Hawaiian Telcom Communications Inc. posted a quarterly net loss of $40.1 million as the company continued to lose customers to wireless companies and other competitors.

The loss compares with a $15.5 million net profit in the year-earlier period and follows last week's appointment of Hawaiian Electric Co. executive Eric Yeaman as Hawaiian Telcom's new chief executive officer in a move designed to help turn around the company.

"We are seeing some mild softening in the economic climate here in Hawai'i," Hawaiian Telcom Chief Financial Officer Robert Reich said in a conference call with investors.

"While our business access lines have been historically stable, we are seeing some moderate contraction in our business lines as some companies downsize and respond to the current economic circumstances."

Hawaiian Telcom said the number of its "customer access lines," or land lines, continued to decline during the quarter. The company had a total of 545,000 access lines as of March 31, which was down about 8.3 percent from the year before.

The state's largest phone company reported revenues of $112.4 million during the three months ending March 31, which was down $13 million, or 10.4 percent, from the same period in 2007.

The quarterly result was not unexpected for a company that has lost more than $200 million since 2005 when Washington, D.C.-based Carlyle Group bought the local telecommunications company from Verizon Communications Inc.

INTERNET SUSCRIBERS UP

The $40.1 million net loss is Hawaiian Telcom's fourth largest quarterly loss since the May 2005 takeover. The worst quarterly loss was in the third quarter of 2005, when the company lost $59 million.

The company said its operating expenses declined by $7.2 million, or 8.3 percent, to $79.6 million. That's largely due to lower network-related costs and workforce reductions, which included early retirements and the layoff of 50 managers.

Hawaiian Telcom said the number of subscribers to high-speed Internet service increased by 3.6 percent to 94,230 while revenues from its long-distance services rose 8.3 percent to $9 million.

As of March 31, the company had $93 million in cash and cash equivalents, which compares with $4.9 million the year before.

The financial results coincided with management shakeups. In February, the company's first chief executive officer, Michael Ruley, abruptly resigned and was replaced by New York turnaround expert Stephen Cooper.

And last week, the company named Yeaman as its new CEO and appointed Walter Dods, former First Hawaiian Bank CEO and phone company investor, as its nonexecutive chairman.