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Cincinnati Bell Inc. Completes Nine Consecutive Quarters of Year-over-Year Revenue Growth and Delivers Strong 2007 Performance

02/07/08

Increased Profitability from Wireless and Technology Solutions Drives Full-Year Improvement

CINCINNATI--(BUSINESS WIRE)--Feb. 7, 2008--Cincinnati Bell Inc. (NYSE:CBB) today announced results for the fourth quarter including revenue of $360 million, an increase of $31 million or 10 percent from the prior year quarter. Operating income was $41 million and included a pre-tax restructuring charge of $38 million related to the company's previously announced restructuring plan. Net income for the quarter was $1 million. Earnings per share on a diluted basis(1) was a 1 cent loss. Excluding restructuring charges, net income was $23 million or 8 cents per share. Adjusted earnings before interest, taxes, depreciation and amortization(2) (Adjusted EBITDA) equaled $118 million, up $6 million, or 6 percent from a year ago.

"2007 was an outstanding year for Cincinnati Bell. Investments in our Wireless and Technology Solutions segments drove significant rates of revenue and operating income growth," said Jack Cassidy, president and chief executive officer of Cincinnati Bell Inc. "Despite the intense competition in our market, consistent execution of our strategy has produced the ninth consecutive quarter of revenue growth and sixth consecutive quarter of combined Adjusted EBITDA growth in our three operating segments."

Revenue in 2007 totaled $1.3 billion, an increase of $79 million or 6 percent from 2006. Operating income for the year was $282 million with net income of $73 million, or 24 cents per diluted share. Net income excluding special items(3) was $96 million or 33 cents per diluted share, up $7 million or 2 cents per share from 2006 also excluding special items. Adjusted EBITDA equaled $473 million representing a year-over-year increase of 3 percent.


    Quarterly Highlights

    --  Quarterly revenue increased 10 percent or $31 million from a
        year ago reflecting growth of $17 million in service revenue
        and $15 million in equipment revenue.

    --  The Technology Solutions segment had quarterly revenue of $78
        million, an increase of 26 percent from a year ago
        representing growth in each of its reported lines of business.
        This drove a 31 percent increase in operating income and 76
        percent increase in Adjusted EBITDA from the fourth quarter of
        2006. Adjusted EBITDA reached a record $10 million.

    --  Wireless service revenue in the quarter was $70 million. This
        led to a 32 percent increase in operating income and a 28
        percent increase in Wireless Adjusted EBITDA. Adjusted EBITDA
        margins expanded 3 points from the fourth quarter of 2006 to
        25 percent.

    --  Wireline segment profitability remained strong. Operating
        income was $35 million and included a restructuring charge of
        $34 million. Adjusted EBITDA increased $1 million versus the
        prior year to $97 million as data, long distance and expansion
        market revenue growth and expense reductions offset the impact
        of decreased consumer voice revenue in Cincinnati Bell's
        traditional operating area.

    --  In the quarter, Cincinnati Bell further expanded its growing
        enterprise business. The Company acquired the assets of
        GramTel USA, Inc. in a transaction valued at $20 million.
        GramTel is a regional provider of disaster recovery, business
        continuity and data backup services and operates four data
        centers in Indiana, Illinois and Michigan. Also, on February
        1st Cincinnati Bell finalized its previously announced
        acquisition of eGIX Inc., an Indiana-based competitive service
        provider for approximately $18 million plus certain
        additional, future performance-related payments.

    --  As a result of initiatives designed to improve its future cost
        structure, the company incurred a pre-tax restructuring charge
        of $38 million in the quarter. The charge includes the cost of
        a previously announced voluntary retirement program for
        management and costs associated with other anticipated
        workforce reductions.

    --  In a separate release issued today, Cincinnati Bell also
        announced that its Board of Directors has authorized the
        repurchase of the Company's outstanding common stock in an
        amount up to $150 million over the next two years.

    --  Cincinnati Bell met or exceeded its 2007 financial guidance:

      Category         2007 Actual Results    2007 Original Guidance
----------------------------------------------------------------------
Revenue                   $1.3 billion         Approx. $1.3 billion
----------------------------------------------------------------------
Adjusted EBITDA           $473 million        Approx. $465 million(a)
----------------------------------------------------------------------
Capital Expenditures  $234 million; 17% of    Approx. 19% of revenue
                             revenue
----------------------------------------------------------------------
Free Cash Flow(4)          $59 million          Approx. $50 million
----------------------------------------------------------------------
(a) Adjusted EBITDA guidance updated to $470 million on Nov. 2, 2007.

Financial and Operations Overview

"Combined Wireless and Technology Solutions revenue and EBITDA growth continue to offset Wireline profit erosion caused by consumer access line loss," said Brian Ross, chief financial officer of Cincinnati Bell Inc. "As a result, cash flow remains strong, our balance sheet is solid and our operations are well-positioned for 2008."

Quarterly free cash flow was $10 million, which included a $22 million data center customer prepayment, with which the Company accelerated $20 million of future mandatory pension contributions. Free cash flow for 2007 equaled $59 million.

Capital expenditures were $81 million in the quarter and $234 million, or 17 percent of revenue, for the year. Year-end net debt(5) totaled $1.98 billion, down $27 million from the end of 2006.

Wireline Segment

Quarterly Wireline revenue equaled $212 million, up $10 million from a year ago mostly related to a large business customer premise wiring project. Operating income was $35 million and included a restructuring charge of $34 million. Adjusted EBITDA totaled $97 million, an increase of $1 million from the fourth quarter of 2006. For the year, segment revenue was $822 million, an increase of $11 million or 1 percent from 2006. Operating income was $253 million, which included pre-tax restructuring charges of $36 million. Adjusted EBITDA was $394 million, down $7 million or 2 percent from 2006.

Year-over-year total access line loss in the quarter was 6 percent. At the end of 2007, expansion market access lines had reached 62,000, up 12,000 lines from the end of 2006. This growth partially offset the impact of the loss of consumer access lines in Cincinnati Bell's traditional service area.

Wireless Segment

Quarterly revenue increased 13 percent to $77 million and operating income, which included a pre-tax restructuring charge of $2 million, equaled $8 million. Operating income increased $2 million or 32 percent from a year ago, primarily due to an 8 percent increase in the segment's subscriber base. Adjusted EBITDA was $19 million compared to $15 million in the fourth quarter of 2006. For the year, Wireless revenue totaled $295 million, up $33 million or 12 percent from 2006. Operating income was $34 million with Adjusted EBITDA of $74 million, an increase of $21 million or 39 percent from a year ago.

In the fourth quarter, postpaid net activations were 9,400 compared with 16,000 in the prior year. Postpaid quarterly average revenue per user (ARPU) of $46.14 and churn of 1.59 percent were comparable to the prior year quarter. Prepaid net activations totaled 4,200 in the quarter and ARPU equaled $26.10 compared to 6,100 and $22.71, respectively, in the fourth quarter of 2006.

Technology Solutions

Technology Solutions quarterly revenue was $78 million, up $16 million or 26 percent from a year ago. Telecommunications and IT Equipment revenue increased $8 million or 17 percent from the prior year while Data Center and Managed Services revenue grew by $7 million or 53 percent compared to the fourth quarter of 2006. Operating income, which included the $1 million impact of pre-tax restructuring charges, totaled $6 million. This reflected an increase of 31 percent from a year ago, while Adjusted EBITDA was a record $10 million, up 76 percent from the fourth quarter of 2006. Total revenue for the year was $258 million, up $42 million or 19 percent from a year ago. Operating income was $18 million while Adjusted EBITDA of $27 million increased 36 percent over last year.

Capital expenditures for the segment, which were $33 million in the fourth quarter and $92 million for the full year, were used primarily to construct new data center space. Billable data center capacity at the end of the fourth quarter was 144,000 square feet, which included 13,000 square feet of GramTel capacity. Utilization was 93 percent compared to 84 percent at the end of the third quarter.

2008 Guidance

Cincinnati Bell is providing the following financial guidance for 2008:

            Category                         2008 Guidance
----------------------------------------------------------------------
Revenue                                   Approx.$1.4 billion
----------------------------------------------------------------------
Adjusted EBITDA                           Approx.$485 million
----------------------------------------------------------------------
Capital Expenditures                    Approx. 16% of revenue
----------------------------------------------------------------------
Free Cash Flow                           Approx. $150 million
----------------------------------------------------------------------

Conference Call/Webcast

Cincinnati Bell will host a conference call today at 10:00 a.m. (ET) to discuss its results for the fourth quarter of 2007. A live webcast of the call will be available via the Investor Relations section of www.cincinnatibell.com. The conference call dial-in number is 866.278.7926. International callers may dial 904.596.2360. A taped replay call will be available one hour after the conclusion of the teleconference until 5:00 p.m. (ET) on February 21, 2008. For U.S. callers, the replay will be available at 888.284.7564. For international callers, the replay will be available at 904.596.3174. The replay reference number is 227400. An archived version of the webcast will also be available in the Investor Relations section of www.cincinnatibell.com.

Safe Harbor Note

Certain of the statements and predictions contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. In particular, statements, projections or estimates that include or reference the words "believes," "anticipates," "plans," "intends," "expects," "will," or any similar expression fall within the safe harbor for forward-looking statements contained in the Reform Act. Actual results or outcomes may differ materially from those indicated or suggested by any such forward-looking statement for a variety of reasons, including, but not limited to: Cincinnati Bell's ability to maintain its market position in communications services, including wireless, wireline and internet services; general economic trends affecting the purchase or supply of telecommunication services; world and national events that may affect the ability to provide services; changes in the regulatory environment; any rulings, orders or decrees that may be issued by any court or arbitrator; restrictions imposed under various credit facilities and debt instruments; work stoppages caused by labor disputes; and Cincinnati Bell's ability to develop and launch new products and services. More information on potential risks and uncertainties is available in recent filings with the Securities and Exchange Commission, including Cincinnati Bell's Form 10-K report, Form 10-Q reports and Form 8-K reports. The forward-looking statements included in this release represent company estimates as of February 7, 2008. Cincinnati Bell anticipates that subsequent events and developments will cause its estimates to change.

Use of Non-GAAP Financial Measures

This press release contains information about net income excluding special items, free cash flow, net debt and adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA). These are non-GAAP financial measures used by Cincinnati Bell management when evaluating results of operations and cash flow. Management believes these measures also provide users of the financial statements with additional and useful comparisons of current results of operations and cash flows with past and future periods. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of net income excluding special items, Adjusted EBITDA, net debt and free cash flow to comparable GAAP financial measures have been included in the tables distributed with this release and are available in the Investor Relations section of www.cincinnatibell.com.

(1)Earnings per share on a diluted basis is calculated as follows: Net income less preferred stock dividends divided by diluted common shares outstanding.

(2)Adjusted EBITDA provides a useful measure of operational performance. The company defines Adjusted EBITDA as GAAP Operating Income plus depreciation, amortization, restructuring charges, asset impairments and other special items. Adjusted EBITDA should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with Adjusted EBITDA as defined by other companies.

(3)Net income excluding special items provides a useful measure of operating performance. Net income excluding special items should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with net income excluding special items as defined by other companies.

(4)Free cash flow provides a useful measure of operational performance, liquidity and financial health. The company defines free cash flow as SFAS 95 cash provided by (used in) operating, financing and investing activities, adjusted for the issuance and repayment of debt, the repurchase of common stock, and the proceeds from the sale or the use of funds from the purchase of business operations. Free cash flow should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities, or the change in cash on the balance sheet and may not be comparable with free cash flow as defined by other companies. Although the company feels that there is no comparable GAAP measure for free cash flow, the attached financial information reconciles free cash flow to the net increase (decrease) in cash and cash equivalents.

(5)Net debt provides a useful measure of liquidity and financial health. The company defines net debt as the sum of the face amount of short-term and long-term debt and unamortized premium and/or discount, offset by cash and cash equivalents.

About Cincinnati Bell Inc.

Cincinnati Bell Inc. (NYSE:CBB) is parent to one of the nation's most-respected and best-performing local exchange and wireless providers with a legacy of unparalleled customer service excellence. With headquarters in Cincinnati, Ohio, Cincinnati Bell provides a wide range of telecommunications products and services to residential and business customers in Ohio, Kentucky and Indiana. For more information, visit www.cincinnatibell.com.


Cincinnati Bell Inc.
Consolidated Statements of Income
(Unaudited)
(Dollars in millions, except per share amounts)


                     Three Months              Twelve Months
                  Ended December 31,   %    Ended December 31,    %
                     2007     2006   Change   2007      2006    Change
                  ---------- ------- ------ --------- --------- ------

Revenue              $359.9  $328.5   10%   $1,348.6  $1,270.1    6%

Costs and
 expenses
  Cost of
   services and
   products           172.2   151.8   13%      609.7     568.3    7%
  Selling,
   general and
   administrative      69.4    64.7    7%      265.9     244.2    9%
  Depreciation
   and
   amortization        40.0    37.4    7%      150.8     143.0    5%
  Shareholder
   claim
   settlement             -       -   n/m          -       6.3  (100%)
  Restructuring
   charges             37.5    (0.1)  n/m       39.8       3.4   n/m
  Gain on sale of
   broadband
   assets                 -       -   n/m          -      (7.6) (100%)
                  ---------- -------        --------- ---------

    Operating
     income            40.8    74.7  (45%)     282.4     312.5  (10%)

Minority interest
 income                   -    (0.7) (100%)        -      (0.5) (100%)
Interest expense       37.8    40.8   (7%)     154.9     162.1   (4%)
Other income, net      (0.4)   (3.3) (88%)      (2.4)     (3.7) (35%)
                  ---------- -------        --------- ---------

Income before
 income taxes           3.4    37.9  (91%)     129.9     154.6  (16%)
Income tax
 expense                2.7    15.1  (82%)      56.7      68.3  (17%)
                  ---------- -------        --------- ---------

Net income              0.7    22.8  (97%)      73.2      86.3  (15%)

Preferred stock
 dividends              2.6     2.6    0%       10.4      10.4    0%
                  ---------- -------        --------- ---------

Net income (loss)
 applicable to
 common
 shareowners         $ (1.9) $ 20.2   n/m   $   62.8  $   75.9  (17%)
                  ========== =======        ========= =========


Basic earnings
 (loss) per
 common share        $(0.01) $ 0.08         $   0.25  $   0.31
                  ========== =======        ========= =========

Diluted earnings
 (loss) per
 common share        $(0.01) $ 0.08         $   0.24  $   0.30
                  ========== =======        ========= =========

Weighted average
 common shares
 outstanding
 (millions)
  - Basic             247.6   246.8            247.4     246.8
  - Diluted           247.6   254.9            256.8     253.3

Cincinnati Bell Inc.
Segment Information
(Unaudited)
(Dollars in millions)


                      Three Months             Twelve Months
                   Ended December 31,   %    Ended December 31,   %
                      2007     2006   Change    2007      2006  Change
                   ---------- ------- ------ ----------- ------ ------
Wireline
Revenue
  Voice - local
   service             $103.7 $113.4   (9%)       $432.4 $463.9  (7%)
  Data                   66.8   62.0    8%         258.6  238.2   9%
  Long distance          21.0   17.8   18%          79.3   71.8  10%
  Other                  20.4    9.2   n/m          51.4   36.5  41%
                   ---------- -------        ----------- ------

  Total revenue         211.9  202.4    5%         821.7  810.4   1%

Operating costs
 and expenses
  Cost of services
   and products          77.6   69.1   12%         276.6  264.1   5%
  Selling, general
   and
   administrative        37.5   37.0    1%         151.0  145.5   4%
  Depreciation and
   amortization          27.4   26.9    2%         105.5  106.2  (1%)
  Restructuring
   charges               34.0   (0.2)  n/m          36.1    2.8  n/m
                   ---------- -------        ----------- ------

  Total operating
   costs and
   expenses             176.5  132.8   33%         569.2  518.6  10%
                   ---------- -------        ----------- ------

Operating income       $ 35.4 $ 69.6  (49%)       $252.5 $291.8 (13%)
                   ========== =======        =========== ======

Wireless
Revenue
  Service              $ 69.6 $ 61.3   14%        $267.5 $235.7  13%
  Equipment               7.8    7.5    4%          27.0   26.3   3%
                   ---------- -------        ----------- ------

  Total revenue          77.4   68.8   13%         294.5  262.0  12%

Operating costs
 and expenses
  Cost of services
   and products          40.1   36.3   10%         152.1  146.1   4%
  Selling, general
   and
   administrative        18.0   17.4    3%          68.2   62.6   9%
  Depreciation and
   amortization           9.7    9.4    3%          37.8   33.1  14%
  Restructuring
   charges                2.1      -   n/m           2.1      -  n/m
                   ---------- -------        ----------- ------

  Total operating
   costs and
   expenses              69.9   63.1   11%         260.2  241.8   8%
                   ---------- -------        ----------- ------

Operating income       $  7.5 $  5.7   32%        $ 34.3 $ 20.2  70%
                   ========== =======        =========== ======

Technology
 Solutions
Revenue
  Telecom and IT
   equipment
   distribution        $ 55.8 $ 47.8   17%        $180.8 $162.2  11%
  Data center and
   managed
   services              19.4   12.7   53%          67.6   47.4  43%
  Professional
   services               3.0    1.8   67%           9.9    7.0  41%
                   ---------- -------        ----------- ------

  Total revenue          78.2   62.3   26%         258.3  216.6  19%

Operating costs
 and expenses
  Cost of services
   and products          61.4   50.9   21%         204.6  175.2  17%
  Selling, general
   and
   administrative         7.1    5.9   20%          27.2   21.9  24%
  Depreciation and
   amortization           2.8    1.0   n/m           7.4    3.7  100%
  Restructuring
   charges                1.0      -   n/m           1.0      -  n/m
                   ---------- -------        ----------- ------

  Total operating
   costs and
   expenses              72.3   57.8   25%         240.2  200.8  20%
                   ---------- -------        ----------- ------

Operating income       $  5.9 $  4.5   31%        $ 18.1 $ 15.8  15%
                   ========== =======        =========== ======

Cincinnati Bell Inc.
Segment Information
(Unaudited)
(Dollars in millions)


                     Three Months              Twelve Months
                  Ended December 31,   %    Ended December 31,    %
                     2007     2006   Change   2007      2006    Change
                  ---------- ------- ------ --------- --------- ------
Revenue
  Wireline        $   211.9  $202.4    5%   $  821.7  $  810.4    1%
  Wireless             77.4    68.8   13%      294.5     262.0   12%
  Technology
   Solutions           78.2    62.3   26%      258.3     216.6   19%
  Eliminations         (7.6)   (5.0)  52%      (25.9)    (18.9)  37%
                  ---------- -------        --------- ---------

  Total revenue   $   359.9  $328.5   10%   $1,348.6  $1,270.1    6%
                  ========== =======        ========= =========

Cost of Services
 and Products
  Wireline        $    77.6  $ 69.1   12%   $  276.6  $  264.1    5%
  Wireless             40.1    36.3   10%      152.1     146.1    4%
  Technology
   Solutions           61.4    50.9   21%      204.6     175.2   17%
  Eliminations         (6.9)   (4.5)  53%      (23.6)    (17.1)  38%
                  ---------- -------        --------- ---------

  Total cost of
   services and
   products       $   172.2  $151.8   13%   $  609.7  $  568.3    7%
                  ========== =======        ========= =========

Selling, General
 & Administrative
  Wireline        $    37.5  $ 37.0    1%   $  151.0  $  145.5    4%
  Wireless             18.0    17.4    3%       68.2      62.6    9%
  Technology
   Solutions            7.1     5.9   20%       27.2      21.9   24%
  Corporate and
   eliminations         6.8     4.4   55%       19.5      14.2   37%
                  ---------- -------        --------- ---------

  Total selling,
   general &
   administrative $    69.4  $ 64.7    7%   $  265.9  $  244.2    9%
                  ========== =======        ========= =========

Depreciation and
 Amortization
  Wireline        $    27.4  $ 26.9    2%   $  105.5  $  106.2   (1%)
  Wireless              9.7     9.4    3%       37.8      33.1   14%
  Technology
   Solutions            2.8     1.0   n/m        7.4       3.7   100%
  Corporate             0.1     0.1    0%        0.1         -   n/m
                  ---------- -------        --------- ---------

  Total
   depreciation
   and
   amortization   $    40.0  $ 37.4    7%   $  150.8  $  143.0    5%
                  ========== =======        ========= =========

Restructuring
 Charges,
 Shareholder
 Claim
 Settlement, and
 Gain on Sale of
 Broadband Assets
  Wireline        $    34.0  $ (0.2)  n/m   $   36.1  $    2.8   n/m
  Wireless              2.1       -   n/m        2.1         -   n/m
  Technology
   Solutions            1.0       -   n/m        1.0         -   n/m
  Corporate             0.4     0.1   n/m        0.6      (0.7)  n/m
                  ---------- -------        --------- ---------

  Total
   restructuring
   charges,
   shareholder
   claim
   settlement,
   and gain on
   sale of
   broadband
   assets         $    37.5  $ (0.1)  n/m   $   39.8  $    2.1   n/m
                  ========== =======        ========= =========

Operating Income
  Wireline        $    35.4  $ 69.6  (49%)  $  252.5  $  291.8  (13%)
  Wireless              7.5     5.7   32%       34.3      20.2   70%
  Technology
   Solutions            5.9     4.5   31%       18.1      15.8   15%
  Corporate and
   eliminations        (8.0)   (5.1)  57%      (22.5)    (15.3)  47%
                  ---------- -------        --------- ---------

  Total operating
   income         $    40.8  $ 74.7  (45%)  $  282.4  $  312.5  (10%)
                  ========== =======        ========= =========

Cincinnati Bell Inc.
Segment Metric Information
(Unaudited)


                                             December 31, December 31,
                                                 2007         2006
                                             ------------ ------------
(in thousands)

Local access lines                                  834.3        887.1
DSL subscribers                                     221.5        198.3
Custom Connections (Super Bundle)
 subscribers                                        187.2        173.2


Postpaid wireless subscribers                       400.4        365.8
Prepaid wireless subscribers                        170.6        162.3
                                             ------------ ------------

Total wireless subscribers                          571.0        528.1
                                             ============ ============


Consumer long distance lines                        374.2        394.8
Business long distance lines                        174.1        157.5
                                             ------------ ------------

Total long distance lines                           548.3        552.3
                                             ============ ============


Data Center and Managed Services
   Raised Floor (in square feet)                  144,000       91,000
   Utilization rate                                   93%          91%

Cincinnati Bell Telephone
Local Access Line Detail
(Unaudited)
(In thousands)



                      ----------------------- -----------------------
                               2005                    2006
                      ----------------------- -----------------------
                       1Q    2Q    3Q    4Q    1Q    2Q    3Q    4Q
                      ----- ----- ----- ----- ----- ----- ----- -----
Local Access Lines
---------------------

   In-Territory:
      Primary
       Residential    584.2 573.0 563.9 555.7 547.4 536.7 522.5 510.5
      Secondary
       Residential     48.9  47.1  45.4  43.9  42.4  40.9  39.2  37.6
      Business/Other  296.1 294.3 292.9 293.3 290.9 291.3 291.4 288.6
                      ----------------------- -----------------------
   Total In-Territory 929.2 914.4 902.2 892.9 880.7 868.9 853.1 836.7

   Out-of-Territory:
      Primary
       Residential     17.7  18.4  20.5  21.5  22.8  24.8  26.8  28.1
      Secondary
       Residential      0.8   0.9   1.0   1.0   1.1   1.1   1.2   1.2
      Business/Other   12.2  12.8  13.9  15.2  16.3  17.7  19.4  21.0
                      ----------------------- -----------------------
   Total Out-of-
    Territory          30.7  32.1  35.4  37.7  40.2  43.6  47.4  50.3

                      ----------------------- -----------------------
   Total Access Lines 959.9 946.5 937.6 930.6 920.9 912.5 900.5 887.0
                      ======================= =======================


                                               -----------------------
                                                        2007
                                               -----------------------
                                                1Q    2Q    3Q    4Q
                                               ----- ----- ----- -----
Local Access Lines
----------------------------------------------

   In-Territory:
      Primary Residential                      499.1 484.8 468.4 454.2
      Secondary Residential                     36.2  34.9  33.4  32.0
      Business/Other                           287.6 287.7 286.9 285.8
                                               -----------------------
   Total In-Territory                          822.9 807.4 788.7 772.0

   Out-of-Territory:
      Primary Residential                       29.4  30.7  32.0  32.7
      Secondary Residential                      1.2   1.3   1.3   1.3
      Business/Other                            22.4  24.2  26.7  28.3
                                               -----------------------
   Total Out-of-Territory                       53.0  56.2  60.0  62.3

                                               -----------------------
   Total Access Lines                          875.9 863.6 848.7 834.3
                                               =======================

Cincinnati Bell Inc.
Net Debt Calculation
(Unaudited)
(Dollars in millions)


                              December 31, December 31,     Change
                                                        --------------
                                  2007         2006        $       %
                              ------------ ------------ --------------

Credit facility, revolver     $      55.0  $         -  $  55.0   n/m
Credit facility, tranche B                                       (47%)
 term loan                          211.0        395.0   (184.0)
7 1/4% Senior Notes due 2013        470.5        496.9    (26.4) (5%)
8 3/8% Senior Subordinated                                        1%
 Notes due 2014                     637.4        631.5      5.9
7% Senior Notes due 2015            250.6        245.0      5.6   2%
7 1/4% Senior Notes due 2023         50.0         50.0        -   0%
Accounts receivable                                               n/m
 securitization facility             75.0            -     75.0
Various Cincinnati Bell                                           0%
 Telephone notes                    230.0        230.0        -
Capital leases and other debt        29.6         24.0      5.6   23%
Net unamortized premium               0.6          0.8     (0.2) (25%)
                              ------------ ------------ -------- -----

   Total debt                     2,009.7      2,073.2    (63.5) (3%)

(Deduct) Add: Interest rate                                       n/m
 swap liability                      (2.9)        13.5    (16.4)
Less: Cash and cash                                              (67%)
 equivalents                        (26.1)       (79.4)    53.3
                              ------------ ------------ -------- -----

   Net debt (as defined by                                       (1%)
    the company)              $   1,980.7  $   2,007.3  $ (26.6)
                              ============ ============ ======== =====

Credit facility availability  $     167.9  $     245.2  $ (77.3) (32%)
                              ============ ============ ======== =====

Cincinnati Bell Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions)


                                    Three Months      Twelve Months
                                 Ended December 31, Ended December 31,
                                    2007     2006     2007      2006
                                 ---------- ------- --------- --------

Cash provided by operating
 activities                      $    99.5  $124.5  $  308.8  $ 334.7
                                 ---------- ------- --------- --------

   Capital expenditures              (81.4)  (41.5)   (233.8)  (151.3)
   Acquisition of businesses and
    remaining minority interest
    in CBW                           (19.0)      -     (23.6)   (86.7)
   Deposit/purchase of wireless
    licenses                          (4.4)  (30.1)     (4.4)   (37.1)
   Proceeds from sale of
    broadband assets                     -       -         -      4.7
   Proceeds from sale of
    investment                           -     5.7         -      5.7
   Other, net                         (1.0)    2.5      (1.7)     4.7
                                 ---------- ------- --------- --------

Cash used in investing
 activities                         (105.8)  (63.4)   (263.5)  (260.0)
                                 ---------- ------- --------- --------

   Issuance of long-term debt          0.6       -      75.6        -
   Increase (decrease) in
    corporate credit facility,
    net                               15.0    (4.0)     55.0        -
   Repayment of debt                  (7.9)   (1.9)   (219.1)   (13.3)
   Debt issuance costs                   -       -      (1.3)       -
   Issuance of common shares -
    exercise of stock options          0.2     0.2       2.5      1.9
   Preferred stock dividends          (2.6)   (2.6)    (10.4)   (10.4)
   Other, net                         (0.2)   (0.9)     (0.9)     0.8
                                 ---------- ------- --------- --------

Cash provided by (used in)
 financing activities                  5.1    (9.2)    (98.6)   (21.0)
                                 ---------- ------- --------- --------

Net (decrease) increase in cash
 and cash equivalents                 (1.2)   51.9     (53.3)    53.7
Cash and cash equivalents at
 beginning of period                  27.3    27.5      79.4     25.7
                                 ---------- ------- --------- --------

Cash and cash equivalents at end
 of period                       $    26.1  $ 79.4  $   26.1  $  79.4
                                 ========== ======= ========= ========


Reconciliation of GAAP Cash Flow
 to Free Cash Flow (as defined
 by the company)
Net (decrease) increase in cash
 and cash equivalents            $    (1.2) $ 51.9  $  (53.3) $  53.7
Less adjustments:
   Issuance of long-term debt
    and net change in corporate
    credit facility                  (15.6)    4.0    (130.6)       -
   Repayment of debt                   7.9     1.9     219.1     13.3
   Proceeds from sale of
    investment                           -    (5.7)        -     (5.7)
   Acquisition of businesses and
    remaining minority interest
    in CBW                            19.0       -      23.6     86.7
                                 ---------- ------- --------- --------

      Free cash flow (as defined
       by the company)           $    10.1  $ 52.1  $   58.8  $ 148.0
                                 ========== ======= ========= ========

Income tax payments              $     1.0  $  1.4  $    6.6  $   6.6

Cincinnati Bell Inc.
Reconciliation of Adjusted EBITDA (Non-GAAP) to Operating Income
 (GAAP)
(Unaudited)
(Dollars in millions)


                  ----------------------------------------------------
                          Three Months Ended December 31, 2007
                  ----------------------------------------------------
                                    Technology
                  Wireline Wireless Solutions  Corporate Total Company
                  ----------------------------------------------------

Operating Income
 (GAAP)           $ 35.4   $   7.5  $     5.9  $   (8.0) $       40.8

Add:
   Depreciation
    and
    amortization    27.4       9.7        2.8       0.1          40.0
   Restructuring
    charges         34.0       2.1        1.0       0.4          37.5
                  ----------------------------------------------------

EBITDA (Non-GAAP) $ 96.8   $  19.3  $     9.7  $   (7.5) $      118.3
                  ====================================================



                  ----------------------------------------------------
                          Three Months Ended December 31, 2006
                  ----------------------------------------------------
                                    Technology
                  Wireline Wireless Solutions  Corporate Total Company
                  ----------------------------------------------------

Operating Income
 (GAAP)           $ 69.6   $   5.7  $     4.5  $   (5.1) $       74.7

Add:
   Depreciation
    and
    amortization    26.9       9.4        1.0       0.1          37.4
   Restructuring
    charges         (0.2)        -          -       0.1          (0.1)
                  ----------------------------------------------------

EBITDA (Non-GAAP) $ 96.3   $  15.1  $     5.5  $   (4.9) $      112.0
                  ====================================================

Year-over-year
 percent change
 in EBITDA             1%       28%        76%       53%            6%


                  ----------------------------------------------------
                         Twelve Months Ended December 31, 2007
                  ----------------------------------------------------
                                    Technology
                  Wireline Wireless Solutions  Corporate Total Company
                  ----------------------------------------------------

Operating Income
 (GAAP)           $252.5   $  34.3  $    18.1  $  (22.5) $      282.4

Add:
   Depreciation
    and
    amortization   105.5      37.8        7.4       0.1         150.8
   Restructuring
    charges         36.1       2.1        1.0       0.6          39.8
                  ----------------------------------------------------

EBITDA (Non-GAAP) $394.1   $  74.2  $    26.5  $  (21.8) $      473.0
                  ====================================================



                  ----------------------------------------------------
                         Twelve Months Ended December 31, 2006
                  ----------------------------------------------------
                                    Technology
                  Wireline Wireless Solutions  Corporate Total Company
                  ----------------------------------------------------

Operating Income
 (GAAP)           $291.8   $  20.2  $    15.8  $  (15.3) $      312.5

Add:
   Depreciation
    and
    amortization   106.2      33.1        3.7         -         143.0
   Restructuring
    charges,
    shareholder
    claim
    settlement
    and gain on
    sale of
    broadband
    assets           2.8         -          -      (0.7)          2.1
                  ----------------------------------------------------

EBITDA (Non-GAAP) $400.8   $  53.3  $    19.5  $  (16.0) $      457.6
                  ====================================================

Year-over-year
 percent change
 in EBITDA            (2%)      39%        36%       36%            3%

Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)

                                                         Three
                         Three                        Months Ended
                      Months Ended                 December 31, 2007
                      December 31,                Before Special Items
                      2007 (GAAP)  Special Items       (Non-GAAP)
                      ------------------------------------------------
                                         B
   Revenue            $     359.9  $          -   $             359.9

   Costs and expenses
      Cost of
       services and
       products             172.2             -                 172.2
      Selling,
       general and
       administrative        69.4             -                  69.4
      Depreciation
       and
       amortization          40.0             -                  40.0
      Restructuring
       charges               37.5         (37.5)                    -
                      ------------ -------------  --------------------
         Operating
          income             40.8          37.5                  78.3

   Interest expense          37.8             -                  37.8
   Other income              (0.4)            -                  (0.4)
                      ------------ -------------  --------------------

   Income before
    income taxes              3.4          37.5                  40.9
   Income tax expense         2.7          15.0                  17.7
                      ------------ -------------  --------------------

   Net income                 0.7          22.5                  23.2

   Preferred stock
    dividends                 2.6             -                   2.6
                      ------------ -------------  --------------------

   Net income (loss)
    applicable to
    common
    shareowners       $      (1.9) $       22.5   $              20.6
                      ============ =============  ====================


   Weighted average
    diluted common
    shares                  247.6         257.2  A              257.2
                      ============ =============  ====================

   Diluted earnings
    (loss) per common
    share             $     (0.01) $       0.09   $              0.08
                      ============ =============  ====================


A  Shares have been adjusted for dilutive common stock equivalents
    that result after excluding the special items from earnings.

   Normalized results have been adjusted for the following (pretax
    adjustments are tax effected at 40%):

B  Represents charge for previously announced voluntary retirement
    program for management and anticipated workforce reductions.

Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)


                                                 Special Items
                                         -----------------------------

                                Twelve
                             Months Ended
                             December 31, Restructuring Dividend From
                             2007 (GAAP)     Charge      Investment
                             -----------------------------------------
                                                A             B
   Revenue                   $   1,348.6  $          -  $          -

   Costs and expenses
      Cost of services and
       products                    609.7             -             -
      Selling, general and
       administrative              265.9             -             -
      Depreciation and
       amortization                150.8             -             -
      Restructuring charges         39.8         (39.8)            -
                             ------------ ------------- -------------
         Operating income          282.4          39.8             -

   Interest expense                154.9             -             -
   Other income, net                (2.4)            -           1.9
                             ------------ ------------- -------------

   Income before income
    taxes                          129.9          39.8          (1.9)
   Income tax expense               56.7          15.9          (0.8)
                             ------------ ------------- -------------

   Net income                       73.2          23.9          (1.1)

   Preferred stock dividends        10.4             -             -
                             ------------ ------------- -------------

   Net income applicable to
    common shareowners       $      62.8  $       23.9  $       (1.1)
                             ============ ============= =============


   Weighted average diluted
    common shares                  256.8         256.8         256.8
                             ============ ============= =============

   Diluted earnings per
    common share             $      0.24  $       0.09  $       0.00
                             ============ ============= =============


                                                         Twelve
                                                      Months Ended
                                                   December 31, 2007
                                                  Before Special Items
                                                       (Non-GAAP)
                                                  --------------------

   Revenue                                        $           1,348.6

   Costs and expenses
      Cost of services and products                             609.7
      Selling, general and administrative                       265.9
      Depreciation and amortization                             150.8
      Restructuring charges                                         -
                                                  --------------------
         Operating income                                       322.2

   Interest expense                                             154.9
   Other income, net                                             (0.5)
                                                  --------------------

   Income before income taxes                                   167.8
   Income tax expense                                            71.8
                                                  --------------------

   Net income                                                    96.0

   Preferred stock dividends                                     10.4
                                                  --------------------

   Net income applicable to common shareowners    $              85.6
                                                  ====================


   Weighted average diluted common shares                       256.8
                                                  ====================

   Diluted earnings per common share              $              0.33
                                                  ====================



    Normalized results have been adjusted for the following (pretax
     adjustments are tax effected at 40%):

 A  Represents charge for previously announced voluntary retirement
     program for management and anticipated workforce reductions.

 B  One-time dividend received from cost investment.

Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)

                                    Special Items
                                    -------------
                                                         Three
                          Three        Gain on        Months Ended
                       Months Ended    Sale of     December 31, 2006
                       December 31,   Broadband   Before Special Items
                       2006 (GAAP)     Assets          (Non-GAAP)
                       -----------------------------------------------
                                          A
   Revenue             $     328.5  $          -  $             328.5

   Costs and expenses
      Cost of services
       and products          151.8             -                151.8
      Selling, general
       and
       administrative         64.7             -                 64.7
      Depreciation and
       amortization           37.4             -                 37.4
      Restructuring           (0.1)            -                 (0.1)
                       ------------ ------------- --------------------
         Operating
          income              74.7             -                 74.7

   Minority interest
    Income                    (0.7)            -                 (0.7)
   Interest expense           40.8             -                 40.8
   Other income, net          (3.3)          3.2                 (0.1)
                       ------------ ------------- --------------------

   Income before
    income taxes              37.9          (3.2)                34.7
   Income tax expense         15.1          (1.3)                13.8
                       ------------ ------------- --------------------

   Net income                 22.8          (1.9)                20.9

   Preferred stock
    dividends                  2.6             -                  2.6
                       ------------ ------------- --------------------

   Net income
    applicable to
    common shareowners $      20.2  $       (1.9) $              18.3
                       ============ ============= ====================


   Weighted average
    diluted common
    shares                   254.9         254.9                254.9
                       ============ ============= ====================

   Diluted earnings
    per common share   $      0.08  $      (0.01) $              0.07
                       ============ ============= ====================


   Normalized results have been adjusted for the following (pretax
    adjustments are tax effected at 40%):

A  Gain on sale of investment.

Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)
(Dollars in millions, except per share amounts)


                                               Special Items
                                      --------------------------------

                             Twelve     Gain on
                          Months Ended  Sale of  Shareholder Income
                          December 31, Broadband    Claim      Tax
                          2006 (GAAP)   Assets   Settlement  Expense
                          --------------------------------------------
                                           A          B         C
   Revenue                $   1,270.1  $      -  $        -  $    -

   Costs and expenses
      Cost of services
       and products             568.3         -           -       -
      Selling, general
       and administrative       244.2         -           -       -
      Depreciation and
       amortization             143.0         -           -       -
      Shareholder claim
       settlement                 6.3         -        (6.3)      -
      Gain on sale of
       broadband assets          (7.6)      7.6           -       -
      Restructuring
       charges                    3.4         -           -       -
                          ------------ --------- ----------- -------
         Operating income       312.5      (7.6)        6.3       -

   Minority interest
    income                       (0.5)        -           -       -
   Interest expense             162.1         -           -       -
   Other income, net             (3.7)        -           -       -
                          ------------ --------- ----------- -------

   Income before income
    taxes                       154.6      (7.6)        6.3       -
   Income tax expense            68.3      (3.0)        2.5    (3.6)
                          ------------ --------- ----------- -------

   Net income                    86.3      (4.6)        3.8     3.6

   Preferred stock
    dividends                    10.4         -           -       -
                          ------------ --------- ----------- -------

   Net income applicable
    to common shareowners $      75.9  $   (4.6) $      3.8  $  3.6
                          ============ ========= =========== =======


   Weighted average
    diluted common shares       253.3     253.3       253.3   253.3
                          ============ ========= =========== =======

   Diluted earnings per
    common share          $      0.30  $  (0.02) $     0.02  $ 0.01
                          ============ ========= =========== =======

                              Special Items
                        --------------------------
                                                         Twelve
                                                      Months Ended
                                        Gain on    December 31, 2006
                         Restructuring  Sale of   Before Special Items
                            Charge     Investment      (Non-GAAP)
                        ----------------------------------------------
                               D           E
   Revenue               $          -  $       -  $           1,270.1

   Costs and expenses
      Cost of services
       and products                 -          -                568.3
      Selling, general
       and
       administrative               -          -                244.2
      Depreciation and
       amortization                 -          -                143.0
      Shareholder claim
       settlement                   -          -                    -
      Gain on sale of
       broadband assets             -          -                    -
      Restructuring
       charges                   (3.4)                              -
                        ------------------------- --------------------
         Operating
          income                  3.4          -                314.6

   Minority interest
    income                          -          -                 (0.5)
   Interest expense                 -          -                162.1
   Other income, net                -        3.2                 (0.5)
                        ------------------------- --------------------

   Income before income
    taxes                         3.4       (3.2)               153.5
   Income tax expense             1.4       (1.3)                64.3
                        ------------------------- --------------------

   Net income                     2.0       (1.9)                89.2

   Preferred stock
    dividends                       -          -                 10.4
                        ------------------------- --------------------

   Net income
    applicable to
    common shareowners   $        2.0  $    (1.9) $              78.8
                        ============== ========== ====================


   Weighted average
    diluted common
    shares                      253.3      253.3                253.3
                        ========================= ====================

   Diluted earnings per
    common share         $       0.01  $   (0.01) $              0.31
                        ============== ========== ====================



    Normalized results have been adjusted for the following (pretax
     adjustments are tax effected at 40%):

 A  Gain on sale of Broadband assets includes sale of certain
     broadband fiber assets and expiration of certain indemnifications
     that were previously reserved.

 B  Reserve of $6.3 million recorded to settle the Company's
     shareholder claim.

 C  Kentucky net operating loss carry-forward write-off due to
     regulations issued in the first quarter of 2006.

 D  In September 2006, the company incurred employee separation
     expense related to the outsourcing of certain supply chain
     functions.

 E  Gain on sale of investment.

Cincinnati Bell Inc.
Reconciliation of Adjusted EBITDA (Non-GAAP) Guidance to Operating
 Income (GAAP) Guidance
(Unaudited)
(Dollars in millions)


                                                              2008
                                                          ------------
Consolidated 2008 Operating Income (GAAP) Guidance        $        326

Add:
    Depreciation and amortization                                  156
    Restructuring charges                                            3
                                                          ------------

Consolidated 2008 Adjusted EBITDA Guidance                $        485
                                                          ============

CONTACT: Cincinnati Bell Inc.
Traci Bolte, 513-397-1195
traci.bolte@cinbell.com

SOURCE: Cincinnati Bell Inc.