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Cincinnati Bell Posts Second-Quarter Earnings Growth on Increased Revenue and Strong Subscriber Metrics

08/02/06

CINCINNATI, Aug 02, 2006 (BUSINESS WIRE) -- Cincinnati Bell Inc. (NYSE:CBB) today reported earnings growth driven by increased wireless and data revenue and by lower interest expense. For the quarter, revenue was $323 million with operating income of $83 million and net income of $24 million, or 9 cents per share. Net income excluding special items(1) was $23 million, or 8 cents per share, an increase of $8 million, or 3 cents a share, from the second quarter of 2005 also excluding special items. Special items in the current quarter include a $2 million benefit from the expiration of certain guarantees and warranties associated with the broadband segment.

"By focusing on consistent execution of our strategy, Cincinnati Bell has delivered revenue, earnings and subscriber growth in one of the most competitive telecommunications markets in the country," said Jack Cassidy, president and chief executive officer of Cincinnati Bell Inc. "During the quarter, we completed the wireless subscriber migration to our GSM network. This is another significant milestone for Cincinnati Bell Wireless. Now, all of our customers share the experience of communicating on the best wireless network in Cincinnati and Dayton and the company no longer incurs the added expense of converting customers from one network to another."

Second Quarter Highlights

-- Quarterly revenue increased to $323 million, up 3 percent or $8 million from a year ago, as increased wireless service, data and managed services revenue and equipment sales offset a decrease in local voice revenue.

-- Net postpaid wireless activations in the quarter totaled 12,000, an increase of 15,000 from the second quarter of 2005. Postpaid average revenue per user (ARPU) was $48, even with a year ago. By completing the wireless subscriber migration, Cincinnati Bell has discontinued the operation of its legacy TDMA network.

-- Cincinnati Bell's "Super Bundle" subscriber base reached 160,000, an increase of 11 percent from a year ago. As a result, consumer bundle penetration totaled 28 percent of Cincinnati Bell households within its traditional operating area. In addition to increasing household bundle penetration, revenue per household increased to an all-time high of $83, up 5 percent from a year ago.

-- Cincinnati Bell's DSL subscriber base grew to 177,000, a 22 percent increase versus the second quarter of 2005. DSL penetration of in-territory consumer primary access lines was up 7 percentage points from a year ago to 29 percent, representing 154,000 subscribers.

-- Free cash flow(2) of $52 million increased 23 percent versus the second quarter of 2005, primarily due to reduced interest payments. Net debt(3) declined by $48 million in the quarter to $2.1 billion. Capital expenditures during the quarter were $39 million, or 12 percent of revenue.

Financial and Operations Overview

"We are very pleased with the financial performance in each of our business segments," said Brian Ross, chief financial officer of Cincinnati Bell Inc. "Wireless service revenue growth validates that we have turned our wireless business around. Profitability in our core wireline business remains stable despite declining access lines. Reduced interest payments are improving free cash flow."

Revenue of $323 million grew 8 percent and adjusted EBITDA(4) (earnings before interest, taxes, depreciation and amortization) of $116 million improved 4 percent sequentially. Adjusted EBITDA declined $8 million from the second quarter of 2005, primarily the result of increased expenses related to wireless subscriber growth and migration to the GSM network.

Local Segment

Quarterly access line performance improved sequentially and was nearly equal to the second quarter of 2005 as the rate of decline slowed to 3.6 percent. The rate of in-territory access line loss remained relatively unchanged at 5.0 percent as wireless substitution remained the key contributor to in-territory decline. Access lines in expansion markets adjacent to the company's traditional marketing area grew 36 percent from a year ago.

The Local segment produced quarterly revenue of $187 million, nearly even with the second quarter of 2005. Adjusted EBITDA of $96 million was approximately equal to a year ago as an 8 percent increase in data revenue and a 3 percent decrease in the cost of providing service partially offset lower voice revenue.

Wireless Services

Strong subscriber growth continued in the second quarter with postpaid net activations of 12,000, an increase of 15,000 from a year ago as churn remained low at 1.6 percent. Postpaid ARPU of $48 represented the second consecutive quarter of improvement and was essentially even with a year ago. During the quarter, Cincinnati Bell discontinued the operation of its TDMA network with the migration of 51,000 customers to the GSM network.

The Wireless segment generated quarterly revenue of $66 million, up 10 percent from the second quarter of 2005 reflecting growth in subscriber voice, data and equipment revenue. Postpaid data revenue doubled from a year ago, which resulted in a data ARPU of $5 per postpaid subscriber.

Adjusted EBITDA for the quarter of $13 million was down $6 million compared to the second quarter of 2005. Higher expenses supporting a 63 percent increase in postpaid gross activations and accelerated network migration accounted for the decline.

Hardware and Managed Services

The Hardware and Managed Services segment produced quarterly revenue of $58 million, a 7 percent increase from a year ago as equipment sales, data center and related managed service activity remained strong. Sequentially, revenue improved by 50 percent driven by an increase in seasonal equipment sales. Adjusted EBITDA was $5 million, even with the second quarter of 2005 as increased margin from higher computer hardware sales and managed services revenue offset margin declines in telephony hardware and related services.

Other Communications Services

The Other Communications Services segment, which includes long distance, security monitoring and payphone operations, generated revenue of $20 million, which was equal to the second quarter of 2005. Adjusted EBITDA of $8 million was also equal to the second quarter of 2005 as increased long distance profitability offset a decline in payphone operations.

Conference Call/Webcast

Cincinnati Bell will host a conference call today at 10:00 a.m. (EDT) to discuss its results for the second quarter of 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. (EDT) on August 16, 2006. 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 189770. 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 August 2, 2006. 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) 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.

(3) Net debt provides a useful measure of liquidity and financial health. The company defined 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.

(4) 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.

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            Six Months
                         Ended June 30,    %    Ended June 30,    %
                          2006    2005   Change  2006    2005   Change
                         ------- ------- ------ ------- ------- ------

Revenue                  $323.3  $315.4      3% $621.6  $604.0      3%

Costs and expenses
   Cost of services and
    products              145.5   133.7      9%  273.6   242.9     13%
   Selling, general and
    administrative         61.7    57.4      7%  120.0   115.5      4%
   Depreciation and
    amortization           35.7    48.4   (26%)   70.1    91.4   (23%)
   Shareholder claim
    settlement               --      --    n/m     6.3      --    n/m
   Gain on sale of
    broadband assets       (2.9)     --    n/m    (2.9)     --    n/m
   Asset impairments and
    other charges           0.1      --    n/m     0.2    23.1   (99%)
                         ------- -------        ------- -------

      Operating income     83.2    75.9     10%  154.3   131.1     18%

Minority interest expense
 (income)                    --    (0.5)   n/m     0.4    (4.8) (108%)
Interest expense           40.3    49.6   (19%)   79.8   100.1   (20%)
Loss on extinguishment of
 debt                        --      --    n/m      --     7.9    n/m
Other income, net          (0.1)   (0.7)  (86%)   (0.2)   (0.2)     0%
                         ------- -------        ------- -------

Income before income
 taxes                     43.0    27.5     56%   74.3    28.1    164%
Income tax expense         18.7    57.3   (67%)   35.9    61.1   (41%)
                         ------- -------        ------- -------

Net income (loss)          24.3   (29.8)   n/m    38.4   (33.0)   n/m

Preferred stock dividends   2.6     2.6      0%    5.2     5.2      0%
                         ------- -------        ------- -------

Net income (loss)
 applicable to common
 shareowners              $21.7  $(32.4)   n/m   $33.2  $(38.2)   n/m
                         ======= =======        ======= =======

Basic earnings (loss) per
 common share             $0.09  $(0.13)         $0.13  $(0.16)
-------------            ======= =======        ======= =======

Diluted earnings (loss)
 per common share         $0.09  $(0.13)         $0.13  $(0.16)
-----------------        ======= =======        ======= =======

Weighted average common
 shares outstanding
 (millions)
-------------------------
   - Basic                246.8   245.8          246.7   245.7
   - Diluted              252.4   245.8          251.9   245.7


Cincinnati Bell Inc.
Segment Information
(Unaudited)

(dollars in millions)

                          Three Months            Six Months
                         Ended June 30,    %    Ended June 30,    %
                          2006    2005   Change  2006    2005   Change
                         ------- ------- ------ ------- ------- ------
Local

Revenue
  Voice                  $118.9  $126.4    (6%) $239.9  $254.4    (6%)
  Data                     58.8    54.2      8%  115.4   107.3      8%
  Other                     9.7     9.0      8%   18.5    18.0      3%
                         ------- -------        ------- -------

Total revenue             187.4   189.6    (1%)  373.8   379.7    (2%)

Operating costs and
 expenses:
  Cost of services and
   products                57.5    59.0    (3%)  116.2   116.7    (0%)
  Selling, general and
   administrative          33.9    33.7      1%   66.5    69.0    (4%)
  Depreciation             25.4    26.8    (5%)   51.0    53.9    (5%)
                         ------- -------        ------- -------

  Total operating costs
   and expenses           116.8   119.5    (2%)  233.7   239.6    (2%)
                         ------- -------        ------- -------

Operating income          $70.6   $70.1      1% $140.1  $140.1      0%
                         ======= =======        ======= =======

Wireless

Revenue
  Service                 $59.9   $55.3      8% $115.2  $110.9      4%
  Equipment                 6.5     5.0     30%   13.0    10.6     23%
                         ------- -------        ------- -------

  Total revenue            66.4    60.3     10%  128.2   121.5      6%

Operating costs and
 expenses:
  Cost of services and
   products                38.1    28.0     36%   74.4    57.3     30%
  Selling, general and
   administrative          15.1    13.6     11%   29.4    27.0      9%
  Depreciation and
   amortization             8.7    20.2   (57%)   16.2    35.2   (54%)
  Asset impairments and
   other charges             --      --    n/m      --    23.7    n/m
                         ------- -------        ------- -------

  Total operating costs
   and expenses            61.9    61.8      0%  120.0   143.2   (16%)
                         ------- -------        ------- -------

Operating income (loss)    $4.5   $(1.5)   n/m    $8.2  $(21.7)   n/m
                         ======= =======        ======= =======

Hardware & Managed Services

Revenue
  Hardware                $39.6   $38.1      4%  $60.9   $50.4     21%
  Managed services         18.6    16.4     13%   36.1    31.2     16%
                         ------- -------        ------- -------

  Total revenue            58.2    54.5      7%   97.0    81.6     19%

Operating costs and
 expenses:
  Cost of services and
   products                48.0    45.1      6%   78.5    65.4     20%
  Selling, general and
   administrative           5.4     4.5     20%   10.6     8.6     23%
  Depreciation and
   amortization             1.0     0.6     67%    1.8     1.0     80%
  Asset impairments and
   other charges
   (credits)                 --      --    n/m      --    (0.1)   n/m
                         ------- -------        ------- -------

  Total operating costs
   and expenses            54.4    50.2      8%   90.9    74.9     21%
                         ------- -------        ------- -------

Operating income           $3.8    $4.3   (12%)   $6.1    $6.7    (9%)
                         ======= =======        ======= =======

Other

Revenue                   $19.8   $19.6      1%  $39.4   $38.7      2%

Operating costs and
 expenses:
  Cost of services and
   products                 8.5     8.3      2%   17.6    17.1      3%
  Selling, general and
   administrative           3.7     3.7      0%    7.2     7.6    (5%)
  Depreciation              0.6     0.5     20%    1.1     0.9     22%
                         ------- -------        ------- -------

  Total operating costs
   and expenses            12.8    12.5      2%   25.9    25.6      1%
                         ------- -------        ------- -------

Operating income           $7.0    $7.1    (1%)  $13.5   $13.1      3%
                         ======= =======        ======= =======

Broadband

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

Costs, expenses, gains
 and losses:
  Selling, general and
   administrative           0.5    (1.4)   n/m     0.9    (2.1)   n/m
  Depreciation               --      --    n/m      --      --    n/m
  Gain on sale of assets
   and other               (2.8)     --    n/m    (2.7)   (0.5)   n/m
                         ------- -------        ------- -------

  Total costs, expenses,
   gains and losses        (2.3)   (1.4)    64%   (1.8)   (2.6)  (31%)
                         ------- -------        ------- -------

Operating income           $2.3    $1.4     64%   $1.8    $2.6   (31%)
                         ======= =======        ======= =======


Cincinnati Bell Inc.
Segment Information
(Unaudited)

(dollars in millions)

                          Three Months            Six Months
                         Ended June 30,    %    Ended June 30,    %
                          2006    2005   Change  2006    2005   Change
                         ------- ------- ------ ------- ------- ------
Revenue
     Local               $187.4  $189.6    (1%) $373.8  $379.7    (2%)
     Wireless              66.4    60.3     10%  128.2   121.5      6%
     Hardware & Managed
      Services             58.2    54.5      7%   97.0    81.6     19%
     Other                 19.8    19.6      1%   39.4    38.7      2%
     Broadband               --      --    n/m      --      --    n/m
     Corporate and
      eliminations         (8.5)   (8.6)   (1%)  (16.8)  (17.5)   (4%)
                         ------- -------        ------- -------

     Total revenue       $323.3  $315.4      3% $621.6  $604.0      3%
                         ======= =======        ======= =======

Cost of Services and
 Products
     Local                $57.5   $59.0    (3%) $116.2  $116.7    (0%)
     Wireless              38.1    28.0     36%   74.4    57.3     30%
     Hardware & Managed
      Services             48.0    45.1      6%   78.5    65.4     20%
     Other                  8.5     8.3      2%   17.6    17.1      3%
     Broadband               --      --    n/m      --      --    n/m
     Corporate and
      eliminations         (6.6)   (6.7)   (1%)  (13.1)  (13.6)   (4%)
                         ------- -------        ------- -------

     Total cost of
      services and
      products           $145.5  $133.7      9% $273.6  $242.9     13%
                         ======= =======        ======= =======

Selling, General &
 Administrative
     Local                $33.9   $33.7      1%  $66.5   $69.0    (4%)
     Wireless              15.1    13.6     11%   29.4    27.0      9%
     Hardware & Managed
      Services              5.4     4.5     20%   10.6     8.6     23%
     Other                  3.7     3.7     --     7.2     7.6    (5%)
     Broadband              0.5    (1.4)   n/m     0.9    (2.1)   n/m
     Corporate and
      eliminations          3.1     3.3    (6%)    5.4     5.4    (0%)
                         ------- -------        ------- -------

     Total selling,
      general &
      administrative      $61.7   $57.4      7% $120.0  $115.5      4%
                         ======= =======        ======= =======

Depreciation and
 Amortization
     Local                $25.4   $26.8    (5%)  $51.0   $53.9    (5%)
     Wireless               8.7    20.2   (57%)   16.2    35.2   (54%)
     Hardware & Managed
      Services              1.0     0.6     67%    1.8     1.0     80%
     Other                  0.6     0.5     20%    1.1     0.9     22%
     Broadband               --      --    n/m      --      --    n/m
     Corporate and
      eliminations           --     0.3    n/m      --     0.4    n/m
                         ------- -------        ------- -------

     Total depreciation
      and amortization    $35.7   $48.4   (26%)  $70.1   $91.4   (23%)
                         ======= =======        ======= =======

Asset Impairments,
 Shareholder Claim
 Settlement, Gain on Sale
 of Broadband Assets and
 Other
     Local                  $--     $--    n/m     $--     $--    n/m
     Wireless                --      --    n/m      --    23.7    n/m
     Hardware & Managed
      Services               --      --    n/m      --    (0.1)   n/m
     Other                   --      --    n/m      --      --    n/m
     Broadband             (2.8)     --    n/m    (2.7)   (0.5)   n/m
     Corporate and
      eliminations           --      --    n/m     6.3      --    n/m
                         ------- -------        ------- -------

     Total asset
      impairments,
      shareholder claim
      settlement, gain on
      sale of broadband
      assets and other    $(2.8)    $--    n/m    $3.6   $23.1   (84%)
                         ======= =======        ======= =======

Operating Income
     Local                $70.6   $70.1      1% $140.1  $140.1      0%
     Wireless               4.5    (1.5)   n/m     8.2   (21.7)   n/m
     Hardware & Managed
      Services              3.8     4.3   (12%)    6.1     6.7    (9%)
     Other                  7.0     7.1    (1%)   13.5    13.1      3%
     Broadband              2.3     1.4     64%    1.8     2.6   (31%)
     Corporate and
      eliminations         (5.0)   (5.5)   (9%)  (15.4)   (9.7)    59%
                         ------- -------        ------- -------

     Total operating
      income              $83.2   $75.9     10% $154.3  $131.1     18%
                         ======= =======        ======= =======


Cincinnati Bell Inc.
Segment Metric Information
(Unaudited)

(in thousands)
                                                 June 30, December 31,
                                                   2006       2005
                                                 -------- ------------


Local access lines                                 912.5        930.6
DSL subscribers                                    176.5        162.5
Custom Connections (Super Bundle) subscribers      159.7        150.3

Postpaid wireless subscribers                      339.3        315.1
Prepaid wireless subscribers                       171.0        180.5
                                                 -------- ------------

Total wireless subscribers                         510.3        495.6
                                                 ======== ============

Consumer long distance lines                       404.2        412.6
Business long distance lines                       154.9        151.1
                                                 -------- ------------

Total long distance lines                          559.1        563.7
                                                 ======== ============


Cincinnati Bell Telephone
Local Access Line Detail
(Unaudited)

(in thousands)

           ----------------------- ----------------------- -----------
                    2004                    2005              2006
           ----------------------- ----------------------- -----------
            1Q    2Q    3Q    4Q    1Q    2Q    3Q    4Q    1Q    2Q
           ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Local
 Access
 Lines
------

In-Territory:
  Primary
   Resi-
   dential 611.8 606.3 601.5 592.7 584.2 573.0 563.9 555.7 547.4 536.7
  Secondary
   Resi-
   dential  56.0  54.0  52.2  50.5  48.9  47.1  45.4  43.9  42.4  40.9
  Business/
   Other   301.5 299.6 298.4 296.6 296.1 294.3 292.9 293.3 290.9 291.3
           ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total In-
 Territory 969.3 959.9 952.1 939.8 929.2 914.4 902.2 892.9 880.7 868.9

Out-of-
 Territory:
  Primary
   Resi-
   dential   4.6  10.9  15.8  18.4  17.7  18.4  20.5  21.5  22.8  24.8
  Secondary
   Resi-
   dential   0.2   0.6   0.7   0.8   0.8   0.9   1.0   1.0   1.1   1.1
  Business/
   Other     6.8   8.0   9.9  11.1  12.2  12.8  13.9  15.2  16.3  17.7
           ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total
 Out-of-
 Territory  11.6  19.5  26.4  30.3  30.7  32.1  35.4  37.7  40.2  43.6

           ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total
 Access
 Lines     980.9 979.4 978.5 970.1 959.9 946.5 937.6 930.6 920.9 912.5
           ===== ===== ===== ===== ===== ===== ===== ===== ===== =====


Cincinnati Bell Inc.
Net Debt Calculation
(Unaudited)

(dollars in millions)
                                                             Change
                                   June 30,  December 31, ------------
                                     2006        2005        $     %
                                   --------- ------------ ------------

Credit facility, revolver             $12.0          $--   $12.0  n/m
Credit facility, tranche B term
 loan                                 397.0        399.0    (2.0) (1%)
Cincinnati Bell Telephone notes       230.0        230.0      --    0%
7 1/4% Senior Notes due 2013          500.0        500.0      --    0%
7 1/4% Senior Notes due 2023           50.0         50.0      --    0%
8 3/8% Senior Subordinated Notes
 due 2014                             622.0        633.4   (11.4) (2%)
7% Senior Notes due 2015              240.0        246.4    (6.4) (3%)
Capital leases                         20.1         22.2    (2.1) (9%)
Other short-term debt                   1.0          2.4    (1.4)(58%)
Other long-term debt                    0.1          0.3    (0.2)(67%)
Net unamortized premium                 0.9          1.0    (0.1)(10%)
                                   --------- ------------ ------------
     Total debt                     2,073.1      2,084.7   (11.6) (1%)

Add: Interest rate swap liability      28.0         10.2    17.8  175%
Less: Cash and cash equivalents       (26.6)       (25.7)   (0.9)   4%
                                   --------- ------------ ------------

     Net debt (as defined by the
      company)                     $2,074.5     $2,069.2    $5.3    0%
                                   ========= ============ ============

Credit facility availability         $230.7       $243.6  $(12.9) (5%)
                                   ========= ============ ============


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

(dollars in millions)
                                         Three Months    Six Months
                                        Ended June 30,  Ended June 30,
                                         2006    2005   2006    2005
                                        ------- ------ ------- -------

Cash provided by operating activities    $92.4  $86.8  $157.6  $151.2
                                        ------- ------ ------- -------

   Capital expenditures                  (39.0) (43.0)  (74.6)  (71.0)
   Acquisition of business and remaining
    minority interest in CBW              (3.5)    --   (86.7)     --
   Other                                   0.6     --     2.0      --
                                        ------- ------ ------- -------

Cash used in investing activities        (41.9) (43.0) (159.3)  (71.0)
                                        ------- ------ ------- -------

   Issuance of long-term debt               --    0.1      --   352.1
   Increase (decrease) in corporate
    credit facility, net                 (48.0) (43.0)   12.0    32.0
   Repayment of debt                      (2.4)  (1.2)   (5.7) (442.0)
   Debt issuance costs and consent fees     --     --      --   (21.0)
   Issuance of common shares - exercise
    of stock options                       0.1    0.8     0.7     1.7
   Preferred stock dividends              (2.6)  (2.6)   (5.2)   (5.2)
   Other                                    --     --     0.8      --
                                        ------- ------ ------- -------

Cash provided by (used in) financing
 activities                              (52.9) (45.9)    2.6   (82.4)
                                        ------- ------ ------- -------

Net increase (decrease) in cash and cash
 equivalents                              (2.4)  (2.1)    0.9    (2.2)
Cash and cash equivalents at beginning
 of period                                29.0   24.8    25.7    24.9
                                        ------- ------ ------- -------

Cash and cash equivalents at end of
 period                                  $26.6  $22.7   $26.6   $22.7
                                        ======= ====== ======= =======


Reconciliation of GAAP Cash Flow to Free
 Cash Flow as defined by the company
Net increase (decrease) in cash and cash
 equivalents                             $(2.4) $(2.1)   $0.9   $(2.2)
Less adjustments:
   Issuance of long-term debt and net
    change in corporate credit facility   48.0   42.9   (12.0) (384.1)
   Repayment of debt                       2.4    1.2     5.7   442.0
   Acquisition of business and remaining
    minority interest in CBW               3.5     --    86.7      --
                                        ------- ------ ------- -------

      Free cash flow (as defined by the
       company)                          $51.5  $42.0   $81.3   $55.7
                                        ======= ====== ======= =======

Income tax payments                      $(3.3) $(1.6)  $(3.8)  $(1.1)



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

(dollars in millions)
                 -----------------------------------------------------
                           Three Months Ended June 30, 2006
                 -----------------------------------------------------
                                                                Total
                 Local Wireless  HMS Other Broadband Corporate Company
                 ----- --------- ---- ---- --------- --------- -------
Operating Income
 (GAAP)           $70.6    $4.5  $3.8  $7.0     $2.3    $(5.0)  $83.2

Add:
  Depreciation
   and
   amortization    25.4     8.7   1.0   0.6       --       --    35.7
  Asset
   impairments,
   shareholder
   claim
   settlement,
   gain on sale
   of broadband
   assets and
   other             --      --    --    --     (2.8)      --    (2.8)
                 -----------------------------------------------------
EBITDA (Non-GAAP) $96.0   $13.2  $4.8  $7.6    $(0.5)   $(5.0) $116.1
                 =====================================================


                 -----------------------------------------------------
                           Three Months Ended June 30, 2005
                 -----------------------------------------------------
                                                                Total
                 Local Wireless  HMS Other Broadband Corporate Company
                 ----- --------- ---- ---- --------- --------- -------
Operating Income
 (GAAP)           $70.1   $(1.5) $4.3  $7.1     $1.4    $(5.5)  $75.9

Add:
  Depreciation
   and
   amortization    26.8    20.2   0.6   0.5       --      0.3    48.4
                 -----------------------------------------------------
EBITDA (Non-GAAP) $96.9   $18.7  $4.9  $7.6     $1.4    $(5.2) $124.3
                 =====================================================


                 -----------------------------------------------------
                            Six Months Ended June 30, 2006
                 -----------------------------------------------------
                                                                Total
                 Local Wireless  HMS Other Broadband Corporate Company
                 ----- --------- ---- ---- --------- --------- -------
Operating Income
 (GAAP)          $140.1    $8.2  $6.1 $13.5     $1.8   $(15.4) $154.3

Add:
  Depreciation
   and
   amortization    51.0    16.2   1.8   1.1       --       --    70.1
  Asset
   impairments,
   shareholder
   claim
   settlement,
   gain on sale
   of broadband
   assets and
   other             --      --    --    --     (2.7)     6.3     3.6
                 -----------------------------------------------------
EBITDA (Non-GAAP)$191.1   $24.4  $7.9 $14.6    $(0.9)   $(9.1) $228.0
                 =====================================================


                 -----------------------------------------------------
                            Six Months Ended June 30, 2005
                 -----------------------------------------------------
                                                                Total
                 Local Wireless  HMS Other Broadband Corporate Company
                 ----- --------- ---- ---- --------- --------- -------
Operating Income
 (GAAP)          $140.1  $(21.7) $6.7 $13.1     $2.6    $(9.7) $131.1

Add:
  Depreciation
   and
   amortization    53.9    35.2   1.0   0.9       --      0.4    91.4
  Asset
   impairments
   and other         --    23.7  (0.1)   --     (0.5)      --    23.1
                 -----------------------------------------------------
EBITDA (Non-GAAP)$194.0   $37.2  $7.6 $14.0     $2.1    $(9.3) $245.6
                 =====================================================


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                    June 30, 2005
                      June 30,      Income Tax    Before Special Items
                     2005 (GAAP)      Expense          (Non-GAAP)
                    --------------------------------------------------
                                         A
Revenue                   $315.4           $--              $315.4

Costs and expenses
  Cost of services
   and products            133.7            --               133.7
  Selling, general
   and
   administrative           57.4            --                57.4
  Depreciation and
   amortization             48.4            --                48.4
                    -------------   -----------   -----------------

    Operating income        75.9            --                75.9

Minority interest
 income                     (0.5)                             (0.5)
Interest expense            49.6            --                49.6
Other income, net           (0.7)           --                (0.7)
                    -------------   -----------   -----------------

Income before income
 taxes                      27.5            --                27.5
Income tax expense          57.3         (44.2)               13.1
                    -------------   -----------   -----------------
Net income (loss)          (29.8)         44.2                14.4

Preferred Stock
 Dividends                   2.6            --                 2.6
                    -------------   -----------   -----------------
Net Income (Loss)
 Applicable to
 Common Shareowners       $(32.4)        $44.2               $11.8
                    =============   ===========   =================

Weighted average
 diluted common
 shares                    245.8         251.6 (1)           251.6 (1)

Diluted earnings per
 common share             $(0.13)        $0.18               $0.05
                    =============   ===========   =================

(1) Shares have been adjusted for dilutive common stock equivalents
     that result after excluding special charges from earnings.

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


Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)

(dollars in millions, except per share amounts)

                                   Special Items
                           ------------------------------
                                                               Six
                                                              Months
                                                              Ended
                    Six                                      June 30,
                   Months                         Asset        2005
                   Ended                         Impair-      Before
                  June 30, Income      Debt       ments      Special
                    2005     Tax      Extin-     & Other      Items
                   (GAAP)  Expense   guishment   Charges    (Non-GAAP)
                  ----------------------------------------------------
                              A          B          C
Revenue            $604.0     $--         $--        $--     604.0

Costs and Expenses
   Cost of
    services and
    products        242.9      --          --         --     242.9
   Selling,
    general and
    administrative  115.5      --          --         --     115.5
   Depreciation
    and
    amortization     91.4      --          --         --      91.4
   Asset
    impairments
    and other
    charges          23.1      --          --      (23.1)       --
                  -------- -------   ---------   --------   -------

     Operating
      income        131.1      --          --       23.1     154.2

Minority interest
 income              (4.8)     --          --        4.6      (0.2)
Interest expense    100.1      --          --         --     100.1
Loss on
 extinquishment of
 debt                 7.9      --        (7.9)        --        --
Other income, net    (0.2)     --          --         --      (0.2)
                  -------- -------   ---------   --------   -------

Income before
 Income Taxes        28.1      --         7.9       18.5      54.5
Income tax expense   61.1   (47.6)        3.2        7.4      24.1
                  -------- -------   ---------   --------   -------
Net income (loss)   (33.0)   47.6         4.7       11.1      30.4

Preferred Stock
 Dividends            5.2      --          --         --       5.2
                  -------- -------   ---------   --------   -------
Net income (loss)
 applicable to
 common
 shareowners       $(38.2)  $47.6        $4.7      $11.1     $25.2
                  ======== =======   =========   ========   =======

Weighted average
 diluted shares     245.7   251.1 (1)   251.1 (1)  251.1 (1) 251.1 (1)

Diluted earnings
 (loss) per common
 share             $(0.16)  $0.19       $0.02      $0.04     $0.10
                  ======== =======   =========   ========   =======

(1) Shares have been adjusted for dilutive common stock equivalents
     that result after excluding special charges from earnings.

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

 B  Non-cash loss of $7.9 million due to the extinguishment of the
     company's prior credit facility; and

 C  Asset impairments and other charges of $23.1 million,
     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
                                          -------------
                                                            Three
                                                         Months Ended
                                Three        Gain on    June 30, 2006
                             Months Ended    Sale of    Before Special
                              June 30,      Broadband        Items
                             2006 (GAAP)     Assets       (Non-GAAP)
                            ------------------------------------------
                                                A
Revenue                           $323.3           $--         $323.3

Costs and expenses
   Cost of services and
    products                       145.5            --          145.5
   Selling, general and
    administrative                  61.7            --           61.7
   Depreciation and
    amortization                    35.7            --           35.7
   Gain on sale of broadband
    assets                          (2.9)          2.9             --
   Asset impairments and
    other charges                    0.1             -            0.1
                            ------------- ------------- --------------

      Operating income              83.2          (2.9)          80.3

Interest expense                    40.3            --           40.3
Other income, net                   (0.1)           --           (0.1)
                            ------------- ------------- --------------

Income before income taxes          43.0          (2.9)          40.1
Income tax expense                  18.7          (1.2)          17.5
                            ------------- ------------- --------------
Net income                          24.3          (1.7)          22.6

Preferred stock dividends            2.6            --            2.6
                            ------------- ------------- --------------
Net income applicable to
 common shareowners                $21.7         $(1.7)          20.0
                            ============= ============= ==============

Weighted average diluted
 common shares                     252.4         252.4          252.4
                            ============= ============= ==============

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

A Gain on sale of Broadband assets due to expiration of certain
   indemnifications that were previously reserved.


Cincinnati Bell Inc.
Normalized Statements of Operations (Non-GAAP) - Reconciliation to
 Reported Results
(Unaudited)

(dollars in millions, except per share amounts)

                                      Special Items
                              -----------------------------
                                                               Six
                                                              Months
                                                              Ended
                       Six                                   June 30,
                     Months                                    2006
                      Ended    Gain on                        Before
                    June 30,   Sale of  Shareholder Income   Special
                      2006    Broadband    Claim      Tax     Items
                     (GAAP)    Assets   Settlement  Expense (Non-GAAP)
                    --------------------------------------------------
                                  A          B         C
Revenue               $621.6       $--         $--     $--     $621.6

Costs and expenses
  Cost of services
   and products        273.6        --          --      --      273.6
  Selling, general
   and
   administrative      120.0        --          --      --      120.0
  Depreciation and
   amortization         70.1        --          --      --       70.1
  Shareholder claim
   settlement            6.3        --        (6.3)     --         --
  Gain on sale of
   broadband assets     (2.9)      2.9          --      --         --
  Asset impairments
   and other charges     0.2        --          --      --        0.2
                    --------- --------- ----------- ------- ----------

     Operating
      income           154.3      (2.9)        6.3      --      157.7

Minority interest
 expense                 0.4        --          --      --        0.4
Interest expense        79.8        --          --      --       79.8
Other income, net       (0.2)       --          --      --       (0.2)
                    --------- --------- ----------- ------- ----------

Income before income
 taxes                  74.3      (2.9)        6.3      --       77.7
Income tax expense      35.9      (1.2)        2.5    (3.6)      33.6
                    --------- --------- ----------- ------- ----------
Net income              38.4      (1.7)        3.8     3.6       44.1

Preferred stock
 dividends               5.2        --          --      --        5.2
                    --------- --------- ----------- ------- ----------
Net income
 applicable to
 common shareowners    $33.2     $(1.7)       $3.8    $3.6      $38.9
                    ========= ========= =========== ======= ==========

Weighted average
 diluted common
 shares                251.9     251.9       251.9   251.9      251.9
                    ========= ========= =========== ======= ==========

Diluted earnings per
 common share          $0.13    $(0.01)      $0.02   $0.01      $0.15
                    ========= ========= =========== ======= ==========

A Gain on sale of Broadband assets due to expiration of certain
   indemnifications that were previously reserved;

B Reserve of $6.3 million recorded to cover the Company's anticipated
   contribution to the settlement fund, and other settlement related
   expenses, for shareholder claim; and

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

SOURCE: Cincinnati Bell Inc.

Cincinnati Bell Inc.
Tony Schulte, 513-397-9540
tony.schulte@cinbell.com