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Press release from CNW Group

GLENTEL Inc. Reports Earnings Per Share Of $0.37 for the Third Quarter Ended September 30, 2012

Thursday, October 25, 2012

GLENTEL Inc. Reports Earnings Per Share Of $0.37 for the Third Quarter Ended September 30, 201223:09 EDT Thursday, October 25, 2012BURNABY, BC, Oct. 25, 2012 /CNW/ - GLENTEL Inc. (TSX: GLN) today reported its results for the 3rd quarter and nine months ended September 30, 2012. Financial highlights (tabular amounts in thousands of Canadian dollars, except per share data) follow. Three months ended September 30Nine months endedSeptember 30 2012201120122011Sales$174,834$149,743$467,890$408,770Income before amortization, change infair value of redeemable financialinstruments, finance income andexpenses, and taxes$14,641$14,171$33,126$37,379Income before change in fair value ofredeemable financial instruments,finance income and expenses, andtaxes$11,998$11,357$25,267$29,162Net income$8,263$8,106$16,535$19,042Basic net income per common share$0.37$0.37$0.74$0.86Diluted net income per common share$0.37$0.36$0.74$0.85"Sales increased in the 3rd quarter for both the Retail Canada and Retail U.S. Divisions, as both divisions benefited from the Samsung Galaxy S III and Apple iPhone 5 smartphones launched in the quarter. The Retail U.S. Division saw increases in sales and profit and is showing positive trends versus the 1st two quarters of 2012, resulting from increased sales and cost-control initiatives. These new smartphones should help drives sales in the 4th quarter as we move into the holiday selling season," stated Thomas Skidmore, GLENTEL's President and Chief Executive Officer. "We are excited to continue our relationship with Costco Canada as its exclusive wireless retailer and start a new relationship with Target Canada to be the exclusive wireless retailer for Target Mobile."Consolidated summary3rd Quarter 2012 compared to 2011Consolidated sales increased 17%, to $174.8 million compared to $149.7 million.Income was $14.6 million before amortization, change in fair value of redeemable financial instruments, finance income and expenses, and taxes, compared to $14.2 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes increased 6% to $12.0 million from $11.4 million.Net income and basic earnings per common share were $8.3 million and $0.37 per share respectively, compared to $8.1 million and $0.37 per share.Nine months ended 2012 compared to 2011Consolidated sales increased 15%, to $467.9 million compared to $408.8 million.Income was $33.1 million before amortization, change in fair value of redeemable financial instruments, finance income and expenses, and taxes, compared to $37.4 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes decreased to $25.3 million, compared to $29.2 million.Net income and basic earnings per common share were $16.5 million and $0.74 per share respectively, compared to $19.0 million and $0.86 per share.Retail Canada3rd Quarter 2012 compared to 2011Sales of retail mobile phone products and services in the Retail Canada Division increased 6% to $106.9 million, compared to $100.5 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes remained the same at $13.5 million. The division's operating income was 13% of sales in both 2012 and 2011.Sales increased in the 3rd quarter and same-store activations decreased from the prior year. The launch of the Samsung Galaxy S III and the Apple iPhone 5 helped increase sales. The division was able to increase operating income for the 3rd quarter of 2012 through increased margins and reduced operating expenses. In the 3rd quarter of 2012, the division renewed its contract with Costco Canada to be its exclusive wireless retailer. The division also announced a long-term agreement with Target Canada to be its exclusive wireless retailer for the Target Mobile brand. The division is working with Target on the planning and implementation of the program for a successful launch in 2013, and thus the division will incur development and training costs until the launch of Target Mobile. Also new to the 3rd quarter, the division is operating one mall-based store for a global brand under a management agreement.Nine months ended 2012 compared to 2011Sales of retail mobile phone products and services in the Retail Canada Division increased 6% to $284.0 million, compared to $267.6 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes decreased to $33.1 million, compared to $34.7 million.The 1st two quarters of 2012 saw the carriers face competitive pressures and consumers moving to lower-term plans, which reduced margins for the business. The division is very well positioned to embrace these market changes given that we offer the multi-carrier solution to our customers. The division addressed its cost structure by adjusting operating expenses to align with the decrease in sales. We have concentrated on our operational procedures to align them with our carriers' focus on quality activations and churn management. The division continues to train its sales associates on the fundamentals of sales and product knowledge to provide the best customer service possible. The 3rd quarter saw increased sales and profits with the launch of the Samsung S III and Apple iPhone 5.Retail U.S.3rd Quarter 2012 compared to 2011Sales of retail mobile phone products and services in the Retail U.S. Division increased 45% to $59.9 million, compared to $41.2 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes increased to $4.0 million, compared to $2.6 million.Sales increased in the 3rd quarter and for the nine months ended September 30, 2012, with the greater number of stores operating in the 3rd quarter of 2012 compared to the same period in 2011 and the sales of higher-priced smartphones.  For the first part of the quarter, sales were slow with the rumours of the Apple iPhone 5 release. However, the launch of the Apple iPhone 5 helped increase sales in the late part of the quarter. The Verizon "Share everything plan" helped increase consumer interest in smartphones. These smartphones have a higher selling price and higher cost of goods sold, which also increased sales from the prior period. Verizon continued to introduce promotions in the 3rd quarter of 2012 and the Company matched these promotions to remain competitive in the market; this reduced margins in the 3rd quarter of 2012 by 4% and for the nine months ended September 30, 2012 by 5% versus the previous year. However, margins improved by 2% in the 3rd quarter of 2012 versus the 1st quarter of 2012. The division saw margin improvements from hardware purchase programs and cost-control initiatives. The division rolled out with new energy and focus the employee product sales training program around the Apple iPhone 5 launch.Nine months ended 2012 compared to 2011Sales of mobile phone products and services in the Retail U.S. Division increased 37% to $160.9 million, compared to $117.2 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes decreased to $8.0 million, compared to $8.7 million.Business Division 3rd Quarter 2012 compared to 2011Business Division sales of terrestrial narrowband and broadband radio systems, satellite network services, and implementation services decreased to $8.0 million, compared to $8.1 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes remained the same at $0.4 million.Nine months ended 2012 compared to 2011Sales of terrestrial narrowband and broadband radio systems, satellite network services, and implementation services in the Business Division decreased 4% to $23.0 million, compared to $24.0 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes increased to income of $0.5 million, compared to a loss of $0.3 million.Corporate3rd Quarter 2012 compared to 2011Corporate operating and administrative expenses increased to $5.7 million (3% of sales), compared to $5.0 million (3% of sales). This includes Retail U.S. corporate costs of approximately $1.3 million (2011 - $0.9 million) and one-time acquisition costs of $0.8 million.Nine months ended 2012 compared to 2011Corporate operating expenses increased to $15.8 million (3% of sales), compared to $13.5 million (3% of sales). This includes Retail U.S. corporate costs of approximately $3.6 million (2011 - $2.6 million) and one-time acquisition costs of $2.4 million.About GLENTEL GLENTEL (TSX: GLN) is the largest independent multi-carrier mobile phone retailer in Canada and a leading provider of innovative and reliable telecommunications services and solutions in North America. Founded in 1963 and headquartered in Burnaby, BC, Canada, GLENTEL comprises three operating divisions - Retail Canada, Retail U.S. and Business - that service thousands of consumers and commercial communications customers. The company operates over 540 corporate stores with more than 330 locations in Canada located nationally in retail malls, Costco Wholesale stores, and business centres; and more than 210 retail locations in the United States. GLENTEL offers a choice of network carrier and wireless device or mobile phone to Canadian consumers and offers the family of wireless products and services of Verizon Wireless as one of Verizon Wireless' select six National Premium Retailers in the United States. GLENTEL operates its business under the trading names Glentel Wireless, WIRELESSWAVE, WAVE SANS FIL, Tbooth wireless, la cabine T sans fil, WIRELESS etc., WAVE SANS FIL etc., Mac Station, and Diamond Wireless - a Verizon National Premium Retailer in the U.S.Forward-Looking StatementsStatements in this release relating to matters that are not historical fact are forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, general economic conditions, changes in technology, reliance on third-party manufacturing, managing rapid growth, limited intellectual property protection, and other risks and uncertainties described in GLENTEL's public filings with securities regulatory authorities.NO STOCK EXCHANGE, SECURITIES COMMISSION, OR OTHER REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED HEREIN.For a copy of GLENTEL's annual report or for additional information visit www.glentel.com or www.sedar.com.  SOURCE: Glentel Inc.For further information: Investor Relations Contact: Jas Boparai, Chief Financial Officer GLENTEL Inc. 604.415.6500 investors@glentel.com    Media Contact: Lois Grierson GLENTEL Inc. 604.415.6500  Lois.Grierson@glentel.com