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Broadwing Continues Record Financial Performance In Second Quarter

07/19/01
Revenue up 22%; EBITDA up 25% Data, Internet, and Wireless services fuel growth CINCINNATI--July 19, 2001--Broadwing Inc. (NYSE:BRW) today announced its fifth consecutive quarter of revenue growth greater than 20 percent. For the second quarter, revenues increased 22 percent to $608 million, while earnings before interest, taxes, depreciation and amortization (EBITDA) grew 25 percent to $162 million. The company reported a net loss of $0.14 per share for the quarter versus a net loss of $0.18 per share, excluding non-recurring items in the same quarter in 2000.

"The energy of Broadwing's employees and their unyielding focus on execution continues to fuel our growth, even in challenging times," said Rick Ellenberger, president and CEO of Broadwing Inc. "We are a strong company that is only getting stronger with the sales infrastructure, network, and support systems, to quickly, reliably, and profitably deliver services to our customers."

Highlights of recent activities include:

  • Broadwing Communications' strategy to sell lightwave services was validated by a $180 million contract with a major carrier as the foundation for its nationwide network.
  • Cincinnati Bell, in its first year of eligibility, received the prestigious JD Power and Associates award as Number One in Residential Long Distance Customer Satisfaction - Mainstream Users, while gaining a 65 percent market share in consumer long distance traffic - all carried over Broadwing's national fiber network.
  • Broadwing Communications shattered industry benchmarks for provisioning by delivering 31 OC-192 segments, representing over 310 gigabits/second in nationwide capacity, to a major carrier customer in less than 45 days.
  • Cincinnati Bell Telephone continued to grow and perform at a rate twice that of its peer group, while improving margins and maintaining superior customer service measurements.
  • Broadwing Communications' success with Fortune 2000 companies accelerated as the unique speed, capacity, and delivery capabilities of the all-optical network attracted an ever-expanding portfolio of high value customers.
  • Cincinnati Bell Wireless reached 415,000 total subscribers during the quarter, an increase of 74 percent from a year ago, while expanding its market dominant position to a 29 percent share.
  • The company strengthened its financial position by adding $200 million in additional borrowing capacity at attractive rates, while borrowing less cash than in any previous quarter.

"Broadwing's record results are further evidence that we are right on track to deliver the five year plan we presented to investors two years ago," said Kevin Mooney, executive vice president and chief financial officer, Broadwing Inc. "Our ability to execute against growth opportunities across the business, while maintaining a strong cash position, has enabled Broadwing to continuously deliver record financial performance."

Broadband Services

At Broadwing Communications, the company's national broadband services business, revenues grew 33 percent to $319 million. EBITDA increased 36 percent to $36 million. Data revenues propelled 91 percent of revenue growth this quarter and now comprise 61 percent of total revenue.

During the quarter, Broadwing's vision of using the all-optical, switched network to provide lightwaves as the foundation for network backbones was validated with a $180 million sale to Teleglobe and additional sales of lightwaves to other network providers.

The company leveraged the power of the optical network to deliver the next-generation of data and internet applications by beginning trials of new offerings in coast-to-coast Gigabit Ethernet and managed services through its Optical Media Centers.

Broadwing's IT Consulting business continued to grow at a record pace - more than doubling over the same quarter last year. Broadwing's portfolio of managed services, web enablement capabilities, and systems integration expertise, offered a perfect complement to the company's transport services and network assets.

Cincinnati-Based Operations

Broadwing's Cincinnati-based businesses continued their track record of strong growth, increasing revenue 13 percent, while expanding their world-class reputation for customer satisfaction.

By winning the 2001 JD Power and Associates award as Number One in Residential Long Distance Customer Satisfaction - Mainstream Users, Cincinnati Bell proved the correlation between superior customer service and exceptional financial performance. By providing customers with bundled services, simplified billing, and an outstanding customer experience, Cincinnati Bell continued to expand its market share and revenue for wireless, long distance, value-added services, and ADSL to record levels.

Wireless Services

Cincinnati Bell Wireless continued its strong showing as the best performing PCS business in the country with its second consecutive quarter of net income. For the quarter, revenues increased 47 percent to $63 million and EBITDA improved to $15 million, up over 160 percent from a year ago.

Presently 54 percent of applicable wireless customers take a combined bill with their local service, significantly reducing their susceptibility to churn. In fact, with an industry low post-paid churn rate of only 1.4 percent and post-paid ARPU of almost $64 per month, Cincinnati Bell Wireless delivers the revenue growth of a start-up with the 24 percent EBITDA margin of an established provider.

Local Communications Services

Broadwing's local-exchange company, Cincinnati Bell Telephone, delivered another quarter of excellent financial performance, delivering strong revenue growth of 6 percent to $207 million and EBITDA that grew faster than revenues to an all-time high of $105 million. Cincinnati Bell's EBITDA margin of 51 percent represents an increase of 2 points over last year. Robust growth in data services and the continued success of bundled offerings fueled strong results.

Revenue per household continues to expand, growing 9 percent to $43 per month, with over 213,000 subscribers now taking one of the company's bundled offerings and 20,000 subscribers taking the richest $80 bundle. ADSL subscriptions continued their steady growth of 74 percent year over year to over 50,000 total subscribers.

Other Communications Services

Cincinnati Bell Any Distance, the company's award-winning long distance offering, continues to gain market share and now stands at an astonishing 65 percent of the residential market and 34 percent of the business market.

According to JD Power, Cincinnati Bell Any Distance ranks highest among mainstream users. Cincinnati Bell performed well above industry average on all seven factors impacting customer satisfaction, and led the industry in five categories: cost of service/value for price, corporate image, billing, call quality, and bundled services.

In total, Other Communications Services businesses increased revenue 13 percent over last year to $41 million and generated EBITDA of almost $6 million.

"Broadwing's second quarter performance clearly illustrates the overall financial strength of the company and the momentum that continues across our business, which has energized our employees, customers, and business partners," said Ellenberger.

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Broadwing will host a conference call discussing the second quarter results on Thursday, July 19 at 10:00 a.m. EDT which can be accessed by dialing 800-422-9256 (internationally at 847-619-6928) 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 (internationally at 630-652-3044), passcode 4347390.

About Broadwing

Broadwing Inc. (NYSE: BRW) is parent to two of the industry's leading communications companies, Broadwing Communications and Cincinnati Bell. Broadwing Communications leads the industry as the world's first intelligent, all-optical, switched network provider and offers businesses nationwide a competitive advantage by providing data, voice and Internet solutions that are flexible, reliable and innovative on its 18,500-mile optical network and its award-winning IP backbone. Cincinnati Bell is one of the nation's most respected and best performing local exchange and wireless providers with a legacy of unparalleled customer service excellence and financial strength. Cincinnati Bell provides a wide range of telecommunications products and services to residential and business customers in Ohio, Kentucky and Indiana. Broadwing Inc. is headquartered in Cincinnati, Ohio and has 6,400 employees in 56 sales and service offices across the country. For more information, visit 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 2000's Form 10-K for Broadwing Inc. and Broadwing Communications Inc.

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