Axia Releases Results for Q1FY11

• Consolidated revenue for the first quarter of FY11 increased 9% to $19.9 million from $18.3 million for the prior quarter. 
• Net income for the current quarter was $2.0 million ($0.03 per fully diluted share) consistent with the prior quarter.
• Alberta's Other Services revenue had a one-time increase of $2.3 million compared to the prior quarter, which was attributable to additional connection services projects completed during Q1FY11.
• Covage's total bandwidth grew to 85 Gbps at the end of September 2010 from 72 Gbps at the end of the previous quarter.
• Axia and its Spanish partner, Imagina were awarded a 20 year contract by the Generalitat of Catalonia to carry out the Xarxa Oberta network project in Catalonia.
• Network construction in Singapore has now been completed to over 40% of premises.

CALGARY, Nov. 8 /CNW/ - Axia NetMedia Corporation (Axia) today announced the results for Q1FY11 for the period ended September 30, 2010.

Art Price, Chairman and CEO commented, "Our business in Alberta, our evolving business in France, and our rollout in Singapore all are on plan and on track."

Operational Highlights

North America

Alberta

The Alberta SuperNet Next Generation Network (NGN) continues to perform on plan. Other Services revenue grew 115% to $4.3 million for the first quarter as compared to $2.0 million for the previous quarter due to non-recurring connection services projects completed during the current quarter.  The gross profit for this NGN was $7.1 million for the current quarter as compared to $6.0 million for the prior quarter and $6.4 million for Q1FY10.

Axia is working with the community of Olds to explore the implementation of a Fibre-to-the-Premise (FTTP) network.  The goal is to link every household and business in Olds to the Alberta SuperNet, enabling a high quality end user experience.  Olds hopes to be the first community to showcase how the Alberta SuperNet can be extended directly to homes and businesses through an efficient policy and cost effective funding framework. 

Massachusetts

Throughout North America, Axia continues to monitor and pursue attractive opportunities that meet its business growth objectives.  In Western Massachusetts, Axia has responded to an RFP issued by the Massachusetts Broadband Institute for their 1,300 mile fibre network in Western and North Central Massachusetts which will be built with over US$70.0 million of public funds.  Axia is currently shortlisted as one of three potential candidates and Axia expects further discussions during November 2010.  A final decision and negotiated contracts with the successful bidder are expected by the end of this year. 

Europe

France

In France, Covage's network deployment schedule and initial market adoption remain on track.  As at September 30, 2010, Covage had 67 customers with 1,359 active connections.  Total bandwidth grew to 85 Gbps at the end of September 2010 from 72 Gbps at the end of June 2010 and Covage's addressable market penetration was estimated at 4.0%.  Covage's broadband revenue growth continues and was $3.7 million for the quarter as compared to $3.3 million for the prior quarter and $2.5 million for Q1FY10.

The French government has created a €2.0 billion fund to support the deployment of Fibre-to-the-Home (FTTH) in semi-dense and rural areas. The Government has issued an RFP for pilot FTTH projects to which Covage has responded with projects in a number of its existing concessions. The results will be known by the end of 2010.

As of today, Covage has five outstanding bids for regional network segments and decisions are  expected on most of these bids in 2011.

Spain

Recently, Axia and its Spanish partner, Imagina Media Audiovisual (Imagina), were awarded a 20 year contract by the Generalitat of Catalonia (the Generalitat) to carry out the Xarxa Oberta (Open Network) project in Catalonia. Axia expects the project agreement with the Generalitat to be signed by the end of November 2010.  Xarxa Oberta, a Spanish company owned and controlled by Axia and Imagina, will connect 696 Generalitat sites in the fields of health, education, justice and safety in 95 municipalities of Catalonia.

For the first two years of the network project, Xarxa Oberta will be focused on deploying electronics and activating services on the Generalitat's existing fibre infrastructure which will reach 20% of the Generalitat's 696 sites. In years three and four, Xarxa Oberta will build new fibre to the remaining sites and municipalities.

The Generalitat has committed to pay €253 million of recurring bandwidth fees over the 20 year term.  Xarxa Oberta will also be selling wholesale services to the markets where its network is being deployed, excluding the city centres of Barcelona and three provincial capitals where the European Commission has determined that a competitive market currently exists. 

Asia Pacific

Singapore

Currently, construction to over 40% of premises on the OpenNet NGN has been completed.  While the network is being constructed, OpenNet has also begun selling services on completed portions of the network.  Nucleus Connect recently began operations and announced that it had already signed up five RSPs who have packaged and are reselling broadband services to end users.

Q1FY11 Consolidated Financial Information

Consolidated revenue for the first quarter was $19.9 million, an increase of 9% from the prior quarter and 23% from Q1FY10. Broadband Services revenue has generally increased quarter over quarter.  However, Other Services revenue has fluctuated significantly due to its project-oriented nature.

Consolidated gross profit for the first quarter was $7.9 million or 40% of revenue which is a 15% increase compared to the prior quarter and a 20% increase from the same quarter last year. As a percentage of revenue, gross profit has remained relatively consistent.

Net income for the current quarter was $2.0 million ($0.03 per fully diluted share), consistent with the prior quarter.  Net income for the same quarter of the prior year was $0.9 million ($0.01 per fully diluted share).

As at September 30, 2010, Axia's working capital was $23.7 million as compared to $21.8 million at June 30, 2010.  This increase of $1.9 million is primarily attributable to cash provided by operating activities. 

Outlook

Axia's business is based on NGNs that are increasingly seen as critical infrastructure to enable end users to improve their productivity and efficiency.  Most of the digital based technology being developed depends on next generation network connectivity.  These characteristics are becoming better understood by progressive jurisdictions and as a result, the related public policy and telecom regulation is being reviewed and adjusted to enable deployment of this critical infrastructure. Axia continues to invest business development funds to investigate and assess the best available opportunities globally. 

Conference Call Scheduled

A conference call for the investment community will be held Tuesday, November 9, 2010 at 3 p.m. (Eastern) and 1 p.m. (Mountain). Axia Chairman and CEO Art Price, Axia Canada President and Executive Vice-President Murray Sigler, and Chief Financial Officer Peter McKeown will participate.

To participate in the conference call, please dial [phone] in Toronto and internationally. If you are connecting from other parts of Canada, dial 1-888-231-8191.  Please call ten minutes prior to the start of the call. A live webcast (listen only mode) of the conference call will be available at:

http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3256000

A replay of the conference call will be available at [phone] or 1-800-642-1687, passcode 16709085 from 6 p.m. (ET) Tuesday, November 9, 2010 to midnight (ET) Tuesday, November 16, 2010, or through the webcast archives at http://www.newswire.ca.

About Axia

The unaudited Consolidated Financial Statements for the quarter ended September 30, 2010 and related Management's Discussion & Analysis have been reviewed and approved by Axia's Audit Committee and Board of Directors.  These reports have been filed on SEDAR at www.sedar.com and also posted at www.axia.com.

Axia sells Real Broadband™ and passive services on Next Generation Networks that have implemented the Axia NGN Solution. To date, the Axia NGN Solution has been implemented in Alberta, France and Singapore. Axia trades on the Toronto Stock Exchange under the symbol "AXX".

This News Release contains forward-looking statements, including, without limitation, statements containing the words "should", "believe", "anticipate", "may", "plan", "will", "continue", "intend", "expect", "estimate" and other similar expressions which constitute "forward-looking information" within the meaning of applicable Canadian securities laws.  These statements are based on our current expectations, estimates, forecasts and assumptions about the operating environment, economies and markets in which we operate and are subject to important assumptions, risks and uncertainties that are difficult to predict.  Examples of these statements would include those where Axia forecasts its success and timing in winning new NGN business, the timing of completion and estimated total costs of our networks, the revenues and operating costs associated with these networks over time, and Axia's ability to generate future cash flows and avail itself of other financing alternatives given current market conditions.  The assumptions, risks and uncertainties that could cause actual results to differ materially from the forward-looking information, include, but are not limited to, changes in customer markets, changes in demand for our services, our inability to deliver services in a timely and cost efficient manner, technological change, general economic conditions and other risks detailed from time to time in our ongoing filings with the Canadian securities regulatory authorities, including those in our Annual Information Form, which filings can be found at www.sedar.com. Given these assumptions, risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.  Unless otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise.

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For further information:

please visit Axia's website at www.axia.com, or contact:

Dawn Tinling
VP, Investor Relations and Communications
Axia NetMedia Corporation
[phone]
[email protected]