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Cincinnati Bell Inc. Reports Strong Financial Results for the Fourth Quarter and Full Year 2004

02/15/05
    CINCINNATI--(BUSINESS WIRE)--Feb. 15, 2005--

  Exceeds Net Debt Reduction Goal, Achieves a 73 Percent Increase in
      "Super Bundle" Subscribers and a 31 Percent Increase in DSL
                              Subscribers

Cincinnati Bell Inc. (NYSE:CBB) today announced revenue of $300 million, operating income of $63 million, and net income of $21 million, or $0.07 per diluted share, for the fourth quarter of 2004. Reported results reflect the impact of two special items recorded during the quarter: a non-cash income tax benefit of $13 million related to a change in estimated future tax benefits, and an $11 million restructuring charge, of which $1 million was cash, related to the company's previously announced restructuring plan. Excluding the restructuring charge and the tax benefit, the company generated quarterly operating income of $75 million and net income of $16 million, or $0.05 per diluted share.

For the year ended December 31, the company reported revenue of $1,207 million, operating income of $299 million and net income of $64 million, or $0.21 per diluted share. Excluding restructuring charges and tax benefits, operating income totaled $311 million and net income was $59 million, or $0.20 per diluted share. Capital expenditures were $134 million, or 11 percent of revenue, for 2004.

Highlights for the Year 2004

"This year our core customers were not only well satisfied, they demonstrated increased confidence in us by expanding their commitments to our products and services," said Jack Cassidy, president and chief executive officer of Cincinnati Bell Inc. This success, combined with our recently announced refinancing plan, strengthens our cash flows and allows us to accelerate debt reduction to the benefit of our shareholders and our future competitive strength."

    In 2004, Cincinnati Bell:

    --  Continued to de-lever the company, reducing net debt(a) by
        $149 million and exceeding its goal of approximately $140
        million in 2004. Net debt of $2,112 million was 7 percent less
        than at the end of 2003. The company also produced $167
        million of free cash flow(b), which was 82 percent more than
        in 2003 and exceeded guidance by $7 million.

    --  Defended its core franchise through bundling, adding 52,000
        net subscribers to its Custom Connections "super bundle" which
        offers local, long distance, wireless and/or DSL. The company
        finished the year with 123,000 super bundle subscribers, or 73
        percent more than at the end of the prior year. Additionally,
        total access lines declined by 1.6 percent versus the end of
        2003, a full percentage point improvement over the 2.6 percent
        annual decline reported in the prior year as the company saw
        little impact from cable telephony competition. Combining
        access lines and DSL lines, the company added 16,000 net new
        total connections for the year.

    --  Grew its business by adding 31,000 Digital Subscriber Line
        (DSL) subscribers, or 26 percent more than were added in 2003,
        which is within the guidance range of 30,000 to 35,000 DSL net
        additions. The company finished the year with 131,000 DSL
        subscribers, or 31 percent more than at the end of 2003.
        Cincinnati Bell increased its DSL penetration by 4 points, to
        14 percent of total access lines at year-end.

    --  Met or exceeded financial guidance for the year:
Category               2004 Guidance           2004 Actual
---------------------- ----------------------- -----------------------
Net debt reduction     Approximately $140      $149 million
                        million
---------------------- ----------------------- -----------------------
EBITDA(c)              $485 to $505 million    $501 million, excluding
                                                a $3 million non-cash
                                                adjustment to wireless
                                                rent expense
---------------------- ----------------------- -----------------------
Revenue decline, excl. Low single-digit        4 percent
 Broadband Services
---------------------- ----------------------- -----------------------
DSL net additions      30,000 to 35,000        31,000
---------------------- ----------------------- -----------------------
Effective tax rate     50 percent, with        36 percent (including
                        approximately $5        non-cash tax
                        million in cash income  benefits), with $2
                        tax payments            million in cash income
                                                tax payments
---------------------- ----------------------- -----------------------
Capital expenditures   10 to 12 percent of     11 percent of revenue
                        revenue
---------------------- ----------------------- -----------------------
Net access line        Below 2 percent         1.6 percent
 decline
---------------------- ----------------------- -----------------------
Wireless net additions 10,000 to 20,000        7,000
---------------------- ----------------------- -----------------------

Highlights for the Fourth Quarter 2004

"DSL adoption and service bundling continue to be success stories for Cincinnati Bell," said Cassidy. "DSL growth continues to help offset traditional access line losses, while 78 percent of in-territory consumer DSL activations and 76 percent of in-territory consumer postpaid wireless activations came as part of the bundle."

    In the fourth quarter, Cincinnati Bell:

    --  Posted DSL net additions of 8,000, up 15 percent from the
        fourth quarter of 2003.

    --  Added 10,000 net subscribers to its Custom Connections
        "super-bundle." Twenty percent of the company's in-territory
        consumer households are now super-bundle customers. This
        helped to increase in-territory consumer revenue per household
        5 percent versus the fourth quarter of 2003, to a total of
        approximately $77 per month.

    --  Improved postpaid wireless churn to 2.78 percent, a 0.9 point
        improvement versus the third quarter of 2004.

    Financial Results

"During 2004, Cincinnati Bell exceeded its net debt reduction goal while at the same time continuing to make the investments necessary to operating a world-class telecommunications company. We continue to generate strong cash flow for de-levering the company while remaining the pre-eminently positioned competitive force in our market," said Brian Ross, Cincinnati Bell Inc.'s chief financial officer.

Revenue

For the fourth quarter, revenue of $300 million was flat versus the fourth quarter of 2003 when excluding the impact of the sale of substantially all of the out-of-territory assets of the company's Hardware and Managed Services segment. This sale resulted in a decrease in revenue of $11 million.

For the year, excluding the Broadband segment, revenue decreased $49 million, or 4 percent, versus 2003. Of this decrease, $33 million was due primarily to the sale of substantially all of the out-of-territory assets of CBTS, while $13 million was due to a decline in local service revenue resulting from a decrease in access lines. On a consolidated basis, revenue of $1,207 million declined 23 percent, or $351 million, versus 2003, primarily due to the sale of substantially all of the company's broadband assets in 2003.

Operating Income

For the fourth quarter, operating income, excluding restructuring charges, was $75 million, which was 22 percent, or $14 million, higher than the fourth quarter of 2003. This increase was primarily due to an $8 million decrease in asset impairments and other charges, a $6 million decrease in depreciation, a $5 million decrease in the cost of long distance minutes in the Other segment and a $3 million decrease in operating taxes in the Local segment, partially offset by a $3 million increase in non-cash rent expense in the Wireless segment and the decline in revenue. The increase in rent expense was due to a non-cash, non-recurring adjustment to account for the terms of cell site ground leases and the amortization periods of their respective leasehold improvements consistently.

For the year, excluding the Broadband segment, operating income decreased 15 percent, or $51 million, primarily due to a $23 million increase in wireless and DSL customer acquisition expenses, a $20 million increase in depreciation and amortization and a $5 million increase in restructuring charges. On a consolidated basis, operating income of $299 million decreased 56 percent, or $385 million, versus 2003, primarily due to a $332 million decrease in gain on the sale of substantially all of the broadband assets.

Local Communications Services

Cincinnati Bell's Local segment, which includes the operations of the company's local-exchange subsidiary, Cincinnati Bell Telephone (CBT), produced revenue of $191 million for the fourth quarter, down 1 percent versus the fourth quarter of 2003, as higher DSL revenue partially offset declining voice revenue. For the year, CBT recorded $762 million in revenue, a 2 percent decrease versus 2003, as higher DSL revenue partially offset lower voice and wiring revenue. In 2004, DSL revenue increased 29 percent versus the prior year, driven by a 31 percent increase in subscribers over the same period.

The Local segment produced operating income, excluding restructuring charges, of $73 million for the fourth quarter, a 6 percent, or $4 million, increase versus the fourth quarter of 2003. This increase was primarily due to a $3 million decrease in operating taxes and a $4 million decrease in depreciation, partially offset by the decline in revenue. For the year, the Local segment reported operating income, excluding restructuring charges, of $290 million, up 1 percent, or $2 million, versus 2003. The increase was due primarily to a $9 million decrease in depreciation and a $7 million decrease in operating taxes, partially offset by a $5 million increase in customer acquisition expense and the decline in revenue.

CBT finished the year with 970,000 total access lines, a 1.6 percent decline versus the prior year, a full percentage point improvement over the 2.6 percent decline reported in 2003. This improvement was due primarily to the addition of 21,000 out-of-territory lines in 2004, which was 18,000 more than were added in 2003. This increase in out-of-territory lines was primarily due to the launch of local service in the Dayton market, where Cincinnati Bell sells local service bundled with wireless and long distance service. These out-of-territory lines partially offset the decline of 37,000 in-territory lines. The decrease in in-territory lines was primarily due to wireless and broadband substitution, disconnects for non-payment and, to a lesser degree, cable telephony competition. Combining the in and out-of-territory lines with the increase of 31,000 DSL subscribers, Cincinnati Bell reported a net increase of 16,000 total connections versus the end of 2003.

Capital investment was $21 million for fourth quarter and $80 million, or 11 percent of revenue, for the year.

Wireless Services

Cincinnati Bell Wireless (CBW) reported revenue of $64 million in the fourth quarter, up 3 percent versus the fourth quarter of 2003, as increases in equipment, data and prepaid voice revenue offset lower postpaid voice revenue. For the year, CBW produced revenue of $262 million, up 1 percent versus 2003, for substantially the same reasons. In 2004, CBW increased wireless data revenue 62 percent, or $6 million, to $15 million, or 6 percent of service revenue.

The operating loss for the quarter was $9 million, an $8 million greater loss than the fourth quarter of 2003. This was due in part to the $3 million non-cash, non-recurring adjustment to rent expense described above. CBW also reported a $2 million increase in customer acquisition cost related to a 10 percent increase in gross activations, as well as a $2 million increase in depreciation, amortization and asset write-downs.

For the year, the operating loss was $1 million, a $62 million decrease in operating income versus 2003. This decrease was due primarily to a $35 million increase in depreciation, amortization and asset write-offs, all related to the company's transition from TDMA to GSM technology, an $18 million increase in customer acquisition cost related to a 27 percent increase in gross activations, the $3 million non-cash adjustment to rent expense mentioned above and a $4 million increase in customer care expenses and operating taxes, with the remainder due to the decline in postpaid voice revenue.

In the fourth quarter, the company posted gross activations of 70,000, a 10 percent increase versus the fourth quarter of 2003. Seventy-six percent of consumer postpaid activations in Cincinnati came as part of the bundle. Cincinnati Bell also reported net subscriber additions of 2,000. Postpaid churn finished the quarter at 2.78 percent, which was a 0.9 point improvement versus the third quarter of 2004. The churn improvement was due primarily to improvements in network quality as the company transitions from TDMA to GSM technology.

For the year, gross activations of 243,000 increased 27 percent versus 2003. Net activations of 7,000 were 3,000 higher than in 2003.

For the quarter, postpaid Average Revenue Per User (ARPU(d)) was $51, a 7 percent decrease, while prepaid ARPU was $19, a 12 percent increase, both versus the fourth quarter of 2003. Postpaid ARPU declined due to customer migration to lower ARPU plans as well as lower roaming revenue.

Capital investment was $10 million, or 15 percent of revenue, in the fourth quarter. For the year, capital investment was $32 million, or 12 percent of revenue. Cincinnati Bell finished the year with 481,000 subscribers, 207,000 of which were on the company's GSM network, which the company launched in the fourth quarter of 2003.

Hardware and Managed Services

For the fourth quarter, revenue in the Hardware and Managed Services segment of $34 million increased 3 percent versus the fourth quarter of 2003, excluding revenue associated with the out-of-territory assets of Cincinnati Bell Technology Solutions (CBTS). This increase was due primarily to strong hardware sales to enterprise customers and increased managed services revenue driven by the implementation of a data center in the third quarter of 2004. Including the revenue associated with the out-of-territory assets of CBTS, revenue declined 23 percent versus the fourth quarter of 2003.

For the year, excluding revenue associated with the sale of substantially all of the out-of-territory assets of CBTS, revenue increased 5 percent, or $5 million, compared to 2003, due to strong hardware sales. Including the impact of the sold assets, revenue declined by 17 percent versus 2003.

For the fourth quarter, operating income of $3 million declined $2 million from the fourth quarter of 2003 primarily due to lower margins on equipment sales and also due to the sale of the out-of-territory assets. For the year, operating income of $13 million was down $5 million versus 2003, for substantially the same reasons. The segment reported capital investment of $2 million in the quarter. The segment had capital investment of $16 million for the year, substantially all related to an investment in a data center in the third quarter of 2004. Virtually all of the data center space is currently under long-term service contracts with enterprise customers.

Other Communications Services

Other Communications Services, which includes Cincinnati Bell's voice long distance and public payphone operations, reported revenue of $20 million for the fourth quarter, 4 percent, or $1 million, higher than the same quarter a year ago. This increase was due primarily to a 10 percent, or $2 million, increase in long distance revenue, which was partially offset by a decline in payphone revenue. Long distance revenue increased due to the company's bundling efforts in and out-of-territory, while payphone revenue decreased primarily due to the sale of substantially all of the segment's out-of-territory and correctional institution payphones in the fourth quarter of 2004.

For the year, the Other segment produced revenue of $79 million, or 3 percent less than in 2003. This decrease was due primarily to a 17 percent decrease in payphone revenue as a result of the sale of payphones mentioned above.

The Other segment produced $6 million in operating income for the quarter as compared to break-even performance in the fourth quarter of 2003. This improvement was primarily due to a $4 million asset impairment in the payphone business recorded in the fourth quarter of 2003 and not repeated in the fourth quarter of 2004, as well as a substantial decrease in the cost of long distance minutes. For the year, the Other segment reported operating income of $18 million, up $11 million from 2003, for substantially the same reasons.

CBAD's Cincinnati market share of CBT access lines for which a long distance carrier is selected was 76 percent in the consumer market and 48 percent in the business market at the end of the year, improvements of 5 points and 3 points, respectively, versus the prior year.

Broadband

The Broadband segment produced no revenue in the quarter, due to the sale of substantially all of the company's broadband assets in 2003. There are no longer any meaningful operations in this segment. The remaining activity relates to the disposition of remaining liabilities associated with the broadband sale. At the end of 2004, the company had $24 million in such liabilities. For the year, the company eliminated $38 million of such liabilities, using $26 million in cash. The Broadband segment reported operating income of $6 million for the fourth quarter of 2004, entirely due to favorable adjustments to liabilities and reserves.

2005 Guidance

The company provides the following guidance for 2005 results:

Category          2005 Guidance
----------------- ----------------------------------------------------
Revenue           Low single-digit percent decline
----------------- ----------------------------------------------------
EBITDA            $480 to $490 million, including approximately $20
                   million in incremental non-cash expense related to
                   post-retirement medical benefits and employee stock
                   options
----------------- ----------------------------------------------------
Capex             Approximately 12 percent of revenue
----------------- ----------------------------------------------------
Free cash flow    Approximately $145 million, including approximately
                   $20 million in financing fees
----------------- ----------------------------------------------------

Use of Non-GAAP Financial Measures

(a) The company has presented certain information regarding net debt in the preceding discussion because the company believes net debt provides a useful measure of a company's liquidity and financial health. Net debt is defined by the company as the sum of the face amount of short-term and long-term debt, offset by cash and cash equivalents. A detailed reconciliation of the company's net debt to comparable GAAP financial measures is given in the attached financial information.

(b) The company has presented certain information regarding free cash flow in the preceding discussion because the company believes cash flow provides a useful measure of a company's operational performance, liquidity and financial health. Free cash flow is defined by the company as SFAS 95 cash provided by (used in) operating, financing and investing activities, less changes in restricted cash in operating activities, issuance and repayment of long-term debt in financing activities, short-term borrowings (repayments) in financing activities and proceeds from the sale of discontinued operations and assets in investing activities. 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 cash flow as defined by other companies. A detailed reconciliation of the company's free cash flow to comparable GAAP financial measures is given in the attached financial information.

(c) The company has presented certain information regarding EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) because the company believes EBITDA provides a useful measure of the company's operational performance. EBITDA is defined by the company as GAAP Operating Income plus depreciation, amortization, restructuring charges, asset impairments, gain on the sale of assets and other special items. EBITDA should not be considered as an alternative to comparable GAAP measures of profitability. A detailed reconciliation of the company's EBITDA to comparable GAAP financial measures is provided in the tables distributed with this release.

These non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. They are presented because Cincinnati Bell Inc. management uses this information when evaluating the company's results of operations and cash flow and believes that this information provides the users of the financial statements with additional and useful comparisons of the company's current results of operations and cash flows with past and future periods.

(d) The company has presented certain information regarding average revenue per user (ARPU) because the company believes ARPU provides a useful measure of the operational performance of the wireless business. ARPU is calculated by dividing service revenue by our average subscriber base for the respective period. For a given period, the average subscriber base is calculated by adding subscribers at the beginning of the period to subscribers at the end of the period and dividing the sum by two.

Conference Call/Webcast

Cincinnati Bell Inc. will host a conference call discussing its fourth quarter 2004 results on Tuesday, February 15, 2005 at 11:00 a.m. EST, which will be webcast on the company's website at www.cincinnatibell.com. The dial-in number for the conference call is 1-877-641-0086. International callers may dial 678-460-1867. A taped replay of the conference call will be available one hour after the conclusion of the teleconference until 5 p.m. (EST) on February 23, 2005. For U.S. callers, the replay will be available at 888-284-7564. For international callers, the replay will be available at 678-460-1866. The replay reference number is 156100.

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. Cincinnati Bell provides a wide range of telecommunications products and services to residential and business customers in Ohio, Kentucky and Indiana. Cincinnati Bell is headquartered in Cincinnati, Ohio. For more information, visit 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, any 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 for 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 our various credit facilities and debt instruments, work stoppages caused by labor disputes, adjustments resulting from year-end audit procedures and Cincinnati Bell's ability to develop and launch new products and services. More information on potential risks and uncertainties is available in the company's recent filings with the Securities and Exchange Commission, including Cincinnati Bell's annual Form 10-K report, quarterly Form 10-Q reports and Forms 8-K. The forward-looking statements included in this release represent the company's estimates as of February 15, 2005. The company anticipates that subsequent events and developments will cause its estimates to change.

Cincinnati Bell Inc.
Consolidated Statements of Income
(Unaudited)

(in millions - except per share amounts)

                         For the                 For the
                       Three Months            Twelve Months
                          Ended                   Ended
                       December 31,     %      December 31,       %
                       2004    2003   Change  2004      2003    Change
                      ------- ------- --------------- --------- ------

 Revenue              $299.8  $311.2   (4%) $1,207.1  $1,557.8   (23%)
 ---------------------

 Costs & Expenses
 ---------------------
 Cost of Services and
  Products             120.0   130.3   (8%)    481.4     681.5   (29%)
 Selling, General &
  Administrative        62.0    62.2   (0%)    227.6     353.1   (36%)
 Depreciation and
  Amortization          45.0    48.7   (8%)    187.7     169.7     11%
 Restructuring          11.4     0.8   n/m      11.6      (2.6)   n/m
 Asset Impairments and
  Other Charges          1.7     9.5  (82%)      3.2       8.8   (64%)
 Gain on Sale of
  Broadband Assets      (3.7)   (0.4)  n/m      (3.7)   (336.7)  (99%)
                      ------- -------       --------- ---------

 Operating Income       63.4    60.1     5%    299.3     684.0   (56%)

 Minority Interest
  Expense (Income)      (2.0)   (0.3)  n/m      (0.5)     42.2  (101%)
 Other Income, Net      (3.2)  (26.4) (88%)     (3.8)     (9.6)     -
 Interest Expense and
  Other Financing
  Costs                 51.3    60.4  (15%)    203.3     234.2   (13%)
                      ------- -------       --------- ---------

   Income before Income Taxes
    and Cumulative Effect of
 Change in Accounting
  Principle             17.3    26.4     -     100.3     417.2   (76%)

 Income Tax Expense
  (Benefit)             (3.6) (816.6)  n/m      36.1    (828.8) (104%)
                      ------- -------       --------- ---------

 Income before
  Cumulative Effect of
  Change in Accounting
  Principle             20.9   843.0  (98%)     64.2   1,246.0   (95%)

 Cumulative Effect of
  Change in Accounting
  Principle, Net of
  Taxes                   --      --   n/m        --      85.9    n/m
                      ------- -------       --------- ---------

 Net Income             20.9   843.0  (98%)     64.2   1,331.9   (95%)

 Preferred Stock
  Dividends              2.6     2.6     -      10.4      10.4      -
                      ------- -------       --------- ---------

 Net Income Applicable
  to Common
  Shareowners          $18.3  $840.4  (98%)    $53.8  $1,321.5   (96%)
                      ======= =======       ========= =========

 Basic Earnings Per
  Common Share
 ---------------------
 Income before
  Cumulative Effect of
  Change in Accounting
  Principle            $0.07   $3.44           $0.22     $5.44
 Cumulative Effect of
  Change in Accounting
  Principle, Net of
  Taxes                   --      --              --      0.38
                      ------- -------       --------- ---------
 Net Earnings Per
  Common Share         $0.07   $3.44           $0.22     $5.82
                      ======= =======       ========= =========

 Diluted Earnings Per
  Common Share
 ---------------------
 Income before
  Cumulative Effect of
  Change in Accounting
  Principle            $0.07   $3.17           $0.21     $5.02
 Cumulative Effect of
  Change in Accounting
  Principle, Net of
  Taxes                   --      --              --      0.34
                      ------- -------       --------- ---------
 Net Earnings Per
  Common Share         $0.07   $3.17           $0.21     $5.36
                      ======= =======       ========= =========

 Weighted Average
  Common Shares
  Outstanding
 ---------------------
 - Basic               245.2   244.3           245.1     226.9
 - Diluted             248.6   267.6           250.5     253.3



Cincinnati Bell Inc.
Segment Information
(Unaudited)


 (dollars in millions)      For the                For the
                          Three Months           Twelve Months
                             Ended                  Ended
                          December 31,     %     December 31,     %
                          2004    2003   Change  2004    2003   Change
                         ------- ------- -------------- ------- ------
  Local
 Revenue
    Voice                $128.3  $132.6    (3%) $519.8  $536.6    (3%)
    Data                   52.2    49.6      5%  203.9   196.3      4%
    Other services         10.3     9.5      8%   38.0    41.6    (9%)
                         ------- -------        ------- -------
    Total revenue         190.8   191.7    (0%)  761.7   774.5    (2%)

 Operating Costs and
  Expenses:
    Cost of services and
     products              54.8    57.0    (4%)  220.2   232.2    (5%)
    Selling, general and
     administrative        34.9    33.3      5%  134.8   128.8      5%
    Depreciation           27.6    31.8   (13%)  117.2   125.7    (7%)
    Restructuring          10.2     4.5    127%   10.4     4.5    131%
    Asset impairments and
     other charges           --     0.3    n/m      --     0.6    n/m
                         ------- -------        ------- -------
    Total operating costs
     and expenses         127.5   126.9      0%  482.6   491.8    (2%)

                         ------- -------        ------- -------
 Operating income         $63.3   $64.8    (2%) $279.1  $282.7    (1%)
                         ======= =======        ======= =======

  Wireless
 Revenue
    Service               $57.2   $58.7     --  $242.0  $246.4    (2%)
    Equipment               7.1     3.9     82%   19.7    13.1     50%
                         ------- -------        ------- -------
    Total revenue          64.3    62.6      3%  261.7   259.5     --

 Operating Costs and
  Expenses:
    Cost of services and
     products              37.5    32.4     16%  133.2   110.5     21%
    Selling, general and
     administrative        17.7    15.1     17%   56.5    50.0     13%
    Depreciation           14.4    15.8    (9%)   58.3    38.3     52%
    Amortization            2.0     0.1    n/m     9.1     0.5    n/m
    Restructuring           0.1     0.1     --     0.1       -    n/m
    Asset impairments and
     other charges          1.8       -    n/m     5.9       -    n/m
                         ------- -------        ------- -------
    Total operating costs
     and expenses          73.5    63.5     16%  263.1   199.3     32%

                         ------- -------        ------- -------
 Operating income         $(9.2)  $(0.9)   n/m   $(1.4)  $60.2    n/m
                         ======= =======        ======= =======

  Hardware & Mgd.
   Services
 Revenue
    Hardware              $17.1   $25.1   (32%)  $74.0   $89.6   (17%)
    Managed services       16.6    18.4   (10%)   60.7    73.2   (17%)
                         ------- -------        ------- -------
    Total revenue          33.7    43.5   (23%) $134.7   162.8   (17%)

 Operating Costs and
  Expenses:
    Cost of services and
     products              25.5    32.1   (21%)  104.7   121.4   (14%)
    Selling, general and
     administrative         4.4     6.7   (34%)   16.7    24.3   (31%)
    Depreciation            0.5     0.2    150%    1.1     0.7     57%
    Restructuring           0.6       -    n/m     0.6       -    n/m
    Asset impairments and
     other charges            -       -     --    (1.1)      -    n/m
    Gain on sale of
     assets                   -     0.1    n/m       -    (1.1)   n/m
                         ------- -------        ------- -------
    Total operating costs
     and expenses          31.0    39.1   (21%)  122.0   145.3   (16%)

                         ------- -------        ------- -------
 Operating income          $2.7    $4.4   (39%)  $12.7   $17.5   (27%)
                         ======= =======        ======= =======

  Other
 Revenue                  $20.0   $19.4     --   $78.6   $81.1    (3%)


 Costs and Expenses:
    Cost of services and
     products               9.1    12.9   (29%)   44.5    54.1   (18%)
    Selling, general and
     administrative         4.2     2.6     62%   14.3    14.8    (3%)
    Depreciation and
     amortization           0.5     0.6   (17%)    1.7    2.1    (19%)
    Restructuring           0.2      --    n/m     0.2     --     n/m
    Asset impairments and
     other charges         (0.1)    3.5    n/m    (0.1)   3.6     n/m
                         ------- -------        ------- -------
    Total costs and
     expenses              13.9    19.6   (29%)   60.6   74.6    (19%)

                         ------- -------        ------- -------
 Operating income          $6.1   $(0.2)   n/m   $18.0   $6.5     n/m
                         ======= =======        ======= =======

  Broadband
 Revenue
    Broadband transport       -       -     --       -   159.3    n/m
    Switched voice
     services                 -       -     --       -   111.9    n/m
    Data and Internet         -       -     --       -    59.5    n/m
    Other services            -       -     --       -     1.7    n/m
                         ------- -------        ------- -------
    Total revenue             -       -     --       -   332.4    n/m

 Costs and Expenses:
    Cost of services and
     products                 -       -     --       -   202.8    n/m
    Selling, general and
     administrative        (1.0)    1.8    n/m    (3.7)  125.2  (103%)
    Depreciation              -       -     --       -     1.9    n/m
    Restructuring          (1.8)   (7.8)  (77%)   (1.8)  (11.1)  (84%)
    Asset impairments and
     other charges          0.1     5.7   (98%)   (1.5)    5.8    n/m
    Gain on sale of
     broadband assets      (3.7)   (0.4)    n/m   (3.7) (336.7)  (99%)
                         ------- -------        ------- -------
    Total costs and
     expenses              (6.4)   (0.7)    n/m  (10.7)  (12.1)  (12%)

                         ------- -------        ------- -------
 Operating income          $6.4    $0.7     n/m  $10.7  $344.5   (97%)
                         ======= =======        ======= =======



Cincinnati Bell Inc.
Segment Information
(Unaudited)


 (dollars in            For the                  For the
  millions)           Three Months             Twelve Months
                         Ended                    Ended
                      December 31,     %       December 31,       %
                      2004    2003   Change   2004      2003    Change
                     ------- ------- ---------------- --------- ------
 Revenue
 --------------------
 Local               $190.8  $191.7    (0%)   $761.7    $774.5    (2%)
 Wireless              64.3    62.6      3%    261.7     259.5     --
 Hardware & Mgd.
  Services             33.7    43.5   (23%)    134.7     162.8   (17%)
 Other                 20.0    19.4      3%     78.6      81.1    (3%)
 Broadband               --      --     --        --     332.4    n/m
 Corporate and
  eliminations         (9.0)   (6.0)    50%    (29.6)    (52.5)  (44%)
                     ------- -------        --------- ---------
 Total Revenue       $299.8  $311.2    (4%) $1,207.1  $1,557.8   (23%)
                     ======= =======        ========= =========

 Cost of Services and
  Products
 --------------------
 Local                $54.8   $57.0    (4%)   $220.2    $232.2    (5%)
 Wireless              37.5    32.4     16%    133.2     110.5     21%
 Hardware & Mgd.
  Services             25.5    32.1   (21%)    104.7     121.4   (14%)
 Other                  9.1    12.9   (29%)     44.5      54.1   (18%)
 Broadband               --      --    --         --     202.8    n/m
 Corporate and
  eliminations         (6.9)   (4.1)    68%    (21.2)    (39.5)  (46%)
                     ------- -------        --------- ---------
 Total Cost of
  Services and
  Products           $120.0  $130.3    (8%)   $481.4    $681.5   (29%)
                     ======= =======        ========= =========

 Selling, General &
  Administrative
 --------------------
 Local                $34.9   $33.3      5%   $134.8    $128.8      5%
 Wireless              17.7    15.1     17%     56.5      50.0     13%
 Hardware & Mgd.
  Services              4.4     6.7   (34%)     16.7      24.3   (31%)
 Other                  4.2     2.6     62%     14.3      14.8    (3%)
 Broadband             (1.0)    1.8    n/m      (3.7)    125.2    n/m
 Corporate and
  eliminations          1.8     2.7   (33%)      9.0      10.0   (10%)
                     ------- -------        --------- ---------
 Total Selling,
  General &
  Administrative      $62.0   $62.2    (0%)   $227.6    $353.1   (36%)
                     ======= =======        ========= =========

 Depreciation and
  Amortization
 --------------------
 Local                $27.6   $31.8   (13%)   $117.2    $125.7    (7%)
 Wireless              16.4    15.9      3%     67.4      38.8     74%
 Hardware & Mgd.
  Services              0.5     0.2    150%      1.1       0.7     57%
 Other                  0.5     0.6   (17%)      1.7       2.1   (19%)
 Broadband               --      --     --        --       1.9    n/m
 Corporate and
  eliminations           --     0.2    n/m       0.3       0.5   (40%)
                     ------- -------        --------- ---------
 Total Depreciation
  and Amortization    $45.0   $48.7    (8%)   $187.7    $169.7     11%
                     ======= =======        ========= =========

 Restructuring
 --------------------
 Local                $10.2    $4.5    127%    $10.4      $4.5    131%
 Wireless               0.1     0.1     --       0.1         -    n/m
 Hardware & Mgd.
  Services              0.6       -    n/m       0.6         -    n/m
 Other                  0.2       -    n/m       0.2         -    n/m
 Broadband             (1.8)   (7.8)  (77%)      (1.8)   (11.1)  (84%)
 Corporate and
  eliminations          2.1     4.0   (48%)      2.1       4.0   (48%)
                     ------- -------        --------- ---------
 Total Restructuring  $11.4    $0.8    n/m     $11.6     $(2.6)   n/m
                     ======= =======        ========= =========

 Asset Impairments and Other
  Charges (Credits)
 ---------------------------
 Local                   $-    $0.3    n/m        $-      $0.6    n/m
 Wireless               1.8       -    n/m       5.9         -    n/m
 Hardware & Mgd.
  Services                -       -     --      (1.1)     (1.1)    --
 Other                 (0.1)    3.5  (103%)     (0.1)      3.6    n/m
 Broadband             (3.6)    5.3    n/m      (5.2)   (330.9)  (98%)
 Corporate and
  eliminations         (0.1)      -    n/m         -         -     --
                     ------- -------        --------- ---------
 Total Asset
  Impairments and
  Other Charges
  (Credits)           $(2.0)   $9.1  (122%)    $(0.5)  $(327.8) (100%)
                     ======= =======        ========= =========

 Operating Income
 --------------------
 Local                $63.3   $64.8    (2%)   $279.1    $282.7    (1%)
 Wireless              (9.2)   (0.9)   n/m      (1.4)     60.2    n/m
 Hardware & Mgd.
  Services              2.7     4.4   (39%)     12.7      17.5   (27%)
 Other                  6.1    (0.2)   n/m      18.0       6.5    n/m
 Broadband              6.4     0.7    n/m      10.7     344.5   (97%)
 Corporate and
  eliminations         (5.9)   (8.7)  (32%)    (19.8)    (27.4)  (28%)
                     ------- -------        --------- ---------
 Total Operating
  Income              $63.4   $60.1      5%   $299.3    $684.0   (56%)
                     ======= =======        ========= =========



Cincinnati Bell Inc.
Consolidated Balance Sheets
(Unaudited)

 (in millions - except debt covenants and
  segment metric information)
                                             December 31, December 31,
                                                2004         2003
                                             ------------ ------------

 Assets
 -------------------------------------------

 Cash and Cash Equivalents                         $24.9        $26.0
 Receivables - Net                                 139.0        140.5
 Materials and Supplies                             29.3         33.6
 Other Current Assets                               66.6         59.3
 Property, Plant and Equipment - Net               851.1        898.8
 Goodwill                                           40.9         40.9
 Other Intangible Assets - Net                      35.8         47.2
 Noncurrent Deferred Tax Assets                    654.6        696.9
 Other Noncurrent Assets                           119.2        130.3
                                             ------------ ------------
    Total Assets                                $1,961.4     $2,073.5
                                             ============ ============


 Liabilities and Shareowners' Deficit
 -------------------------------------------

 Current Portion of Long-Term Debt                 $30.1        $13.3
 Current Portion of Unearned Revenue and
  Customer Deposits                                 42.5         41.5
 Accounts Payable                                   58.9         64.5
 Accrued Taxes                                      45.4         43.7
 Other Current Liabilities                         120.5        132.3
 Long-Term Debt, Less Current Portion            2,111.1      2,274.5
 Unearned Revenue, Less Current Portion              8.9         11.9
 Other Noncurrent Liabilities                      126.3        131.5
 Minority Interest                                  39.2         39.7
 Shareowners' Deficit                             (621.5)      (679.4)
                                             ------------ ------------
    Total Liabilities and Shareowners'
     Deficit                                    $1,961.4     $2,073.5
                                             ============ ============


 Other Data:
 -------------------------------------------
 Common Shares Outstanding at Balance Sheet
  Date                                             245.5        244.6
 Net Debt                                       $2,112.4     $2,261.8
 Credit Facility Availability                     $377.7       $299.5

 Debt Covenants:
 -------------------------------------------
 Debt to EBITDA Ratio - Calculated                  4.77         4.70
 Debt to EBITDA Ratio - Required                    5.75         6.20

 Senior Secured Debt to EBITDA Ratio -
  Calculated                                        1.64         1.87
 Senior Secured Debt to EBITDA Ratio -
  Required                                          3.50         4.00

 Interest Coverage Ratio - Calculated               2.62         3.56
 Interest Coverage Ratio - Required                 2.18         2.50

 Year-to-date Capital Expenditures -
  Restricted Group Actual                          118.4        122.2
 Maximum Annual Capital Expenditures -
  Restricted Group Allowed                         137.8        146.0

 Segment Metric Information (in thousands):
 -------------------------------------------
 Local Access Lines                                970.1        985.8
 Complete Connections Subscribers                  336.4        312.5
 DSL Subscribers                                   130.8         99.5
 Custom Connections Subscribers                    123.4         71.4

 GSM:
 Postpaid Wireless Subscribers                     119.3          8.3
 Prepaid Wireless Subscribers                       87.5            -
 TDMA:
 Postpaid Wireless Subscribers                     187.0        303.6
 Prepaid Wireless Subscribers                       87.2        162.5
                                             ------------ ------------
 Total Wireless Subscribers                        481.0        474.4
                                             ============ ============

 Consumer Long Distance Lines                      423.5        414.4
 Business Long Distance Lines                      138.1        124.6
                                             ------------ ------------
 Total Long Distance Lines                         561.6        539.0
                                             ============ ============



Cincinnati Bell Telephone
Three Year Access Line Detail
(Unaudited)


 (in thousands)
                                     --------------------------------
                                                  2002
                                     --------------------------------
                                        1Q      2Q      3Q      4Q
                                     --------------------------------
 Access Lines
 ------------------------------------

 In-Territory:
          Primary Residential          631.2   628.1   624.7   624.3
          Secondary Residential         71.7    69.8    68.0    66.6
          Business/Other               322.2   319.5   315.9   314.5
                                     --------------------------------
 Total In-Territory                  1,025.1 1,017.4 1,008.6 1,005.4

 Out-of-Territory:
          Primary Residential            0.4     0.8     1.5     1.9
          Secondary Residential            -     0.1     0.1     0.1
          Business/Other                 2.9     3.2     3.7     4.5
                                     --------------------------------
 Total Out-of-Territory                  3.3     4.1     5.3     6.5

                                     --------------------------------
 Total Access Lines                  1,028.4 1,021.5 1,013.9 1,011.9
                                     ================================


Cincinnati Bell Telephone
Three Year Access Line Detail
(Unaudited)


 (in thousands)
                                     --------------------------------
                                                  2003
                                     --------------------------------
                                        1Q      2Q      3Q      4Q
                                     --------------------------------
 Access Lines
 ------------------------------------

 In-Territory:
          Primary Residential          624.6   620.3   617.7   613.9
          Secondary Residential         64.3    62.2    60.0    58.1
          Business/Other               313.2   310.2   308.0   304.6
                                     --------------------------------
 Total In-Territory                  1,002.1   992.7   985.7   976.6

 Out-of-Territory:
          Primary Residential            2.3     2.7     3.1     3.4
          Secondary Residential          0.1     0.1     0.2     0.2
          Business/Other                 4.7     5.0     5.2     5.6
                                     --------------------------------
 Total Out-of-Territory                  7.1     7.8     8.5     9.2

                                     --------------------------------
 Total Access Lines                  1,009.2 1,000.5   994.2   985.8
                                     ================================


Cincinnati Bell Telephone
Three Year Access Line Detail
(Unaudited)


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

 In-Territory:
          Primary Residential          611.8   606.3   601.5    592.7
          Secondary Residential         56.0    54.0    52.2     50.5
          Business/Other               301.5   299.6   298.4    296.6
                                     ---------------------------------
 Total In-Territory                    969.3   959.9   952.1    939.8

 Out-of-Territory:
          Primary Residential            4.6    10.9    15.8     18.4
          Secondary Residential          0.2     0.6     0.7      0.8
          Business/Other                 6.8     8.0     9.9     11.1
                                     ---------------------------------
 Total Out-of-Territory                 11.6    19.5    26.4     30.3

                                     ---------------------------------
 Total Access Lines                    980.9   979.4   978.5    970.1
                                     =================================



Cincinnati Bell Inc.
Consolidated Revenue and Operating Income Excluding Broadband
(Unaudited)

 (dollars in              For the                For the
  millions)             Three Months           Twelve Months
                           Ended                  Ended
                        December 31,    %      December 31,       %
                       2004    2003   Change  2004      2003    Change
                      ------- ------- --------------- --------- ------

 Reconciliation of Consolidated Revenue to
  Consolidated Revenue Excluding Broadband
 Revenue              $299.8  $311.2   (4%) $1,207.1  $1,557.8   (23%)
 Less adjustments:
 Broadband Revenue         -       -   n/m         -     332.4    n/m
 Broadband
  Intercompany
  Activity                 -       -   n/m         -     (30.3)   n/m
                      ------- -------       --------- ---------

 Consolidated Revenue
  Excluding Broadband $299.8  $311.2   (4%) $1,207.1  $1,255.7    (4%)
                      ======= =======       ========= =========



 Reconciliation of Consolidated Operating Income to
  Consolidated Operating Income Excluding Broadband
 Operating Income      $63.4   $60.1     5%   $299.3    $684.0   (56%)
 Less adjustments:
 Broadband Operating
  Income                 6.4     0.7   n/m     10.7     344.5   (97%)
                      ------- -------       --------- ---------

 Consolidated
  Operating Income
  Excluding Broadband  $57.0   $59.4   (4%)   $288.6    $339.5   (15%)
                      ======= =======       ========= =========



Cincinnati Bell Inc.
Net Debt Calculation
(Unaudited)

                               December 31, December 31,    Change
                                                         -------------
 (dollars in millions)            2004         2003         $      %
                               ------------ ------------ -------------

 Credit Facilities                  $438.9       $608.4  $(169.5)(28%)
 Cincinnati Bell Telephone
  notes                              250.0        250.0        -    -
 7 1/4% Senior notes due 2013
  of Cincinnati Bell Inc.            500.0        500.0        -    -
 16% Senior subordinated notes
  of Cincinnati Bell Inc.            375.2        360.6     14.6    4%
 7 1/4% Senior notes due 2023
  of Cincinnati Bell Inc.             50.0         50.0        -    -
 8 3/8% Senior notes due 2014
  of Cincinnati Bell Inc.            543.9        540.0      3.9    1%
 Capital leases                       15.5         18.2     (2.7)(15%)
 Other short-term debt                 1.6          2.7     (1.1)(41%)
 Unamortized discount                (33.9)       (42.1)     8.2 (19%)
                               ------------ ------------ --------

    Total Debt                     2,141.2      2,287.8   (146.6) (6%)

 Add: Interest Rate Swap
  Liability on 8 3/8% Notes due
  2014                                (3.9)           -     (3.9)   -
 Less: Cash and Cash
  Equivalents                        (24.9)       (26.0)     1.1  (4%)
                               ------------ ------------ --------

    Net Debt (as defined by
     the company)                 $2,112.4     $2,261.8  $(149.4) (7%)
                               ============ ============ ========


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

 (dollars in millions)                   For the         For the
                                       Three Months    Twelve Months
                                          Ended           Ended
                                       December 31,    December 31,
 Consolidated Cash Flow               2004    2003    2004     2003
                                      ------ ------- ------- ---------

 Cash provided by operating
  activities                          $84.4   $79.9  $300.7    $310.6
                                      ------ ------- ------- ---------

 Capital expenditures                 (33.9)  (31.6) (133.9)   (126.4)
 Proceeds from sale of assets           1.4       -     3.3      82.7
 Other                                  3.1    (0.1)    6.3       0.9
                                      ------ ------- ------- ---------
 Cash used in investing activities    (29.4)  (31.7) (124.3)    (42.8)
                                      ------ ------- ------- ---------

 Issuance of long-term debt               -   540.0       -   1,390.0
 Repayment of long-term debt          (70.1) (576.2) (189.5) (1,585.1)
 Short-term borrowings (repayments),
  net                                  19.2    (1.7)   17.7      (5.5)
 Debt issuance costs                      -   (15.2)      -     (80.4)
 Issuance of common shares - exercise
  of stock options                      0.5     0.7     2.4       2.2
 Preferred stock dividends paid        (2.6)   (2.6)  (10.4)     (7.9)
 Other                                    -       -     2.3         -
                                      ------ ------- ------- ---------
 Cash used in financing activities    (53.0)  (55.0) (177.5)   (286.7)
                                      ------ ------- ------- ---------
                                                          -
 Net increase in cash and cash
  equivalents                           2.0    (6.8)   (1.1)    (18.9)
 Cash and cash equivalents at
  beginning of period                  22.9    32.8    26.0      44.9
                                      ------ ------- ------- ---------
 Cash and cash equivalents at end of
  period                              $24.9   $26.0   $24.9     $26.0
                                      ====== ======= ======= =========


 Reconciliation of GAAP Cash Flow to
  Cash Flow as defined by the company
 Net increase in cash and cash
  equivalents                          $2.0   $(6.8)  $(1.1)   $(18.9)
 Less adjustments:
 Issuance of long-term debt
  (financing activities)                  -   540.0       -   1,390.0
 Repayment of long-term debt
  (financing activities)              (70.1) (576.2) (189.5) (1,585.1)
 Short-term borrowings (repayments),
  net (financing activities)           19.2    (1.7)   17.7      (5.5)
 Restricted Cash                          -       -       -       6.9
 Proceeds from sale of assets
  (investing activities)                1.4       -     3.3      82.7
                                      ------ ------- ------- ---------

    Cash flow (as defined by the
     company)                         $51.5   $31.1  $167.4     $92.1
                                      ====== ======= ======= =========


 Cash Expenditures for Restructuring  $(1.6)  $(9.0)  $(4.5)   $(21.3)

 Income Tax Refunds / (Payments)      $(0.4)     $-   $(2.3)     $0.3



Reconciliation of EBITDA to Operating Income (GAAP)

                                      For the            For the
                                    Three Months      Twelve Months
                                Ended December 31,  Ended December 31,
                                       2004               2003
                                --------------------------------------

Operating Income (GAAP)                      $63.4             $299.3

Add:
    Depreciation and
     Amortization                             45.0              187.7
    Restructuring                             11.4               11.6
    Gain on Sale of Assets                    (3.7)              (3.7)
    Asset Impairments & Other                  1.7                3.2
                                --------------------------------------

                                              54.4              198.8
                                --------------------------------------

EBITDA (Non-GAAP)                           $117.8             $498.1
                                ======================================

    CONTACT: Cincinnati Bell Inc.
             Michael Vanderwoude, 513-397-7685
             mike.vanderwoude@cinbell.com

    SOURCE: Cincinnati Bell Inc.