, 2001, and incorporated herein by reference.
The Company's filings, including current financial reports, can be accessed through the EDGAR database at www.sec.gov. |
