Telergee: Rural Telephone Companies’ Financials See Flat Revenues and Declining Margins

Telergee, an alliance of accounting firms specializing in rural telecommunications, finds that the typical small rural telephone company financials saw margins decrease about 3% between 2012 and 2013 as their revenue mix shifted toward non-regulated lines of business.

The decrease in operating margins is not surprising as the Telergee report has seen margins drop all but one year out of the last five. Although policymakers have focused heavily on bringing broadband to rural America in recent years, small telcos’ capital investment, measured as a percentage of operating revenues, was virtually flat – coming in at 20.4% for the median company in 2013, compared with 19.5% for the median company in 2012. Small telcos say they have been reluctant to invest because of uncertainty about their ability to recover that investment as today’s Universal Service Fund transitions to a Connect America Fund.