Hawaiian Telcom narrowed its financial losses last year despite an erosion of its customer base from competition and customer service problems.

The company lost $144.6 million last year versus $159.6 million in losses in 2005, the company reported yesterday. Revenues rose 6 percent primarily because of a change in accounting methods.

Hawaiian Telcom's losses come from high debt costs and costs associated with turning the company into a standalone phone service. Hawaiian Telcom was created following the $1.6 billion sale of Verizon Hawaii to The Carlyle Group.

Increased competition from wireless companies and struggles with billing and customer service resulted in a 6.6 percent loss of customer access lines last year. Losses on the residential side of the business were even greater. The number of residential access lines fell 9.3 percent, or 37,696 lines, last year. Access line losses were partially offset by an increase in wireless phone and high-speed Internet customers.

For the three months ended Dec. 31, Hawaiian Telcom lost $29.9 million compared with a loss of $44.3 million in the year-ago period. Fourth-quarter revenues increased 4.9 percent to $142.3 million in part because of increased sales of advanced telecommunications equipment.

"Our fourth-quarter results remain below the level of performance we believe this company can deliver, and, as such, we have taken and will continue to take the necessary steps to improve our cost and revenue performance," said Mike Ruley, Hawaiian Telcom's chief executive. "There still remains a lot of hard work ahead to get this company on stronger footing, but we have made a tremendous amount of progress to date."

Hawaiian Telcom recently said it will eliminate operator positions and contract for directory assistance with a Mainland company that has a Honolulu call center to reduce costs and invest in other areas of the company.