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Cincinnati Bell Inc. Reports Revenue and Earnings Growth in 2006

02/20/07
    Increased Wireless Profitability and Strong Performance from Data
   and Technology Solutions Drive Fourth Quarter to Cement Full Year
                              Improvement

CINCINNATI--(BUSINESS WIRE)--Feb. 20, 2007--Cincinnati Bell Inc. (NYSE:CBB) today announced fourth quarter and full year 2006 financial results. For the year, revenue of $1.3 billion represented an increase of $61 million or 5 percent from 2005. Operating income was $313 million, up $54 million or 21 percent from a year ago. Net income was $86 million or 30 cents per diluted share. Net income excluding special items(1), which is detailed in the attached financial information, was $89 million or 31 cents per diluted share, up $29 million or 11 cents per diluted share from 2005 also excluding special items.

"For Cincinnati Bell, 2006 will be remembered as a year of operational progress and earnings growth," said Jack Cassidy, president and chief executive officer. "Driven by consistent execution of our strategy, we leveraged our unique strengths to meet the changing needs of customers. We showed progress in re-establishing wireless margin expansion and saw the benefit of prior investments in data centers and managed services. As a result, we are well-positioned with strong cash flow, a solid balance sheet and operations that are primed for growth and success in 2007."

For the fourth quarter, revenue of $329 million increased $23 million or 8 percent from the prior year quarter. Operating income of $75 million improved $19 million or 34 percent. Net income was $23 million or 8 cents per diluted share. Special items in the quarter included a gain of $2 million related to the sale of the company's remaining interest in its legacy broadband business. Excluding this special item, net income was $21 million or 7 cents per diluted share, even with a year ago.


    Performance Highlights

    --  In the fourth quarter, Cincinnati Bell's core operations,
        which exclude the Broadband segment, produced adjusted
        earnings before interest, taxes, depreciation and
        amortization(2) (EBITDA) of $111 million, an increase of $3
        million from the fourth quarter of 2005. Improved wireless
        profitability was the primary contributor to the increase.

    --  Total wireless service revenue in the fourth quarter increased
        $10 million or 19 percent driving a 12-point improvement to a
        22 percent EBITDA margin over the prior year quarter. Growth
        in subscribers and postpaid average revenue per user (ARPU)
        were the key factors in the service revenue increase.
        Quarterly postpaid ARPU was $46.18, up $1.28 from a year ago.
        Net postpaid activations totaled 16,000 in the fourth quarter,
        an increase of 6 percent from the prior year, on the strength
        of higher gross activations and lower churn of 1.5 percent
        versus 1.8 percent in the prior year quarter.

    --  Quarterly net DSL activations were 11,000, up 18 percent from
        the same time a year ago. Year-end DSL subscribers totaled
        198,000, representing a record gain of 36,000 subscribers over
        the prior year. In 2006, DSL churn was 1.9 percent. Year-end
        DSL penetration of in-territory primary consumer access lines
        was 34 percent, up 8 percentage points and representing
        172,000 subscribers.

    --  Growth in Cincinnati Bell's "Super Bundle" subscriber base
        drove quarterly revenue per household to an all-time high of
        $88, up 12 percent from the fourth quarter of 2005. "Super
        Bundle" penetration in the fourth quarter increased to 32
        percent of Cincinnati Bell households in the company's
        traditional operating area.

    --  Quarterly adjusted EBITDA from the Technology Solutions
        segment increased 17 percent from the prior year quarter to $6
        million on 31 percent revenue growth.

    --  Cincinnati Bell met or exceeded its 2006 financial guidance:

    Category          2006 Actual Results           2006 Guidance
----------------------------------------------------------------------
     Revenue              $1.3 billion          Approx. flat at $1.2
                                                       billion
----------------------------------------------------------------------
 Adjusted EBITDA          $458 million          Approx. $460 million
----------------------------------------------------------------------
    Capital          $151 million; 12% of      Approx. 12% of revenue
   Expenditures              revenue
----------------------------------------------------------------------
Free Cash Flow(3)       $148 million(a)        Approx. $125 million(b)
----------------------------------------------------------------------

(a)Excludes $81 million for acquisitions, including the purchase of the 20% minority stake of Cincinnati Bell Wireless previously owned by Cingular, offset by proceeds from sale of an investment.

(b)The company had previously provided an estimate of $152 million, but subsequently decreased this amount in connection with its $37 million purchase of wireless spectrum licenses.

Financial and Operations Overview

"Our fourth quarter results underscore the benefit of continued growth in wireless, DSL, and hardware and managed services products," said Brian Ross, chief financial officer of Cincinnati Bell. "By profitably expanding our core operations, we are able to grow revenue, offset the impact of access line loss and generate increased EBITDA for our shareholders over the long term."

Cincinnati Bell recorded quarterly revenue of $329 million, an increase of 8 percent from the fourth quarter of 2005. For the year, revenue totaled $1.3 billion, an increase of 5 percent from 2005.

In the fourth quarter, adjusted EBITDA was $112 million, down 4 percent from a year ago. Adjusted EBITDA for the company's operations excluding the broadband segment was up $3 million from 2005. Adjusted EBITDA for the full year of $458 million was equal to 2005 when excluding the release of broadband segment operating tax reserves in 2005, as well as 2006 increases in non-recurring operating taxes and investment in new wireless subscriber acquisition.

Quarterly free cash flow was $52 million after a $30 million final payment for wireless spectrum licenses purchased in the Advanced Wireless Services (AWS) auction. For the year, free cash flow was $148 million, which has been reduced by a total of $37 million for the purchase of AWS spectrum. Excluding this purchase, 2006 free cash flow represented a $33 million improvement from 2005 free cash flow of $152 million.

In the quarter, Cincinnati Bell used free cash flow to reduce net debt(4), which totaled $2 billion at the end of the year. Capital expenditures, which exclude the AWS spectrum purchase, were $42 million in the quarter and $151 million, or 12 percent of revenue, for the year.

Local Segment

Local revenue of $187 million was $2 million less than the fourth quarter of 2005, as a 9 percent increase in data revenue partially offset lower voice revenue. Adjusted EBITDA in the quarter was $90 million, a decrease of $7 million from the prior year quarter primarily due to $4 million in non-recurring operating taxes and a $2 million increase in pension and post-retiree medical benefits. Related to the non-recurring operating tax item, the company also recorded a $9 million charge to opening retained earnings, net of income taxes, for a potential liability from prior years.

For the year, Local segment revenue was $747 million, a decline of 1 percent from 2005. Adjusted EBITDA was $373 million, down 3 percent largely as cost reductions from job eliminations and out-sourcing, data and expansion market revenue only partially offset the profitability impact of lower in-territory consumer access lines, increased pension expense, and non-recurring operating taxes.

Total access line performance for the year included consistent out-of-territory growth. At the end of 2006, out-of-territory access lines had reached 50,000, up 13,000 lines from the end of 2005. This growth helped partially offset the impact of wireless substitution in Cincinnati Bell's traditional service area. Year-over-year total access line loss in the fourth quarter was 4.7 percent, which included an in-territory decline of 6.3 percent.

Wireless Services

The Wireless segment generated quarterly revenue of $69 million compared to $58 million in the fourth quarter of 2005. Service revenue, which was up $10 million or 19 percent from a year ago, contributed almost all of the segment's $11 million growth. Quarterly adjusted EBITDA of $15 million increased $9 million from a year ago resulting in a 12 point EBITDA margin expansion to 22 percent in the quarter. For the year, revenue totaled $262 million, up $25 million from 2005. Adjusted EBITDA was $53 million compared with $52 million in 2005.

Cincinnati Bell Wireless maintained postpaid subscriber momentum in the fourth quarter with net activations of 16,000, up 1,000 from a year ago. Quarterly postpaid ARPU of $46.18 compared favorably to $44.90 in the fourth quarter of 2005 and contributed to an $8 million increase in postpaid service revenue. For the year, net postpaid activations of 51,000 represented a quantum improvement from 9,000 in 2005.

On a sequential basis, prepaid fundamentals strengthened with quarterly net activations of 6,000 versus a loss of 15,000 in the third quarter of 2006. In addition, recently introduced rate plans helped to produce quarterly prepaid ARPU of $22.71, an increase of $3.20 from the third quarter and an increase of $5.03 from the fourth quarter of 2005. As a result, prepaid subscriber revenue increased $1 million from the third quarter and $2 million from the fourth quarter of 2005.

Technology Solutions

The Technology Solutions segment produced quarterly revenue of $62 million, a 31 percent increase from the fourth quarter of 2005. Adjusted EBITDA was $6 million, up 17 percent from the prior year quarter. In the fourth quarter, Cincinnati Bell has begun to report revenue for this segment, previously known as the Hardware and Managed Services segment, in three separate product lines: Telecom and IT Equipment Distribution; Data Center and Managed Services; and Professional Services. Total segment revenue in 2006 was $217 million, an increase of 25 percent from a year ago driven by increases of 28 percent in the telecom and IT equipment and data center and managed services product lines. Total adjusted EBITDA of $20 million represented a 23 percent increase over last year and reflected higher volumes of hardware and equipment sales and increased data center and managed service gross margins.

Capital expenditures for the segment were $6 million in the fourth quarter and totaled $11 million for the full year and were used to construct new data center space. To meet growing, large enterprise customer demand, Cincinnati Bell anticipates up to $75 million additional investment in 2007 in order to complete space under construction and begin building new space.

Other Communications Services

The Other Communications Services segment, which includes long distance, security monitoring and payphone operations, generated quarterly revenue of $20 million, which was a slight increase from the fourth quarter of 2005. Adjusted EBITDA of $7 million in the quarter was down $1 million from a year ago due to fewer consumer long distance subscribers. For the year, adjusted EBITDA was $28 million, approximately equal to the prior year period.

2007 Guidance

Cincinnati Bell is providing the following guidance for 2007:

       Category               2007 Guidance        2006 Actual Results
----------------------------------------------------------------------
Revenue                       $1.3 billion            $1.3 billion
----------------------------------------------------------------------
Adjusted EBITDA        Approximately $465 million     $458 million
----------------------------------------------------------------------
Total Capital         Approximately 19% of revenue $151 million; 12%
 Expenditures                                           of revenue



Capital Expenditures  Approximately 11% of revenue   11% of revenue
excluding data center
and 3rd generation
(3G) wireless network
construction


Capital Expenditures   Approximately 8% of revenue    1% of revenue
related to new data
center and 3G

----------------------------------------------------------------------
Free Cash Flow          Approximately $50 Million     $148 Million

                      Included in total Free Cash
                       Flow:
                      -- Approximately $30 million
                       3G wireless network
                       construction
                      -- Approximately $60 million
                       incremental new data center
                       construction
                      -- Approximately $30 million
                       working capital usage
                       (primarily due to
                        acceleration and timing of
                        operating tax payments)
----------------------------------------------------------------------

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 and full year 2006. 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 March 6, 2007. 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 201898. An archived version of the webcast will also be available at 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 20, 2007. 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, free cash flow, net debt and adjusted EBITDA 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)Net income excluding special items provides a useful measure of operating performance. The amounts of the special items are detailed and reconciled to GAAP net income in the accompanying financial statements and in the Investor Relations section of the company's Web site, www.cincinnatibell.com.

(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) 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 and for 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.

(4) 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,    %
                    2006     2005    Change   2006      2005    Change
                  --------- -------- ------ --------- --------- ------

 Revenue          $  328.5  $ 305.3      8% $1,270.1  $1,209.6      5%

 Costs and
  expenses
  Cost of
   services and
   products          151.8    138.8      9%    568.3     512.3     11%
  Selling,
   general and
   administrative     64.7     49.7     30%    244.2     221.0     10%
  Depreciation
   and
   amortization       37.4     41.5   (10%)    143.0     174.7   (18%)
  Shareholder
   claim
   settlement            -        -    n/m       6.3         -    n/m
  Gain on sale of
   broadband
   assets                -        -    n/m      (7.6)        -    n/m
  Restructuring
   charges            (0.1)     1.1    n/m       3.4       1.1    n/m
  Asset
   impairments
   and other
   charges               -     18.6    n/m         -      41.7    n/m
                  --------- --------        --------- ---------

   Operating
    income            74.7     55.6     34%    312.5     258.8     21%

 Minority
  interest income     (0.7)    (5.2)  (87%)     (0.5)    (11.0)  (95%)
 Interest expense     40.8     37.3      9%    162.1     184.4   (12%)
 Loss on
  extinguishment
  of debt                -        -    n/m       0.1      99.8  (100%)
 Other income,
  net                 (3.3)    (2.7)    22%     (3.8)     (4.2)  (10%)
                  --------- --------        --------- ---------

 Income (loss)
  before income
  taxes               37.9     26.2     45%    154.6     (10.2)   n/m
 Income tax
  expense             15.1     13.6     11%     68.3      54.3     26%
                  --------- --------        --------- ---------

 Net income
  (loss)              22.8     12.6     81%     86.3     (64.5)   n/m

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

 Net income
  (loss)
  applicable to
  common
  shareowners     $   20.2  $  10.0    n/m  $   75.9  $  (74.9)   n/m
                  ========= ========        ========= =========


 Basic earnings
  (loss) per
  common share    $   0.08  $  0.04         $   0.31  $  (0.30)
 ---------------- ========= ========        ========= =========

 Diluted earnings
  (loss) per
  common share    $   0.08  $  0.04         $   0.30  $  (0.30)
 ---------------- ========= ========        ========= =========

 Weighted average
  common shares
  outstanding
  (millions)
 ----------------
  - Basic            246.8    246.2            246.8     245.9
  - Diluted          254.9    250.8            253.3     245.9
Cincinnati Bell Inc.
Segment Information
(Unaudited)

 (dollars in millions)

                      Three Months             Twelve Months
                   Ended December 31,   %    Ended December 31,   %
                     2006     2005    Change   2006     2005    Change
                   --------- -------- ------ --------- -------- ------
  Local
 Revenue
  Voice            $  115.7  $ 122.5    (6%) $  473.0  $ 500.4    (5%)
  Data                 62.0     56.9      9%    238.2    219.2      9%
  Other                 9.2      9.1      1%     36.1     36.0      0%
                   --------- --------        --------- --------

 Total revenue        186.9    188.5    (1%)    747.3    755.6    (1%)

 Operating costs
  and expenses
  Cost of services
   and products        62.2     61.1      2%    237.9    236.1      1%
  Selling, general
   and
   administrative      34.9     30.7     14%    136.8    133.7      2%
  Depreciation         26.2     27.1    (3%)    103.8    108.2    (4%)
  Restructuring
   charges             (0.2)     1.5    n/m       2.8      1.5     87%
                   --------- --------        --------- --------

  Total operating
   costs and
   expenses           123.1    120.4      2%    481.3    479.5      0%
                   --------- --------        --------- --------

 Operating income  $   63.8  $  68.1    (6%) $  266.0  $ 276.1    (4%)
                   ========= ========        ========= ========

  Wireless
 Revenue
  Service          $   61.3  $  51.5     19% $  235.7  $ 214.8     10%
  Equipment             7.5      6.3     19%     26.3     22.7     16%
                   --------- --------        --------- --------

  Total revenue        68.8     57.8     19%    262.0    237.5     10%

 Operating costs
  and expenses
  Cost of services
   and products        36.3     37.1    (2%)    146.1    129.3     13%
  Selling, general
   and
   administrative      17.4     14.9     17%     62.6     56.1     12%
  Depreciation and
   amortization         9.4     13.1   (28%)     33.1     61.5   (46%)
  Asset
   impairments and
   other charges          -     18.6    n/m         -     42.3    n/m
                   --------- --------        --------- --------

  Total operating
   costs and
   expenses            63.1     83.7   (25%)    241.8    289.2   (16%)
                   --------- --------        --------- --------

 Operating income
  (loss)           $    5.7  $ (25.9)   n/m  $   20.2  $ (51.7)   n/m
                   ========= ========        ========= ========

  Technology
   Solutions
 Revenue
  Telecom and IT
   equipment
   distribution    $   47.8  $  35.1     36% $  162.2  $ 126.7     28%
  Data center and
   managed
   services            12.7     10.6     20%     47.4     37.1     28%
  Professional
   services             1.8      1.8      0%      7.0      8.9   (21%)
                   --------- --------        --------- --------

 Total revenue         62.3     47.5     31%    216.6    172.7     25%

 Operating costs
  and expenses
  Cost of services
   and products        50.9     38.4     33%    175.2    139.5     26%
  Selling, general
   and
   administrative       5.9      4.4     34%     21.9     17.4     26%
  Depreciation and
   amortization         1.0      0.6     67%      3.7      2.3     61%
  Restructuring           -      0.1    n/m         -      0.1    n/m
  Asset
   impairments and
   other charges          -      0.1    n/m         -        -    n/m
                   --------- --------        --------- --------

  Total operating
   costs and
   expenses            57.8     43.6     33%    200.8    159.3     26%
                   --------- --------        --------- --------

 Operating income  $    4.5  $   3.9     15% $   15.8  $  13.4     18%
                   ========= ========        ========= ========

  Other
 Revenue           $   19.6  $  19.4      1% $   79.0  $  77.7      2%

 Operating costs
  and expenses
  Cost of services
   and products         9.5      8.2     16%     36.2     33.4      8%
  Selling, general
   and
   administrative       3.6      4.1   (12%)     14.6     15.8    (8%)
  Depreciation          0.7      0.5     40%      2.4      1.9     26%
                   --------- --------        --------- --------

  Total operating
   costs and
   expenses            13.8     12.8      8%     53.2     51.1      4%
                   --------- --------        --------- --------

 Operating income  $    5.8  $   6.6   (12%) $   25.8  $  26.6    (3%)
                   ========= ========        ========= ========

  Broadband
 Revenue           $      -  $     -    n/m  $      -  $     -    n/m

 Costs, expenses,
  gains and losses
  Selling, general
   and
   administrative      (0.8)    (8.4)  (90%)     (3.4)   (11.4)  (70%)
  Depreciation            -      0.1    n/m         -      0.1    n/m
  Restructuring
   charges              0.1     (0.5)   n/m       0.6     (0.5)   n/m
  Gain on sale of
   assets                 -        -    n/m      (7.6)       -    n/m
  Asset
   impairments and
   other charges          -        -    n/m         -     (0.5)   n/m
                   --------- --------        --------- --------

  Total costs,
   expenses, gains
   and losses          (0.7)    (8.8)  (92%)    (10.4)   (12.3)  (15%)
                   --------- --------        --------- --------

 Operating income  $    0.7  $   8.8   (92%) $   10.4  $  12.3   (15%)
                   ========= ========        ========= ========
Cincinnati Bell Inc.
Segment Information
(Unaudited)

(dollars in millions)

                     Three Months              Twelve Months
                  Ended December 31,   %    Ended December 31,    %
                    2006      2005   Change   2006      2005    Change
                  --------- -------- ------ --------- --------- ------
Revenue
  Local           $  186.9  $ 188.5    (1%) $  747.3  $  755.6    (1%)
  Wireless            68.8     57.8     19%    262.0     237.5     10%
  Technology
   Solutions          62.3     47.5     31%    216.6     172.7     25%
  Other               19.6     19.4      1%     79.0      77.7      2%
  Broadband              -        -    n/m         -         -    n/m
  Corporate and
   eliminations       (9.1)    (7.9)    15%    (34.8)    (33.9)     3%
                  --------- --------        --------- ---------

  Total revenue   $  328.5  $ 305.3      8% $1,270.1  $1,209.6      5%
                  ========= ========        ========= =========

Cost of Services
 and Products
  Local           $   62.2  $  61.1      2% $  237.9  $  236.1      1%
  Wireless            36.3     37.1    (2%)    146.1     129.3     13%
  Technology
   Solutions          50.9     38.4     33%    175.2     139.5     26%
  Other                9.5      8.2     16%     36.2      33.4      8%
  Broadband              -        -    n/m         -         -    n/m
  Corporate and
   eliminations       (7.1)    (6.0)    18%    (27.1)    (26.0)     4%
                  --------- --------        --------- ---------

  Total cost of
   services and
   products       $  151.8  $ 138.8      9% $  568.3  $  512.3     11%
                  ========= ========        ========= =========

Selling, General
 & Administrative
  Local           $   34.9  $  30.7     14% $  136.8  $  133.7      2%
  Wireless            17.4     14.9     17%     62.6      56.1     12%
  Technology
   Solutions           5.9      4.4     34%     21.9      17.4     26%
  Other                3.6      4.1   (12%)     14.6      15.8    (8%)
  Broadband           (0.8)    (8.4)  (90%)     (3.4)    (11.4)  (70%)
  Corporate and
   eliminations        3.7      4.0    (8%)     11.7       9.4     24%
                  --------- --------        --------- ---------

  Total selling,
   general &
   administrative $   64.7  $  49.7     30% $  244.2  $  221.0     10%
                  ========= ========        ========= =========

Depreciation and
 Amortization
  Local           $   26.2  $  27.1    (3%) $  103.8  $  108.2    (4%)
  Wireless             9.4     13.1   (28%)     33.1      61.5   (46%)
  Technology
   Solutions           1.0      0.6     67%      3.7       2.3     61%
  Other                0.7      0.5     40%      2.4       1.9     26%
  Broadband              -      0.1    n/m         -       0.1    n/m
  Corporate and
   eliminations        0.1      0.1      0%        -       0.7    n/m
                  --------- --------        --------- ---------

  Total
   depreciation
   and
   amortization   $   37.4  $  41.5   (10%) $  143.0  $  174.7   (18%)
                  ========= ========        ========= =========

Shareholder Claim
 Settlement, Gain on Sale
 of Broadband Assets,
 Restructuring
  Charges and
  Asset
  Impairments
  Local           $   (0.2) $   1.5    n/m  $    2.8  $    1.5     87%
  Wireless               -     18.6    n/m         -      42.3    n/m
  Technology
   Solutions             -      0.2    n/m         -       0.1    n/m
  Other                  -        -    n/m         -         -    n/m
  Broadband            0.1     (0.5)   n/m      (7.0)     (1.0)   n/m
  Corporate and
   eliminations          -     (0.1)   n/m       6.3      (0.1)   n/m
                  --------- --------        --------- ---------

  Total shareholder claim
   settlement, gain on sale
   of broadband assets,
   restructuring
    charges and
    asset
    impairments   $   (0.1) $  19.7    n/m  $    2.1  $   42.8    n/m
                  ========= ========        ========= =========

Operating Income
  Local           $   63.8  $  68.1    (6%) $  266.0  $  276.1    (4%)
  Wireless             5.7    (25.9)   n/m      20.2     (51.7)   n/m
  Technology
   Solutions           4.5      3.9     15%     15.8      13.4     18%
  Other                5.8      6.6   (12%)     25.8      26.6    (3%)
  Broadband            0.7      8.8   (92%)     10.4      12.3   (15%)
  Corporate and
   eliminations       (5.8)    (5.9)   (2%)    (25.7)    (17.9)    44%
                  --------- --------        --------- ---------

  Total operating
   income         $   74.7  $  55.6     34% $  312.5  $  258.8     21%
                  ========= ========        ========= =========
Cincinnati Bell Inc.
Segment Metric Information
(Unaudited)


                                             December 31, December 31,
                                                2006         2005
                                             ------------ ------------
 (in thousands)

 Local access lines                                887.1        930.6
 DSL subscribers                                   198.3        162.5
 Custom Connections (Super Bundle)
  subscribers                                      173.2        150.3


 Postpaid wireless subscribers                     365.8        315.1
 Prepaid wireless subscribers                      162.3        180.5
                                             ------------ ------------

 Total wireless subscribers                        528.1        495.6
                                             ============ ============


 Consumer long distance lines                      394.8        412.6
 Business long distance lines                      157.5        151.1
                                             ------------ ------------

 Total long distance lines                         552.3        563.7
                                             ============ ============


 Data Center and Managed Services
 Raised Floor (in thousands, of square feet)          91           71
 Utilization rate                                     91%          99%
Cincinnati Bell Telephone
Local Access Line Detail
(Unaudited)



                   ------------------------ ------------------------
                            2004                     2005
                   ------------------------ ------------------------
 (in thousands)      1Q    2Q    3Q    4Q     1Q    2Q    3Q    4Q
                   ------------------------ ------------------------
 Local Access
  Lines
 -----------------

 In-Territory:
    Primary
     Residential   611.8 606.3 601.5 592.7  584.2 573.0 563.9 555.7
    Secondary
     Residential    56.0  54.0  52.2  50.5   48.9  47.1  45.4  43.9
    Business/Other 301.5 299.6 298.4 296.6  296.1 294.3 292.9 293.3
                   ------------------------ ------------------------
 Total In-
  Territory        969.3 959.9 952.1 939.8  929.2 914.4 902.2 892.9

 Out-of-Territory:
    Primary
     Residential     4.6  10.9  15.8  18.4   17.7  18.4  20.5  21.5
    Secondary
     Residential     0.2   0.6   0.7   0.8    0.8   0.9   1.0   1.0
    Business/Other   6.8   8.0   9.9  11.1   12.2  12.8  13.9  15.2
                   ------------------------ ------------------------
 Total Out-of-
  Territory         11.6  19.5  26.4  30.3   30.7  32.1  35.4  37.7

                   ------------------------ ------------------------
 Total Access
  Lines            980.9 979.4 978.5 970.1  959.9 946.5 937.6 930.6
                   ======================== ========================

Cincinnati Bell Telephone
Local Access Line Detail
(Unaudited)



                                             -------------------------
                                                       2006
                                             -------------------------
 (in thousands)                                 1Q    2Q    3Q    4Q
                                             -------------------------
 Local Access Lines
 -------------------------------------------

 In-Territory:
    Primary Residential                       547.4 536.7 522.5 510.5
    Secondary Residential                      42.4  40.9  39.2  37.6
    Business/Other                            290.9 291.3 291.4 288.6
                                             -------------------------
 Total In-Territory                           880.7 868.9 853.1 836.7

 Out-of-Territory:
    Primary Residential                        22.8  24.8  26.8  28.1
    Secondary Residential                       1.1   1.1   1.2   1.2
    Business/Other                             16.3  17.7  19.4  21.0
                                             -------------------------
 Total Out-of-Territory                        40.2  43.6  47.4  50.3

                                             -------------------------
 Total Access Lines                           920.9 912.5 900.5 887.0
                                             =========================
Cincinnati Bell Inc.
Net Debt Calculation
(Unaudited)



                                                             Change
                                                          ------------
                      December 31, 2006 December 31, 2005    $     %
                      ----------------- ----------------- ------------
 (dollars in millions)
 Credit facility,
  revolver                 $         -       $         -  $    -  n/m
 Credit facility,
  tranche B term loan            395.0             399.0    (4.0) (1%)
 Cincinnati Bell
  Telephone notes                230.0             230.0       -    0%
 7 1/4% Senior Notes
  due 2013                       496.9             500.0    (3.1) (1%)
 7 1/4% Senior Notes
  due 2023                        50.0              50.0       -    0%
 8 3/8% Senior
  Subordinated Notes
  due 2014                       631.5             633.4    (1.9) (0%)
 7% Senior Notes due
  2015                           245.0             246.4    (1.4) (1%)
 Capital leases and
  other debt                      24.0              24.9    (0.9) (4%)
 Net unamortized
  premium                          0.8               1.0    (0.2)(20%)
                      ----------------- ----------------- ------------

  Total debt                   2,073.2           2,084.7   (11.5) (1%)

 Add: Interest rate
  swap liability                  13.5              10.2     3.3   32%
 Less: Cash and cash
  equivalents                    (79.4)            (25.7)  (53.7) n/m
                      ----------------- ----------------- ------------

  Net debt (as defined
   by the company)         $   2,007.3       $   2,069.2  $(61.9) (3%)
                      ================= ================= ============

 Credit facility
  availability             $     245.2       $     243.6  $  1.6    1%
                      ================= ================= ============
Cincinnati Bell Inc.
Consolidated Statements of Cash Flows
(Unaudited)

 (dollars in millions)

                                    Three Months      Twelve Months
                                 Ended December 31, Ended December 31,
                                    2006     2005      2006     2005
                                 --------- -------- --------- --------

 Cash provided by operating
  activities                      $ 124.5  $  96.9   $ 334.7  $ 322.3
                                 --------- -------- --------- --------

  Capital expenditures              (41.5)   (34.3)   (151.3)  (143.0)
  Acquisition of business and
   remaining minority interest in
   CBW                                  -        -     (86.7)       -
  Purchase of wireless licenses     (30.1)       -     (37.1)       -
  Proceeds from sale of broadband
   assets                               -        -       4.7        -
  Proceeds from sale of
   investment                         5.7        -       5.7        -
  Other                               2.5     (0.9)      4.7      0.3
                                 --------- -------- --------- --------

 Cash used in investing
  activities                        (63.4)   (35.2)   (260.0)  (142.7)
                                 --------- -------- --------- --------

  Issuance of long-term debt            -        -         -    752.1
  Decrease in corporate credit
   facility, net                     (4.0)   (38.0)        -        -
  Repayment of debt                  (1.9)   (20.8)    (13.3)  (903.3)
  Debt issuance costs and consent
   fees                                 -        -         -    (21.9)
  Issuance of common shares -
   exercise of stock options          0.2      0.1       1.9      2.5
  Preferred stock dividends          (2.6)    (2.6)    (10.4)   (10.4)
  Other                              (0.9)     1.6       0.8      2.2
                                 --------- -------- --------- --------

 Cash used in financing
  activities                         (9.2)   (59.7)    (21.0)  (178.8)
                                 --------- -------- --------- --------

 Net increase in cash and cash
  equivalents                        51.9      2.0      53.7      0.8
 Cash and cash equivalents at
  beginning of period                27.5     23.7      25.7     24.9
                                 --------- -------- --------- --------

 Cash and cash equivalents at end
  of period                       $  79.4  $  25.7   $  79.4  $  25.7
                                 ========= ======== ========= ========


 Reconciliation of GAAP Cash Flow to Free
  Cash Flow as defined by the company
 Net increase (decrease) in cash
  and cash equivalents            $  51.9  $   2.0   $  53.7  $   0.8
 Less adjustments:
  Issuance of long-term debt and
   net change in corporate credit
   facility                           4.0     38.0         -   (752.1)
  Repayment of debt                   1.9     20.8      13.3    903.3
  Proceeds from sale of
   investment                        (5.7)       -      (5.7)       -
  Acquisition of business and
   remaining minority interest in
   CBW                                  -        -      86.7        -
                                 --------- -------- --------- --------

     Free cash flow (as defined
      by the company)             $  52.1  $  60.8   $ 148.0  $ 152.0
                                 ========= ======== ========= ========


 Income tax payments              $  (1.4) $  (1.0)  $  (6.6) $  (2.1)
Cincinnati Bell Inc.
Reconciliation of Adjusted EBITDA (Non-GAAP) to Operating Income
 (GAAP)
(Unaudited)

(dollars in
 millions)

                ------------------------------------------------------
                         Three Months Ended December 31, 2006
                ------------------------------------------------------
                                                               Total
                 Local Wireless CBTS Other Broadband Corporate Company
                ------------------------------------------------------

Operating Income
 (GAAP)          $63.8    $5.7  $4.5  $5.8      $0.7    $(5.8)  $74.7

Add:
 Depreciation
  and
  amortization    26.2     9.4   1.0   0.7         -      0.1    37.4
 Shareholder
  claim
  settlement,
  gain on sale
  of broadband
  assets,
  restructuring
  charges and
  asset
  impairments     (0.2)      -     -     -       0.1        -    (0.1)
                ------------------------------------------------------

EBITDA (Non-
 GAAP)           $89.8   $15.1  $5.5  $6.5      $0.8    $(5.7) $112.0
                ======================================================



                ------------------------------------------------------
                         Three Months Ended December 31, 2005
                ------------------------------------------------------
                                                               Total
                 Local Wireless CBTS Other Broadband Corporate Company
                ------------------------------------------------------

Operating Income
 (GAAP)          $68.1  $(25.9) $3.9  $6.6      $8.8    $(5.9)  $55.6

Add:
 Depreciation
  and
  amortization    27.1    13.1   0.6   0.5       0.1      0.1    41.5
 Shareholder
  claim
  settlement,
  gain on sale
  of broadband
  assets,
  restructuring
  charges and
  asset
  impairments      1.5    18.6   0.2     -      (0.5)    (0.1)   19.7
                ------------------------------------------------------

EBITDA (Non-
 GAAP)           $96.7    $5.8  $4.7  $7.1      $8.4    $(5.9) $116.8
                ======================================================



                ------------------------------------------------------
                        Twelve Months Ended December 31, 2006
                ------------------------------------------------------
                                                               Total
                 Local Wireless CBTS Other Broadband Corporate Company
                ------------------------------------------------------

Operating Income
 (GAAP)         $266.0   $20.2 $15.8 $25.8     $10.4   $(25.7) $312.5

Add:
 Depreciation
  and
  amortization   103.8    33.1   3.7   2.4         -        -   143.0
 Shareholder
  claim
  settlement,
  gain on sale
  of broadband
  assets,
  restructuring
  charges and
  asset
  impairments      2.8       -     -     -      (7.0)     6.3     2.1
                ------------------------------------------------------

EBITDA (Non-
 GAAP)          $372.6   $53.3 $19.5 $28.2      $3.4   $(19.4) $457.6
                ======================================================



                ------------------------------------------------------
                        Twelve Months Ended December 31, 2005
                ------------------------------------------------------
                                                               Total
                 Local Wireless CBTS Other Broadband Corporate Company
                ------------------------------------------------------

Operating Income
 (GAAP)         $276.1  $(51.7)$13.4 $26.6     $12.3   $(17.9) $258.8

Add:
 Depreciation
  and
  amortization   108.2    61.5   2.3   1.9       0.1      0.7   174.7
 Shareholder
  claim
  settlement,
  gain on sale
  of broadband
  assets,
  restructuring
  charges and
  asset
  impairments      1.5    42.3   0.1     -      (1.0)    (0.1)   42.8
                ------------------------------------------------------

EBITDA (Non-
 GAAP)          $385.8   $52.1 $15.8 $28.5     $11.4   $(17.3) $476.3
                ======================================================
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                      Months Ended
                        Months Ended    Gain on    December 31, 2006
                       December 31,     Sale of   Before Special Items
                        2006 (GAAP)    Investment      (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 charges          (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 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
                                                              Months
                                                               Ended
                Twelve   Gain                                December
                Months    on                           Gain  31, 2006
                 Ended   Sale  Share-                   on    Before
               December   of   holder                  Sale   Special
                  31,   Broad-  Claim Income Restruct-  of     Items
                 2006    band  Settle-  Tax    uring  Invest-  (Non-
                (GAAP)  Assets  ment  Expense Charge   ment    GAAP)
                           A      B      C       D       E
Revenue        $1,270.1 $    - $    - $    - $      - $    - $1,270.1

Costs and
 expenses
 Cost of
  services and
  products        568.3      -      -      -        -      -    568.3
 Selling,
  general and
  adminis-
  trative         244.2      -      -      -        -      -    244.2
 Depreciation
  and
  amortization    143.0      -      -      -        -      -    143.0
 Shareholder
  claim
  settlement        6.3      -   (6.3)     -        -      -        -
 Gain on sale
  of broadband
  assets           (7.6)   7.6      -      -        -      -        -
 Restructuring
  charges           3.4      -      -      -     (3.4)     -        -
               -------------------------------------------------------
  Operating
   income         312.5   (7.6)   6.3      -      3.4      -    314.6

Minority
 interest
 income            (0.5)     -      -      -        -      -     (0.5)
Interest
 expense          162.1      -      -      -        -      -    162.1
Loss on
 extinguishment
 of debt            0.1      -      -      -        -      -      0.1
Other income,
 net               (3.8)     -      -      -        -    3.2     (0.6)
               -------------------------------------------------------

Income before
 income taxes     154.6   (7.6)   6.3      -      3.4   (3.2)   153.5
Income tax
 expense           68.3   (3.0)   2.5   (3.6)     1.4   (1.3)    64.3
               -------------------------------------------------------

Net income         86.3   (4.6)   3.8    3.6      2.0   (1.9)    89.2

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

Net income
 applicable to
 common
 shareowners   $   75.9 $ (4.6)$  3.8 $  3.6 $    2.0 $ (1.9)$   78.8
               =======================================================


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

Diluted
 earnings per
 common share  $   0.30 $(0.02)$ 0.02 $ 0.01 $   0.01 $(0.01)$   0.31
               =======================================================

Normalized results have been adjusted for the following (pretax
 adjustments are 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 first quarter 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.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)

 (dollars in millions, except per share amounts)

                                     Special Items
                           ----------------------------------
                                                               Three
                                                              Months
                                                                Ended
                                                              December
                   Three                                        31,
                  Months                                        2005
                    Ended                                     Before
                  December                           Asset     Special
                     31,    Income                Impairments   Items
                   2005      Tax    Restructuring  & Other     (Non-
                   (GAAP)   Expense    Charge       Charges     GAAP)
                              A           B            C
Revenue           $ 305.3  $     -  $          -  $        -  $ 305.3

Costs and expenses
 Cost of services
  and products      138.8        -             -           -    138.8
 Selling, general
  and
  administrative     49.7        -             -           -     49.7
 Depreciation and
  amortization       41.5        -             -           -     41.5
 Restructuring
  charges             1.1        -          (1.1)          -        -
 Asset impairments
  and other
  charges            18.6        -             -       (18.6)       -
                  -------- -------- ------------- ----------- --------
  Operating income   55.6        -           1.1        18.6     75.3

Minority interest
 income              (5.2)       -             -         3.7     (1.5)
Interest expense     37.3        -             -           -     37.3
Other income, net    (2.7)       -             -           -     (2.7)
                  -------- -------- ------------- ----------- --------

Income before
 income taxes        26.2        -           1.1        14.9     42.2
Income tax expense   13.6      2.5           0.4         6.0     22.5
                  -------- -------- ------------- ----------- --------

Net income           12.6     (2.5)          0.7         8.9     19.7

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

Net income
 applicable to
 common
 shareowners      $  10.0  $  (2.5) $        0.7  $      8.9  $  17.1
                  ======== ======== ============= =========== ========


Weighted average
 diluted common
 shares             250.8    250.8         250.8       250.8    250.8
                  ======== ======== ============= =========== ========

Diluted earnings
 per common share $  0.04  $ (0.01) $       0.00  $     0.04  $  0.07
                  ======== ======== ============= =========== ========

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

A Benefit associated with adjustment to state deferred tax assets
 based on interpretive guidance issued by state tax authorities
 clarifying tax law changes enacted in 1Q 2005;

B Restructuring associated with directory assistance outsourcing; and

C Asset impairments and other charges, substantially all of which
 related to a write-down of the company's TDMA network assets.
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
                Twelve                                      December
                Months                                       31, 2005
                 Ended                              Asset    Before
               December                            Impair-   Special
                  31,   Income    Debt   Restruct-  ments     Items
                 2005     Tax   Exting-    uring   & Other    (Non-
                 (GAAP) Expense uishment  Charge    Charges   GAAP)
                           B       C         D        E
Revenue        $1,209.6     $-       $-        $-       $-  $1,209.6

Costs and
 expenses
 Cost of
  services and
  products        512.3      -        -         -        -     512.3
 Selling,
  general and
  adminis-
  trative         221.0      -        -         -        -     221.0
 Depreciation
  and
  amortization    174.7      -        -         -        -     174.7
 Restructuring      1.1      -        -      (1.1)       -         -
 Asset
  impairments
  and other
  charges          41.7      -        -         -    (41.7)        -
               ---------------- -------- --------- -------- ---------
  Operating
   income         258.8      -        -       1.1     41.7     301.6

Minority
 interest
 income           (11.0)     -        -         -      8.3      (2.7)
Interest
 expense          184.4      -        -         -        -     184.4
Loss on
 extinguish-
 ment of debt      99.8      -    (99.8)        -        -         -
Other income,
 net               (4.2)     -        -         -        -      (4.2)
               ---------------- -------- --------- -------- ---------

Income (loss)
 before income
 taxes            (10.2)     -     99.8       1.1     33.4     124.1
Income tax
 expense           54.3  (44.5)    39.9       0.4     13.4      63.5
               ---------------- -------- --------- -------- ---------

Net income
 (loss)           (64.5)  44.5     59.9       0.7     20.0      60.6

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

Net income
 (loss)
 applicable to
 common
 shareowners     $(74.9) $44.5    $59.9      $0.7    $20.0     $50.2
               ================ ======== ========= ======== =========


Weighted
 average
 diluted common
 shares           245.9  251.1 A  251.1 A   251.1 A  251.1 A   251.1 A
               ================ ======== ========= ======== =========

Diluted
 earnings
 (loss) per
 common share    $(0.30) $0.18    $0.24     $0.00    $0.08     $0.20
               ================ ======== ========= ======== =========

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

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

B Write-down of certain state deferred tax assets due to change in
 state tax rates and state tax laws;

C Loss on extinguishment of the company's prior credit facility and
 16% Notes;

D Restructuring associated with directory assistance outsourcing; and

E Asset impairments and other charges, substantially all of which
 related to the write-down of the company's TDMA network assets.

    CONTACT: Cincinnati Bell Inc.
             Investor / Media contact:
             Tony Schulte, 513-397-9540
             tony.schulte@cinbell.com

    SOURCE: Cincinnati Bell Inc.