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Broadwing Announces Record Revenue and EBITDA For Fourth Quarter

01/24/01
Continued Focus on Execution and Growth Propels Strong Results Across All Lines of Business CINCINNATI--Jan. 24, 2001--Broadwing Inc. (NYSE:BRW) today reported another quarter of record financial performance. For the fourth quarter, revenues increased 27 percent to $561 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) improved an impressive 81 percent to $146 million. These results are on a pro forma basis as if the acquisition of IXC Communications had occurred at the beginning of 1999.

For the quarter, the company's earnings per share (EPS), excluding nonrecurring charges, was a loss of $0.18 versus a loss of $0.50 for the same period in 1999. During the quarter, the company recorded a nonrecurring charge of $1.08 per share for the net write-down of the company's portfolio of publicly traded securities. The charge had no impact on the company's cash position. Reported EPS for the quarter was a loss of $1.26 per share, which compares to the pro forma loss of $0.53 per share for the same period a year ago.

"Broadwing's outstanding operating results complete an inaugural year that by any measure has been historic," said Rick Ellenberger, president and chief executive officer, Broadwing Inc. "Clearly the investments we have made in wireless, web hosting, and the nation's most advanced IP and optical network, have placed Broadwing in the position to consistently seize new market opportunities and bring the next generation of internet and data services to our customers, well ahead of our competitors."

Operational highlights of the fourth quarter included:

  • Broadwing Communications installed the industry's first intelligent, all-optical switch into its 18,000 mile IP network, achieving another milestone toward expanding the industry's fastest and highest capacity network;

  • The company sold the industry's first native, commercial 10-gigabit (OC-192) circuit;

  • Broadwing Communications' 11 web hosting centers are already 44% sold;

  • The company is equipping 3 of its web hosting centers to become the industry's first Optical Media Centers, combining deep storage technology from EMC Corporation with Broadwing's optical IP network;

  • Cincinnati Bell Any Distance, the company's long distance offering, increased its share to a remarkable 60 percent of the residential market and 29 percent of the business market;

  • Cincinnati Bell Wireless turned in its fourth consecutive quarter of EBITDA profitability, while adding a record 61,000 subscribers during the quarter;

  • Cincinnati Bell's ADSL penetration continued to lead the industry at 6%, over 3 times the national average.


"Our strong operational performance continues to build Broadwing's reputation for strong execution against our business plan, keen management of our assets for growth, and delivery of the next generation of data and internet solutions for our customers," said Kevin Mooney, executive vice president and chief financial officer, Broadwing Inc.

Broadband Services

Broadwing Communications strengthened its position as the dominant next-generation fiber provider with the most available capacity for bandwidth-intensive carriers and enterprise customers.

Broadwing Communications delivered its fifth consecutive quarter of accelerating revenue growth. Revenues grew 43 percent to $284 million. EBITDA was $30 million, versus a loss of $2 million last year. Data revenues continued to propel this robust growth as customers marched further up the bandwidth continuum.

Broadwing also continued to expand and enhance the nation's most advanced, award-winning pure IP network, which today totals 18,000 miles. Broadwing also completed several milestones surrounding the deployment of the first fully-optical network, including taking delivery of all equipment and deploying the industry's first intelligent all-optical switch. Broadwing also strengthened its already best-in-class IP-VPN leadership by introducing a full-featured set of customer network management tools, enhanced service level agreements, and a commercial quality voice-over-IP offering.

Located directly upon this IP backbone are 11 fully operational web-hosting centers serving an impressive mix of customers with a full suite of services from optical transport to complex web hosting and managed services. Early sales have been so strong that expansion of 3 centers is already underway to meet demand.

Complementing Broadwing's unique IP network, hosting centers and service offerings, is Broadwing's IT Consulting group which has seen revenues almost quadruple as they guide traditional businesses to web-enable their operations.

Local Communications Services

Broadwing's local-exchange company, Cincinnati Bell Telephone (CBT), continued to rank as the best performing, best-run ILEC behind strong revenue growth of 7 percent to $205 million and EBITDA of $104 million. Cincinnati Bell's outstanding EBITDA margin of 51 percent represents an increase of 6 points over last year and the tenth consecutive quarter of margin expansion. The primary contributors were strength in data services and high-margin value added services, and continued aggressive cost management.

Customer retention continues to be world-class at 99 percent, despite 38 interconnection agreements, testifying to Cincinnati Bell's reputation for exceptional customer service and ability to offer valuable service bundles. In fact, the company now has more than 180,000 customers who have taken a high-margin bundled offering that can include local, long distance, value-added services, wireless, internet, and ADSL -- all on one bill.

Additionally, Cincinnati Bell continues to expand the region's position as the highest penetrated ADSL market in the country, making it a magnet for the next generation of internet offerings only dreamed about in other communities. In 2000, the number of ADSL subscribers more than doubled, with these Zoomtown users going beyond just fast internet access to be the first in the country to enjoy pay-per-use movies, streaming media, and high-speed gaming - all over copper telephone lines.

Wireless Services

Cincinnati Bell Wireless continued its unparalleled track record as the premier PCS business in the country, adding 61,000 customers -- 22 percent more than the same quarter last year. The company now has 340,000 total subscribers, more than double the amount at the end of 1999. For the quarter, revenues exploded 75 percent to $52 million and EBITDA was $4 million.

Cincinnati Bell Wireless continues to break new ground in creating and marketing new wireless services. The company's new all-you-can-talk nights and weekends plan maximizes off-peak traffic, while driving new sales. In less than sixty days, this offering was responsible for 46 percent of post-paid activations.

i-wireless, the company's innovative, youth-oriented prepaid service stands at almost 100,000 subscribers, each acquired at about half the cost of postpaid customers and generating primarily off-peak traffic.

Operationally, postpaid ARPU maintained the same high levels of a year ago and churn continues at just 1.8 percent.

Other Communications Services

Just one year after launch, Cincinnati Bell Any Distance, the company's industry-leading long distance offering, has captured an astonishing 60 percent of the residential market and 29 percent of the business market. Leveraging this phenomenal success in voice services, the company introduced an innovative marketing program to drive internet and data sales to the Broadwing network.

As a result, Other Communications Services revenue accounted for $39 million, an increase of 44 percent over the same period a year ago and EBITDA was $5 million.

"Broadwing continues to separate itself from the rest of the competitive set with its ability to execute on its vision, see around the next corner of technology development, and stay focused on and committed to its customers," said Ellenberger. "Our speed, accountability, and momentum will continue to work to our advantage in 2001."

Broadwing will host a conference call discussing the fourth quarter and yearend results on Wednesday, January 24 at 9:00 a.m. EST which can be accessed by dialing 800-610-4566 at least fifteen minutes prior to start time. The conference call will also be web-cast on the company's website at www.broadwing.com. A taped replay will be available for one week by calling 888-843-8996, passcode 3417213.

About Broadwing

Broadwing Inc. (NYSE:BRW) combines unparalleled customer service with the industry's most advanced and flexible 18,000 mile next-generation fiber optic network and award winning IP backbone, to create data and Internet solutions that are innovative, reliable, and provide businesses a competitive advantage. Broadwing will be the first provider with a fully deployed optical network and sets the standard for customer accountability with the industry's only installation guarantee. Headquartered in Cincinnati, Ohio and Austin, Texas with 6,000 employees in 56 sales and service offices across the country, Broadwing can be found on the Web at www.broadwing.com.

Note: Information included in this news release contains forward-looking statements that involve potential risks and uncertainties. Broadwing's future results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, Broadwing's ability to maintain its market position in communications services, and it's ability to develop and launch new products and services. More information on potential risks and uncertainties is available in the company's recent filings with the Securities and Exchange Commission, including 1999's Form 10-K for Broadwing Inc. and Broadwing Communications Inc.


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