Broadwing Delivers Record Revenue and EBITDA for First Quarter
Excluding nonrecurring items, the company reported a net loss of $0.15 per share for the quarter versus a loss of $0.30 per share for the same quarter in 2000. During the quarter, the company recorded a $0.02 per share charge for nonrecurring items, consisting primarily of the restructuring of Cincinnati Bell. On an as reported basis, the loss of $0.17 per share compares to a loss of $0.28 per share in the previous year.
"In a period where established providers are losing market share and emerging providers are struggling, Broadwing continues to shine," said Broadwing's CEO, Rick Ellenberger. "Our record financial results are further proof that the momentum across all lines of business is accelerating."
Highlights of recent activities include:
During the quarter, Broadwing completed its intelligent, all-optical switched network, the first of its kind in the communications world. By switching light across the network backbone, without the need for electrical signal regeneration, the Broadwing network is able to operate at levels of capacity, speed, availability, and efficiency that dwarf any of the 'legacy' networks in operation today.
Also during the quarter, the company created a new customer-centric structure among its Cincinnati-based businesses that coordinates the activities of several units into a single Cincinnati Bell brand. In addition to providing even better service for its customers, this structure has enabled the company to create unique bundles of services, improve customer loyalty, lower churn, and reduce costs.
"Broadwing continues to deliver record revenue and EBITDA from a secure and diverse mix of customers," said Kevin Mooney, executive vice president and chief financial officer, Broadwing Inc. "All of our businesses are excelling, we are experiencing good leverage, and delivering our business plan."
At Broadwing Communications, the company's national broadband services business, revenues grew 40 percent to $297 million. EBITDA was $33 million, versus a loss of $2 million last year. Data revenues were responsible for 73 percent of revenue growth this quarter and now comprise 58 percent of total revenue. Customers continue to display a strong appetite for higher bandwidth services. In fact, the company installed the industry's first native-speed, 10-gigabit (OC-192) circuits during the quarter.
The enabling power of Broadwing's all-optical network attracted major broadcasters, leading financial institutions, carriers, and interactive media companies, among others. This first-of-its-kind network, along with the company's robust web enablement capabilities, offers customers creative ways of reaching new markets and discovering new revenue streams.
During the quarter, Broadwing began transforming its web hosting centers in Cincinnati, Dallas, Santa Clara and New York, into Optical Media Centers. These first-of-a-kind facilities combine the speed and capacity of the all-optical network with EMC Corporation's deep storage technology to provide customers the capability to store, manage and transport enormous amounts of data, streaming media, and rich content.
Broadwing's IT Consulting operations, which are now national in scale with 25 branch locations, accelerated momentum in the first quarter. IT Consulting has experienced record growth as their portfolio of web enabling services, ranging from desktop to hosting, gained traction with Fortune 1000 companies. For the quarter, revenues more than tripled over the same period in 2000.
Broadwing's Cincinnati-based businesses grew 17 percent, about twice the RBOC average, with a majority of growth coming from data, internet, and wireless initiatives.
Cincinnati Bell Wireless continued as the most innovative and best performing PCS business in the country. The company added 40,000 subscribers in the quarter and now has 379,000 total subscribers giving it a 28 percent share of the market. For the quarter, revenues jumped 56 percent to $57 million and EBITDA rocketed to almost $15 million from under $2 million a year ago.
Following the extremely successful launch of its prepaid offering, Cincinnati Bell introduced the next generation of wireless applications - short messaging services. This service, aimed primarily at the teen and pre-teen market, has garnered over 30,000 subscribers, in only 30 days, and generates approximately 300,000 short messages per day across our network. Half of all short messages that travel across the AT&T Wireless network originate and terminate in Cincinnati.
Our post-paid ARPU of $62, combined with one of the industry's lowest churn rates of 1.5 percent, helped contribute to CBW's overall record EBITDA margin of 26 percent. Additionally, costs per gross add dropped to a record low in the period.
Local Communications Services
Broadwing's local-exchange company, Cincinnati Bell Telephone, continued to excel as one of the best performing, best-run ILECs, delivering strong revenue growth of 7 percent to $205 million and EBITDA that grew twice as fast as revenues to $104 million. Cincinnati Bell's EBITDA margin of 51 percent represents an increase of 4 points over last year. The primary contributors were strength in data products and high-margin value added services, and continued aggressive cost management.
Customer retention continues to be world-class at 99 percent, a testament to Cincinnati Bell's reputation for exceptional customer service and the appeal of its highly profitable bundle. Currently the company now has almost 200,000 customers who have taken a high-margin bundled offering, with over 15,000 subscribers taking the richest $80 bundle. As a result, revenue per household grew to $40 per month.
Additionally, the company continues to expand the region's position as the highest penetrated ADSL market in the country with over 45,000 subscribers. In the quarter, Cincinnati Bell became the first ILEC in the nation to fully deploy streaming media and entertainment-on-demand services enabling customers to watch movies, music videos, and classic television shows - all delivered over their telephone line.
Other Communications Services
Cincinnati Bell Any Distance, the company's industry-leading long distance offering, now stands at an astonishing 64 percent of the residential market and 30 percent of the business market. Notably, 30 percent of Any Distance subscribers also sign up for one of the bundled offerings.
Other Communications Services businesses increased revenue 34 percent over last year to $40 million and generated EBITDA of $4 million.
"The market is moving to Broadwing as we continue to separate ourselves from the rest of the competition with our unique, robust collection of assets, strong financial performance, commitment to our customers, and energy of our employees and management team," said Ellenberger.
Broadwing will host a conference call discussing the first quarter results on Thursday, April 19 at 9:00 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 3852552.
Broadwing Inc. (NYSE:BRW) combines unparalleled customer service with the industry's most advanced and flexible 18,500 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 is 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 6,400 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 2000's Form 10-K for Broadwing Inc. and Broadwing Communications Inc.