Broadwing Reports Third Quarter Financial Results
"In the midst of a difficult economy, Broadwing delivered another quarter of revenue growth and margin improvement," said Rick Ellenberger, Broadwing Inc. president and CEO. "The economy continued to worsen and as we exited the quarter, we recognized softening across our business, particularly pronounced in our broadband business, that will make the remainder of the year challenging. We are preparing our company to meet these challenges."
At Broadwing Communications, the company's national broadband services business, revenues grew 15 percent to $304 million. EBITDA increased 23 percent to $33 million.
During the quarter, the company continued to leverage the unique capabilities of its all-optical switched network to create new products and services for customers and set new standards for service delivery. The Broadwing Communications all-optical network also received the Infrastructure of the Year Award at the recent Networld+Interop show.
Broadwing Communications continued to refine its focus up-market. During the quarter the company segmented its enterprise markets for effectiveness and efficiency; strengthened its sales leadership team; and exited telemarketing sales, which sold voice services to a low-end customer base. The National Accounts program continued to grow, particularly in the media and financial services segments.
Broadwing's Cincinnati-based businesses reported revenue growth of 12 percent and EBITDA growth of 20 percent.
In the quarter, Cincinnati Bell was awarded the coveted JD Power and Associates award for Local Residential Telephone Customer Satisfaction, becoming the first provider to simultaneously hold two JD Power and Associates Awards. In early July, the company was selected Number One in Customer Satisfaction for Residential Long Distance Service Among Mainstream Users.
Local Communications Services
Broadwing's local-exchange company, Cincinnati Bell Telephone, produced another quarter of solid financial performance, delivering revenue growth of 5 percent to $209 million and EBITDA that grew to an all-time high of $106 million. Growth in data services and the continued success of bundled offerings fueled results.
Through diligent cost management, revenue per employee is now approaching $300,000 annually. Cincinnati Bell's EBITDA margin remained a strong 51 percent.
Cincinnati Bell Wireless recorded another quarter of strong financial and operational performance. Revenues increased 32 percent to $64 million and EBITDA improved to $20 million, up 163 percent from a year ago.
Cincinnati Bell Wireless continues to be the market share leader with 29 percent of the Cincinnati market. Average revenue per user (ARPU) remains very high with churn near industry lows.
Other Communications Services
Cincinnati Bell Any Distance, the company's award-winning long distance offering, continues to add market share and has captured an impressive 66 percent of the residential market and 37 percent of the business market.
In total, Other Communications Services businesses increased revenue 15 percent over last year to $43 million and generated EBITDA of over $7 million.
"In light of the rapidly changing economic environment, I consider our third quarter results good," said Kevin Mooney, executive vice president and chief financial officer, Broadwing Inc. "Nevertheless, the indicators we saw at the end of the quarter point toward a softening that will be reflected in our 2001 results. We now expect revenues to grow 15% or better, to $2.35 - $2.38 billion, and EBITDA to grow approximately 26%, to be in the $620 - $630 million range, reductions of 5 percent and 2 percent, respectively, from our original guidance. We expect our capital spending to decrease 21% versus last year to $670 million, which is $30 million, or 4%, less than our original guidance. We will remain very aggressive in controlling costs and managing our capital to meet our commitment of becoming free cash flow positive in mid 2002."
"Broadwing's highly diversified collection of businesses, strength of our stable local exchange company, profitable wireless business, and award-winning optical network, position us to weather the changes that our industry is experiencing and prepare us to take advantage of future growth opportunities," said Ellenberger.
Broadwing will host a conference call discussing the third quarter results on Tuesday, October 16 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 4807427.
Broadwing Inc. (NYSE: BRW) is an integrated communications company comprised of 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. The company was recently ranked number one in customer satisfaction by J.D. Power and Associates for local residential telephone service and residential long distance among mainstream users. 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. 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, general economic trends affecting the purchase of telecommunication services, world and national events that may effect the ability to provide services, and its 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 the 2000 Form 10-K for Broadwing Inc. and Broadwing Communications Inc.