Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 8-K
 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 9, 2018


 
CINCINNATI BELL INC.
(Exact Name of Registrant as Specified in its Charter)


 
 
 
 
 
 
Ohio
 
001-8519
 
31-1056105
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
221 East Fourth Street
Cincinnati, OH 45202
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (513) 397-9900

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. o





Section 2 - Financial Information

Item 2.02     Results of Operations and Financial Condition

On May 9, 2018, Cincinnati Bell Inc. reported its financial results for the first quarter 2018. The earnings release is attached as Exhibit 99.1.
 
Section 7 - Regulation FD
 
Item 7.01     Regulation FD Disclosure
 
On May 9, 2018, Leigh R. Fox, the Company's president and chief executive officer, and Andrew R. Kaiser, the Company's chief financial officer, will present first quarter 2018 results. The presentation will be webcast both live and on-demand. To listen, go to the Investor Relations section of www.cincinnatibell.com, click on the Webcasts/Presentations tab and follow the instructions for accessing the webcast.
A copy of the presentation to be made during the meeting is attached to this Current Report as Exhibit 99.2.
The information in Items 2.02 and 7.01 and the exhibits attached to this Current Report as Exhibit 99.1 and 99.2 are being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934 or otherwise subject to the liabilities of that Section nor shall they be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities Act of 1934, except as shall be expressly stated by specific reference in such filing.
 
Item 9.01    Financial Statements and Exhibits.

(c)
Exhibit No.
Description
 
 
 
 
 
 
 
 
 
 
 
 
Press release dated May 9, 2018
 
 
 
 
Presentation made during the Cincinnati Bell first quarter 2018 earnings conference call on May 9, 2018





Cautionary Statement Concerning Forward-Looking Statements


This report and the documents incorporated by reference herein contain forward-looking statements regarding future events and results that are subject to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “predicts,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may,” or variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of future financial performance, anticipated growth and trends in businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned these forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this release and those discussed in other documents the company filed with the Securities and Exchange Commission (SEC). More information on potential risks and uncertainties is available in our recent filings with the SEC, including Cincinnati Bell's Form 10-K report, Form 10-Q reports and Form 8-K reports. Actual results may differ materially and adversely from those expressed in any forward-looking statements. The company undertakes no obligation to revise or update any forward-looking statements for any reason. The forward-looking statements included in this report represent company estimates as of May 9, 2018. Cincinnati Bell anticipates that subsequent events and developments will cause its estimates to change.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
 
 
 
 
CINCINNATI BELL INC.
 
 
 
 
 
Date:
May 9, 2018
 
By:
/s/ Christopher J. Wilson
 
 
 
 
Christopher J. Wilson
 
 
 
 
Vice President and General Counsel




EXHIBIT INDEX

Exhibit No.
Description
 
 
 
 
 
 
 
 
 
 
99.1
Press release dated May 9, 2018.
 
 
99.2
Presentation made during the Cincinnati Bell first quarter 2018 earnings conference call on May 9, 2018.



Exhibit


Cincinnati Bell Reports First Quarter 2018 Results

HIGHLIGHTS
Revenue of $296 million and Adjusted EBITDA1 of $79 million
Entertainment and Communications revenue of $174 million, with Fioptics revenue up 13% and Enterprise Fiber revenue up 6% year-over-year
Fioptics internet subscribers increased 6,200 during the quarter and total internet subscribers were up 2,200
IT Services and Hardware revenue of $128 million, up $47 million from a year ago
Cash provided by operating activities totaled $59 million, up $5 million year-over-year
Free cash flows2 totaled $33 million, up $23 million year-over-year

CINCINNATI - May 9, 2018 - Cincinnati Bell Inc. (NYSE:CBB), today announced financial results for its first quarter, ended March 31, 2018. For the first quarter, revenue increased from the prior year, driven by strong demand for fiber-based products and the contribution from the OnX Enterprise Solutions acquisition. Fioptics internet subscribers totaled 232,800 at the end of the first quarter, up 25,500 compared to a year ago. Fioptics video subscribers totaled 146,300, up 5,200 compared to the same period in 2017. During the quarter, the Company passed an additional 8,600 addresses with Fioptics, which is now available to 580,800 homes and businesses, expanding Cincinnati Bell's fiber network to reach more than 70% of Greater Cincinnati.
Leigh Fox, President and Chief Executive Officer of Cincinnati Bell, commented, "Our solid first quarter performance reflects the continued execution of our strategy to expand our fiber network while advancing our digital-based products and services. The strength of our Fioptics suite of products and Enterprise Fiber network is evidence our strategy is working and further supports our ongoing investments in fiber densification.”
Mr. Fox continued, “In our IT services business, the integration of OnX is progressing well and we are confident we can leverage our extensive product portfolio and expanded footprint to tap into increased demand for strategic IT solutions across a diversified customer base.”
CONSOLIDATED RESULTS
Consolidated revenue totaled $296 million for the first quarter of 2018, up 18% from the prior year.
Operating income was $24 million in the first quarter of 2018, compared to a loss of $2 million in the prior year period. Adjusted EBITDA totaled $79 million for the first quarter of 2018, compared to $73 million in the prior year period.
Net loss for the first quarter of 2018 totaled $8 million, resulting in diluted loss per share of $0.26.





Entertainment and Communications Segment
Entertainment and Communications revenue of $174 million decreased $1 million year-over-year as growth in Fioptics and Enterprise Fiber partially offset Legacy revenue declines
Fioptics revenue of $83 million, up $9 million year-over-year
Enterprise Fiber revenue of $21 million, up $1 million year-over-year
Operating income of $29 million, up $26 million year-over-year
Adjusted EBITDA of $70 million, up $1 million year-over-year
The combination with Hawaiian Telcom represents an important step toward scaling Cincinnati Bell’s network of high-quality fiber assets, having the capacity to meet the demands of the growing IoT ecosystem, and delivering on the promise of 5G. The pending merger recently received approval from the Hawaii Public Utilities Commission, and the regulatory review process is underway with the Federal Communications Commission. The Company continues to expect the transaction to close in the early second half of 2018.
IT Services and Hardware Segment
IT Services and Hardware revenue of $128 million, up $47 million year-over-year, reflecting a $45 million contribution from the OnX acquisition
Consulting revenue of $38 million, up $21 million year-over-year
Cloud revenue of $23 million, up $2 million year-over-year
Communications revenue of $41 million, up $4 million year-over-year
Infrastructure Solutions revenue of $26 million, up $19 million year-over-year
Operating income of $1 million, consistent with the prior year period
Adjusted EBITDA of $12 million, up $5 million year-over-year
The combination of CBTS and OnX supports the Company’s transformation to a leading North American hybrid IT solutions provider, with an expanded footprint of 20+ IT sales offices and the addition of approximately 2,000 new customers throughout the United States and Canada. The combined company’s hosted and managed IT services portfolio coupled with its enhanced scale enables Cincinnati Bell to capitalize on significant market opportunities in Unified Communications, Cloud, and Security services.
Cash Flow and Financial Position
Operating cash flows totaled $59 million for the first quarter of 2018, compared to $54 million in the prior year. Free cash flow totaled $33 million for the first quarter of 2018, up from $10 million in the prior year. Capital expenditures were $33 million in the first quarter of 2018, compared to $55 million in the same period last year with the expectation that full year 2018 capital expenditures will be between $190 million and $210 million.





On April 5, 2018, Cincinnati Bell amended its Credit Agreement, including the Tranche B Term Loan and revolving facility, dated October 2, 2017, to reduce the LIBOR interest rate spread by 50 basis points from the previous 3.75% per annum to 3.25% per annum.
2018 Outlook
Cincinnati Bell reaffirms its previous 2018 financial guidance provided on February 15, 2018:
Category
2018 Guidance Range
Revenue
$1,200M - $1,275M

Adjusted EBITDA
$320M - $330M

As a reminder, this revenue guidance reflects the new ASC 606 revenue recognition standard, effective January 1, 2018, and presents Infrastructure Solutions sales net of product cost. For reference, had the revenue standard not been effective, the Company’s revenue guidance range would have been $1,700 million to $1,775 million.
The Company's 2018 guidance does not include any contribution from the pending merger with Hawaiian Telcom.
Mr. Fox concluded, “We will continue to invest where we are winning while maintaining a disciplined approach to managing both our balance sheet and capital allocation to deliver long-term value for our shareholders and customers. We remain focused on growing our two distinct businesses, and creating platforms for sustainable free cash flow as we drive towards increasing valuation multiples associated with our fiber and IT services businesses.”
Change in Segment Reporting and Revenue Recognition Standard
As previously announced, Cincinnati Bell has changed its segment and business unit financial reporting to align more closely with the Company’s broader strategy and how it manages business operations. Effective January 1, 2018, revenue is reported as follows in the Entertainment and Communications segment: Fioptics, Enterprise Fiber, and Legacy. In the IT Services and Hardware segment, revenue is reported by product practices, including Consulting, Cloud, Communications, and Infrastructure Solutions.
In addition to these changes, commercial Competitive Local Exchange Carrier ("CLEC") revenue, which was previously included in the Entertainment and Communications segment, is now reported within the IT Services and Hardware segment to consolidate all company-wide Voice over Internet Protocol ("VoIP") sales. Following the adoption of the new ASC 606 revenue recognition standard, effective January 1, 2018, Infrastructure Solutions sales are presented net of product cost.





Prior period information has been adjusted to reflect the changes in segment presentation and adoption of the new revenue accounting standard.
Conference Call/Webcast
Cincinnati Bell will host a conference call on May 9, 2018 at 9:00 a.m. (ET) to discuss its results for the first quarter of 2018. 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 888-802-2239. Callers located outside of the U.S. and Canada may dial 719-325-2177. To participate, please call 15 minutes prior to the start time. A taped replay of the conference call will be available approximately one hour after the conclusion of the call until 12:00 p.m. (ET) on Wednesday, May 23, 2018. For U.S. callers, the replay will be available at 888-203-1112. For callers outside of the U.S. and Canada, the replay will be available at 719-457-0820. The replay reference number is 5897871. An archived version of the webcast will also be available in the Investor Relations section of www.cincinnatibell.com.
Safe Harbor Note
This release may contain “forward-looking” statements, as defined in federal securities laws including the Private Securities Litigation Reform Act of 1995, which are based on our current expectations, estimates, forecasts and projections. Statements that are not historical facts, including statements about the beliefs, expectations and future plans and strategies of the Company, are forward-looking statements. Actual results may differ materially from those expressed in any forward-looking statements. The following important factors, among other things, could cause or contribute to actual results being materially and adversely different from those described or implied by such forward-looking statements including, but not limited to: those discussed in this release; we operate in highly competitive industries, and customers may not continue to purchase products or services, which would result in reduced revenue and loss of market share; we may be unable to grow our revenues and cash flows despite the initiatives we have implemented; failure to anticipate the need for and introduce new products and services or to compete with new technologies may compromise our success in the telecommunications industry; our access lines, which generate a significant portion of our cash flows and profits, are decreasing in number and if we continue to experience access line losses similar to the past several years, our revenues, earnings and cash flows from operations may be adversely impacted; our failure to meet performance standards under our agreements could result in customers terminating their relationships with us or customers being entitled to receive financial compensation, which would lead to reduced revenues and/or increased costs; we generate a substantial portion of our revenue by serving a limited geographic area; a large customer accounts for a significant portion of our revenues and accounts receivable and the loss or significant reduction in business from this customer would cause operating revenues to decline and could negatively impact profitability and cash flows; maintaining our telecommunications networks requires significant capital expenditures, and our inability or failure to maintain our telecommunications networks





could have a material impact on our market share and ability to generate revenue; increases in broadband usage may cause network capacity limitations, resulting in service disruptions or reduced capacity for customers; we may be liable for material that content providers distribute on our networks; cyber attacks or other breaches of network or other information technology security could have an adverse effect on our business; natural disasters, terrorists acts or acts of war could cause damage to our infrastructure and result in significant disruptions to our operations; the regulation of our businesses by federal and state authorities may, among other things, place us at a competitive disadvantage, restrict our ability to price our products and services and threaten our operating licenses; we depend on a number of third party providers, and the loss of, or problems with, one or more of these providers may impede our growth or cause us to lose customers; a failure of back-office information technology systems could adversely affect our results of operations and financial condition; if we fail to extend or renegotiate our collective bargaining agreements with our labor union when they expire or if our unionized employees were to engage in a strike or other work stoppage, our business and operating results could be materially harmed; the loss of any of the senior management team or attrition among key sales associates could adversely affect our business, financial condition, results of operations and cash flows; our debt could limit our ability to fund operations, raise additional capital, and fulfill our obligations, which, in turn, would have a material adverse effect on our businesses and prospects generally; our indebtedness imposes significant restrictions on us; we depend on our loans and credit facilities to provide for our short-term financing requirements in excess of amounts generated by operations, and the availability of those funds may be reduced or limited; the servicing of our indebtedness is dependent on our ability to generate cash, which could be impacted by many factors beyond our control; we depend on the receipt of dividends or other intercompany transfers from our subsidiaries and investments; the trading price of our common shares may be volatile, and the value of an investment in our common shares may decline; the uncertain economic environment, including uncertainty in the U.S. and world securities markets, could impact our business and financial condition; our future cash flows could be adversely affected if it is unable to fully realize our deferred tax assets; adverse changes in the value of assets or obligations associated with our employee benefit plans could negatively impact shareowners’ deficit and liquidity; third parties may claim that we are infringing upon their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling products; third parties may infringe upon our intellectual property, and we may expend significant resources enforcing our rights or suffer competitive injury; we could be subject to a significant amount of litigation, which could require us to pay significant damages or settlements; we could incur significant costs resulting from complying with, or potential violations of, environmental, health and human safety laws; the timing and likelihood of completing the merger with Hawaiian Telcom, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals for the proposed transaction that could reduce anticipated benefits or cause the parties to abandon the transaction; the possibility that competing offers or acquisition proposals for Hawaiian Telcom will be made; the occurrence of any event, change or other





circumstance that could give rise to the termination of the proposed transaction; the possibility that the expected synergies and value creation from the proposed transaction involving Hawaiian Telcom will not be realized or will not be realized within the expected time period; the risk that the businesses of the Company and Hawaiian Telcom and other acquired companies will not be integrated successfully; disruption from the proposed transaction involving Hawaiian Telcom making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred; and the possibility that the proposed transaction involving Hawaiian Telcom does not close, including due to the failure to satisfy the closing conditions and the other risks and uncertainties detailed in our filings with the SEC, including our Form 10-K report, Form 10-Q reports and Form 8-K reports, as well as Hawaiian Telcom’s filings with the SEC, including its Form 10-K reports, Form 10-Q reports and Form 8-K reports.
These forward-looking statements are based on information, plans and estimates as of the date hereof and there may be other factors that may cause our actual results to differ materially from these forward-looking statements. We assume no obligation to update the information contained in this release except as required by applicable law.
Use of Non-GAAP Financial Measures
This press release contains information about adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), Adjusted EBITDA margin, net debt, net income (loss) applicable to common shareholders excluding special items and free cash flow. 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 these non-GAAP financial measures 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.

1Adjusted EBITDA provides a useful measure of operational performance. The company defines Adjusted EBITDA as GAAP operating income plus depreciation, amortization, stock based compensation, restructuring and severance related charges, (gain) loss on sale or disposal of assets, transaction and integration costs, asset impairments, and other special items. During the first quarter ended March 31, 2018, the Company revised its methodology to calculate Adjusted EBITDA to exclude stock-based compensation expense to align more closely with its peer group. In addition, the presentation of EBITDA is adjusted for the amended accounting guidance adopted by the Company on January 1, 2018 and implemented retrospectively, which requires pension and postretirement benefit costs (excluding current service cost component) to be reported below operating income. Adjusted EBITDA should not be considered as an





alternative to comparable GAAP measures of profitability and may not be comparable with the measure as defined by other companies.

Adjusted EBITDA margin provides a useful measure of operational performance. The company defines Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. Adjusted EBITDA margin should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with the measure as defined by other companies.

2Free cash flow provides a useful measure of operational performance, liquidity and financial health. The company defines free cash flow as cash provided by (used in) operating activities, adjusted for capital expenditures, restructuring and severance related payments, transaction and integration payments, and preferred stock dividends. Free cash flow should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities, or the change in cash on the balance sheet and may not be comparable with free cash flow as defined by other companies. Although the company feels there is no comparable GAAP measure for free cash flow, the attached financial information reconciles cash provided by operating activities to free cash flow.

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

Net income (loss) applicable to common shareholders excluding special items in total and per share provides a useful measure of operating performance. Net income (loss) applicable to common shareholders excluding special items should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with net income (loss) excluding special items as defined by other companies.

About Cincinnati Bell Inc.
With headquarters in Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE:CBB) provides integrated communications solutions - including local and long distance Voice, Data, high-speed Internet and Video - that keep residential and business customers in Greater Cincinnati and Dayton connected with each other and with the world. In addition, Enterprise customers across the United States and Canada rely on CBTS and OnX, wholly-





owned subsidiaries, for efficient, scalable office communications systems and end-to-end IT solutions. For more information, please visit www.cincinnatibell.com. The information on the Company’s website is not incorporated by reference in this press release.







Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
Consolidated Statements of Operations
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(Dollars in millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
 
 
 
 
 
March 31,
 
Change
 
 
 
 
 
 
2018
 
2017
 
$
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
295.7

 
$
249.6

 
$
46.1

 
18%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
149.4

 
124.1

 
25.3

 
20%
 
 
 
Selling, general and administrative
 
68.4

 
55.3

 
13.1

 
24%
 
 
 
Depreciation and amortization
 
51.2

 
45.8

 
5.4

 
12%
 
 
 
Restructuring and severance related charges
 
0.3

 
25.6

 
(25.3
)
 
(99)%
 
 
 
Transaction and integration costs
 
2.2

 
0.6

 
1.6

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss)
 
24.2

 
(1.8
)
 
26.0

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
30.8

 
18.0

 
12.8

 
71%
 
 
Other components of pension and postretirement benefit plans expense
 
3.3

 
3.2

 
0.1

 
3%
 
 
Gain on sale of Investment in CyrusOne
 

 
(117.7
)
 
117.7

 
n/m
 
 
Other income, net
 
(0.4
)
 
(0.4
)
 

 
0%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) income before income taxes
 
(9.5
)
 
95.1

 
(104.6
)
 
n/m
 
 
Income tax (benefit) expense
 
(1.2
)
 
34.5

 
(35.7
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
(8.3
)
 
60.6

 
(68.9
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
 
2.6

 
2.6

 

 
0%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income applicable to common shareowners

 
$
(10.9
)
 
$
58.0

 
$
(68.9
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net (loss) earnings per common share
 
$
(0.26
)
 
$
1.38

 
 
 
 
 
 
Diluted net (loss) earnings per common share
 
$
(0.26
)
 
$
1.37

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
 
 
 - Basic
 
42.3

 
42.1

 
 
 
 
 
 
 
 - Diluted
 
42.3

 
42.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
Entertainment and Communications Income Statement
 

 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
 
 
 
 
March 31,
 
Change
 
 
 
 
 
2018
 
2017
 
$
 
%
 
 
Income Statement
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
174.2

 
$
175.1

 
$
(0.9
)
 
(1)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
77.6

 
75.7

 
1.9

 
3%
 
 
 
Selling, general and administrative
 
27.1

 
31.3

 
(4.2
)
 
(13)%
 
 
 
Depreciation and amortization
 
40.9

 
39.4

 
1.5

 
4%
 
 
 
Other*
 

 
25.6

 
(25.6
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating costs and expenses
 
145.6

 
172.0

 
(26.4
)
 
(15)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income

 
$
28.6

 
$
3.1

 
$
25.5

 
n/m
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 

 
 
Revenue
 
 
 
 
 
 
 

 
 
 
Fioptics
 
 
 
 
 
 
 

 
 
 
Data
 
$
34.4

 
$
29.6

 
$
4.8

 
16%
 
 
 
Video
 
39.2

 
35.9

 
3.3

 
9%
 
 
 
Voice
 
9.1

 
7.9

 
1.2

 
15%
 
 
 
Other
 
0.3

 
0.3

 

 
0%
 
 
 
 
 
83.0

 
73.7

 
9.3

 
13%
 
 
 
 
 
 
 
 
 
 
 

 
 
 
Enterprise Fiber
 
 
 
 
 
 
 

 
 
 
Data
 
20.8

 
19.7

 
1.1

 
6%
 
 
 
 
 
 
 
 
 
 
 

 
 
 
Legacy
 
 
 
 
 
 
 

 
 
 
Data
 
29.7

 
35.1

 
(5.4
)
 
(15)%
 
 
 
Voice
 
37.9

 
43.8

 
(5.9
)
 
(13)%
 
 
 
Other
 
2.8

 
2.8

 

 
0%
 
 
 
 
 
70.4

 
81.7

 
(11.3
)
 
(14)%
 
 
 
 
 
 
 
 
 
 
 

 
 
Total Entertainment and Communications revenue
 
$
174.2


$
175.1


$
(0.9
)

(1)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Other includes restructuring and severance related charges.







Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
Entertainment and Communications Metric Information
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
 
 
 
2018
 
2017
 
2017
 
2017
 
2017
 
 
 
 
 
 
 
 
 
 
 
Fioptics
 
 
 
 
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
 
 
 
 
Internet FTTP
187.8

 
179.6

 
174.2

 
168.1

 
160.3

 
 
Internet FTTN
45.0

 
47.0

 
47.0

 
46.0

 
47.0

 
 
Total Fioptics Internet
232.8


226.6


221.2


214.1


207.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Video
 
 
 
 
 
 
 
 
 
 
 
Video FTTP
118.1

 
116.5

 
113.5

 
112.8

 
111.1

 
 
Video FTTN
28.2

 
30.0

 
30.0

 
30.0

 
30.0

 
 
Total Fioptics Video
146.3


146.5


143.5


142.8


141.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Voice
 
 
 
 
 
 
 
 
 
 
 
Consumer Voice Lines
89.3

 
88.8

 
88.1

 
87.0

 
85.5

 
 
Enterprise Voice Lines
17.6

 
17.1

 
16.6

 
15.2

 
14.1

 
 
Total Fioptics Voice Lines
106.9

 
105.9

 
104.7

 
102.2

 
99.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fioptics Units Passed
 
 
 
 
 
 
 
 
 
 
 
Units Passed FTTP
440.5

 
431.3

 
423.6

 
415.4

 
403.7

 
 
Units Passed FTTN
140.3

 
140.9

 
141.1

 
141.3

 
141.5

 
 
Total Fioptics Units Passed
580.8


572.2


564.7


556.7


545.2

 
 
 
 
 
 
 
 
 
 
 
 
 
Enterprise Fiber
 
 
 
 
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
 
 
 
 
Ethernet Bandwidth (Gb)
4,046

 
3,919

 
3,733

 
3,638

 
3,521

 
 
 
 
 
 
 
 
 
 
 
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
 
 
 
 
DSL
78.1

 
82.1

 
86.7

 
93.0

 
100.1

 
 
 
 
 
 
 
 
 
 
 
 
Voice
 
 
 
 
 
 
 
 
 
 
 
Consumer Voice Lines
90.4

 
94.9

 
99.5

 
104.9

 
111.1

 
 
Enterprise Voice Lines
161.0

 
167.1

 
172.1

 
177.3

 
183.9

 
 
Total Legacy Voice Lines
251.4


262.0


271.6


282.2


295.0

 
 
 
 
 
 
 
 
 
 
 
 
*Fiber to the Premise (FTTP), Fiber to the Node (FTTN)
 
 
 
 
 
 







Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
IT Services and Hardware Income Statement and Metric Information
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
 
 
 
 
March 31,
 
Change
 
 
 
 
 
2018
 
2017
 
$
 
%
 
 
 
 
 
 
 
 
 
Income Statement
 
 
 
 
 
 
 
 
 
Revenue
 
$
127.6

 
$
81.0

 
$
46.6

 
58%
 
 
 
 
 
 
 
 


 

Operating costs and expenses
 
 
 
 
 


 

 
Cost of services and products
 
77.7

 
54.7

 
23.0

 
42%
 
Selling, general and administrative
 
38.0

 
19.0

 
19.0

 
n/m
 
Depreciation and amortization
 
10.2

 
6.4

 
3.8

 
59%
 
Restructuring and severance related charges
 
0.3

 

 
0.3

 
n/m
 
 
 
 
 
 
 
 
 


 

 
Total operating costs and expenses
 
126.2

 
80.1

 
46.1

 
58%
 
 
 
 
 
 
 
 


 

Operating Income
 
$
1.4

 
$
0.9

 
$
0.5

 
56%
 
 
 
 
 
 
 


 

 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 


 

 
Consulting
 
$
38.1

 
$
16.7

 
$
21.4

 
n/m
 
Cloud
 
22.6

 
20.9

 
1.7

 
8%
 
Communications
 
40.6

 
36.5

 
4.1

 
11%
 
Infrastructure Solutions
 
26.3

 
6.9

 
19.4

 
n/m
 
Total IT Services and Hardware Revenue
 
$
127.6

 
$
81.0

 
$
46.6

 
58%
 
 
 
 
 
 
 
 
 
 
 
 
Metric Information as of March 31, 2018
 
 
 
 
Consulting
Communications
Communications
Communications
Billable Heads
NaaS Locations
SD - WAN Locations
Hosted UCaaS Profiles
888
564
117
178,457






Cincinnati Bell Inc.
 
 
 
 
Net Debt (Non-GAAP) and Common Shares Outstanding
 
 
 
 
(Unaudited)
 
 
 
 
(Dollars and shares in millions)
 
 
 
 
 
 
 
 
 
 
 
 
March 31,
 
December 31,
 
 
 
2018
 
2017
 
 
 
 
 
 
 
Credit Agreement - Tranche B Term Loan due 2024
$
600.0

 
$
600.0

 
7 1/4% Senior Notes due 2023
22.3

 
22.3

 
7% Senior Notes due 2024
625.0

 
625.0

 
8% Senior Notes due 2025
350.0

 
350.0

 
Cincinnati Bell Telephone Notes
87.9

 
87.9

 
Capital leases and other debt
79.9

 
82.9

 
Net unamortized premium
1.9

 
1.9

 
Unamortized note issuance costs
(21.9
)
 
(22.3
)
 
 
 
 
 
 
 
 
Total debt
1,745.1

 
1,747.7

 
 
 
 
 
 
 
Less: Cash and cash equivalents
(412.2
)
 
(396.5
)
 
 
 
 
 
 
 
 
Net debt (Non-GAAP)
$
1,332.9

 
$
1,351.2

 
 
 
 
 
 
 
 
 
 
 
 
Credit Agreement availability
$
200.0

 
$
200.0

 
 
 
 
 
 
 
Common shares outstanding
42.4

 
42.2

 
 
 
 
 
 
 





Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2018
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net loss (GAAP)
 
 
 
 
 
 
 
$
(8.3
)
 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax benefit
 
 
 
 
 
 
 
(1.2
)
 
 
Interest expense
 
 
 
 
 
 
 
30.8

 
 
Other income, net
 
 
 
 
 
 
 
(0.4
)
 
 
Other components of pension and postretirement benefit plans expense
 
 
 
 
 
 
 
3.3

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) (GAAP)
 
$
28.6

 
$
1.4

 
$
(5.8
)
 
$
24.2

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
40.9

 
10.2

 
0.1

 
51.2

 
 
Restructuring and severance related charges
 

 
0.3

 

 
0.3

 
 
Transaction and integration costs
 

 

 
2.2

 
2.2

 
 
Stock-based compensation
 

 

 
0.9

 
0.9

 
Adjusted EBITDA (Non-GAAP)
 
$
69.5

 
$
11.9

 
$
(2.6
)
 
$
78.8

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (Non-GAAP)
 
40
%
 
9
%
 

 
27
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net income (GAAP)
 
 
 
 
 
 
 
$
60.6

 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
 
 
 
 
 
34.5

 
 
Interest expense
 
 
 
 
 
 
 
18.0

 
 
Gain on sale of CyrusOne
 
 
 
 
 
 
 
(117.7
)
 
 
Other income, net
 
 
 
 
 
 
 
(0.4
)
 
 
Other components of pension and postretirement benefit plans expense
 
 
 
 
 
 
 
3.2

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (GAAP)
 
$
3.1

 
$
0.9

 
$
(5.8
)
 
$
(1.8
)
 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
39.4

 
6.4

 

 
45.8

 
 
Restructuring and severance related charges
 
25.6

 

 

 
25.6

 
 
Transaction and integration costs
 

 

 
0.6

 
0.6

 
 
Stock-based compensation
 

 

 
2.8

 
2.8

 
Adjusted EBITDA (Non-GAAP)
 
$
68.1

 
$
7.3

 
$
(2.4
)
 
$
73.0

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (Non-GAAP)
 
39
%
 
9
%
 

 
29
%
 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year dollar change in Adjusted EBITDA
 
$
1.4

 
$
4.6

 
$
(0.2
)
 
$
5.8

 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year percentage change in Adjusted EBITDA
 
2
%
 
63
%

8
%
 
8
%





Cincinnati Bell Inc.
 
 
 
 
Consolidated Statements of Cash Flows
 
 
 
 
(Unaudited)
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
March 31,
 
 
 
 
2018
 
2017
 
 
 
 
 
 
 
 
 
Cash provided by operating activities
$
58.5

 
$
53.9

 
 
 
 
 
 
 
 
 
 
Capital expenditures
(32.7
)
 
(55.1
)
 
 
 
Proceeds from sale of Investment in CyrusOne

 
140.7

 
 
 
Acquisitions of businesses
(2.8
)
 
(9.2
)
 
 
 
Other, net
(0.1
)
 
0.5

 
 
 
 
 
 
 
 
 
Cash (used in) provided by investing activities
(35.6
)
 
76.9

 
 
 
 
 
 
 
 
 
 
Net decrease in corporate credit and receivables facilities with initial maturities less than 90 days

 
(89.5
)
 
 
 
Repayment of debt
(3.0
)
 
(2.1
)
 
 
 
Debt issuance costs
(0.4
)
 
(0.5
)
 
 
 
Dividends paid on preferred stock
(2.6
)
 
(2.6
)
 
 
 
Other, net
(2.0
)
 
(1.1
)
 
 
 
 
 
 
 
 
 
Cash used in financing activities
(8.0
)
 
(95.8
)
 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash

0.8

 

 
 
 
 
 
 
 
 
 
Net increase in cash, cash equivalents and restricted cash
15.7

 
35.0

 
 
Cash, cash equivalents and restricted cash at beginning of period
396.5

 
9.7

 
 
 
 
 
 
 
 
 
Cash, cash equivalents and restricted cash at end of period

$
412.2

 
$
44.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Cash Provided by Operating Activities (GAAP) to
 
 
 
 
 
 
Free Cash Flow (Non-GAAP)
 
 
 
 
 
Cash provided by operating activities
$
58.5

 
$
53.9

 
 
Adjustments:
 
 
 
 
 
 
Capital expenditures
(32.7
)
 
(55.1
)
 
 
 
Restructuring and severance related payments
7.3

 
12.7

 
 
 
Preferred stock dividends
(2.6
)
 
(2.6
)
 
 
 
Transaction and integration costs
2.2

 
0.6

 
 
 
 
 
 
 
 
 
 
   Free cash flow (Non-GAAP)
$
32.7

 
$
9.5

 
 
 
 
 
 
 
 
 
Income tax payments (refunds)
$
(0.1
)
 
$

 
 
 
 
 
 
 
 
 
 





Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
Capital Expenditures
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Mar. 31, 2018
 
Dec. 31, 2017
 
Sep. 30, 2017
 
Jun. 30, 2017
 
Mar. 31, 2017
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
$
27.6

 
$
55.1

 
$
38.8

 
$
45.5

 
$
46.8

IT Services and Hardware
5.1

 
7.2

 
4.2

 
4.6

 
8.3

Total capital expenditures
$
32.7

 
$
62.3

 
$
43.0

 
$
50.1

 
$
55.1






Cincinnati Bell Inc.
 
 
Reconciliation of Net (Loss) Income Applicable to Common Shareholders (GAAP) to Net (Loss) Income Applicable to Common Shareholders, Excluding Special Items (Non-GAAP) and Adjusted Diluted Earnings Per Share (Non-GAAP)
(Unaudited)
 
 
(Dollars in millions, except per share amounts)
 
 
 
 
 
 
Three Months Ended
 
 
March 31, 2018
 
March 31, 2017
 
 
 
 
 
 
 
Net (loss) income applicable to common shareholders (GAAP)
$
(10.9
)
 
$
58.0

 
 
 
 
 
 
 
Special items:
 
 
 
 
 
Restructuring and severance related charges

0.3

 
25.6

 
 
Transaction and integration costs
2.2

 
0.6

 
 
Gain on sale of Investment in CyrusOne

 
(117.7
)
 
 
Income tax effect of special items *
0.4

 
33.2

 
Total special items
2.9

 
(58.3
)
 
 
 
 
 
 
 
Net (loss) income applicable to common shareowners, excluding special items (Non-GAAP)
$
(8.0
)
 
$
(0.3
)
 
 
 
 
 
 
 
Weighted average diluted shares outstanding**
42.3

 
42.1

 
 
 
 
 
 
 
Diluted earnings per common share (GAAP)
$
(0.26
)
 
$
1.38

 
 
 
 
 
 
 
Adjusted diluted (loss) earnings per common share (Non-GAAP)
$
(0.19
)
 
$
(0.01
)
 
 
 
 
 
 
 
*
Special items have been tax effected such that the normalized effective tax rate is 18% and 36% for the three months ended March 31, 2018 and 2017, respectively, with the exception of transaction and integration costs, which are treated as a discrete item in the quarter incurred.
**
Weighted average diluted shares outstanding based on net (loss) income applicable to common shareowners, excluding special items (Non-GAAP).






Cincinnati Bell Inc.
 
 
 
 
 
 
Reconciliation of Operating Income (GAAP) Guidance to Adjusted EBITDA (Non-GAAP) Guidance
 
 
(Unaudited)
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Low
 
High
 
2018 Operating Income (GAAP) Guidance Range
 
$
90

 
$
110

 
 
 
 
 
 
 
 
 
 
Add:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Depreciation and amortization
 
215

 
210

 
   Restructuring and severance related charges
 
10

 
5

 
   Stock compensation expense
 
5

 
5

 
 
 
 
 
 
 
2018 Adjusted EBITDA (Non-GAAP) Guidance Range
 
$
320

 
$
330

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



CONTACT:
    
Cincinnati Bell Inc.
Investor contact:
Josh Duckworth, 513-397-2292
Joshua.Duckworth@cinbell.com

Media contact:
Jane Weiler, 513-397-9941
Jane.Weiler@cinbell.com



cbb1q18presentation
Cincinnati Bell First Quarter 2018 Results May 9, 2018


 
Safe Harbor This presentation may contain “forward‐looking” statements, as defined in federal securities laws including the Private Securities Litigation Reform Act of 1995, which are based on our current  expectations, estimates, forecasts and projections. Statements that are not historical facts, including statements about the beliefs, expectations and future plans and strategies of the Company, are  forward‐looking statements. Actual results may differ materially from those expressed in any forward‐looking statements. The following important factors, among other things, could cause or  contribute to actual results being materially and adversely different from those described or implied by such forward‐looking statements including, but not limited to: those discussed in this release;  we operate in highly competitive industries, and customers may not continue to purchase products or services, which would result in reduced revenue and loss of market share; we may be unable to  grow our revenues and cash flows despite the initiatives we have implemented; failure to anticipate the need for and introduce new products and services or to compete with new technologies may  compromise our success in the telecommunications industry; our access lines, which generate a significant portion of our cash flows and profits, are decreasing in number and if we continue to  experience access line losses similar to the past several years, our revenues, earnings and cash flows from operations may be adversely impacted; our failure to meet performance standards under  our agreements could result in customers terminating their relationships with us or customers being entitled to receive financial compensation, which would lead to reduced revenues and/or  increased costs; we generate a substantial portion of our revenue by serving a limited geographic area; a large customer accounts for a significant portion of our revenues and accounts receivable  and the loss or significant reduction in business from this customer would cause operating revenues to decline and could negatively impact profitability and cash flows; maintaining our  telecommunications networks requires significant capital expenditures, and our inability or failure to maintain our telecommunications networks could have a material impact on our market share  and ability to generate revenue; increases in broadband usage may cause network capacity limitations, resulting in service disruptions or reduced capacity for customers; we may be liable for  material that content providers distribute on our networks; cyber attacks or other breaches of network or other information technology security could have an adverse effect on our business; natural  disasters, terrorists acts or acts of war could cause damage to our infrastructure and result in significant disruptions to our operations; the regulation of our businesses by federal and state  authorities may, among other things, place us at a competitive disadvantage, restrict our ability to price our products and services and threaten our operating licenses; we depend on a number of  third party providers, and the loss of, or problems with, one or more of these providers may impede our growth or cause us to lose customers; a failure of back‐office information technology systems  could adversely affect our results of operations and financial condition; if we fail to extend or renegotiate our collective bargaining agreements with our labor union when they expire or if our  unionized employees were to engage in a strike or other work stoppage, our business and operating results could be materially harmed; the loss of any of the senior management team or attrition  among key sales associates could adversely affect our business, financial condition, results of operations and cash flows; our debt could limit our ability to fund operations, raise additional capital,  and fulfill our obligations, which, in turn, would have a material adverse effect on our businesses and prospects generally; our indebtedness imposes significant restrictions on us; we depend on our  loans and credit facilities to provide for our short‐term financing requirements in excess of amounts generated by operations, and the availability of those funds may be reduced or limited; the  servicing of our indebtedness is dependent on our ability to generate cash, which could be impacted by many factors beyond our control; we depend on the receipt of dividends or other  intercompany transfers from our subsidiaries and investments; the trading price of our common shares may be volatile, and the value of an investment in our common shares may decline; the  uncertain economic environment, including uncertainty in the U.S. and world securities markets, could impact our business and financial condition; our future cash flows could be adversely affected  if it is unable to fully realize our deferred tax assets; adverse changes in the value of assets or obligations associated with our employee benefit plans could negatively impact shareowners’ deficit and  liquidity; third parties may claim that we are infringing upon their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling products; third  parties may infringe upon our intellectual property, and we may expend significant resources enforcing our rights or suffer competitive injury; we could be subject to a significant amount of litigation,  which could require us to pay significant damages or settlements; we could incur significant costs resulting from complying with, or potential violations of, environmental, health and human safety  laws; the timing and likelihood of completing the merger with Hawaiian Telcom, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals for the  proposed transaction that could reduce anticipated benefits or cause the parties to abandon the transaction; the possibility that competing offers or acquisition proposals for Hawaiian Telcom will be  made; the occurrence of any event, change or other circumstance that could give rise to the termination of the proposed transaction; the possibility that the expected synergies and value creation  from the proposed transaction involving Hawaiian Telcom will not be realized or will not be realized within the expected time period; the risk that the businesses of the Company and Hawaiian  Telcom and other acquired companies will not be integrated successfully; disruption from the proposed transaction involving Hawaiian Telcom making it more difficult to maintain business and  operational relationships; the risk that unexpected costs will be incurred; and the possibility that the proposed transaction involving Hawaiian Telcom does not close, including due to the failure to  satisfy the closing conditions and the other risks and uncertainties detailed in our filings with the SEC, including our Form 10‐K report, Form 10‐Q reports and Form 8‐K reports, as well as Hawaiian  Telcom’s filings with the SEC, including its Form 10‐K reports, Form 10‐Q reports and Form 8‐K reports. These forward‐looking statements are based on information, plans and estimates as of the date hereof and there may be other factors that may cause our actual results to differ materially from  these forward‐looking statements. We assume no obligation to update the information contained in this release except as required by applicable law. 2


 
Non‐GAAP Financial Measures This presentation contains information about adjusted earnings before interest, taxes, depreciation and  amortization (Adjusted EBITDA), Adjusted EBITDA margin, net debt, net income (loss) applicable to common  shareholders excluding special items and free cash flow.  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 these non‐ GAAP financial measures 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 within the Investor  Relations section. 3


 
Call Participants Leigh Fox President and CEO, Cincinnati Bell Andy Kaiser CFO, Cincinnati Bell Tom Simpson COO, Cincinnati Bell 4 Page 4


 
First Quarter 2018 Highlights Key Financial Metrics Total Revenue Adjusted EBITDA ($ in millions) ($ in millions) $79 $296 $73 $12 $7 $250 $128 $81 $68  $70  $175 $174 ‐$6 ‐$6 ‐$2 ‐$3 1Q17 1Q18 1Q17 1Q18 Entertainment & Communications IT Services & Hardware Intersegment Entertainment & Communications IT Services & Hardware Corporate Entertainment & Communications IT Services & Hardware Fioptics Communications Cloud Services Revenue of 580,800  Revenue of Revenue of $83M addresses $41M $23M +13% y/y +7% y/y +11% y/y +8% y/y 5 Page 5


 
Progress Towards Strategic Transformation in 1Q18 Entertainment & Communications IT Services & Hardware • Investments in fiber continue to differentiate  • Launched nationwide SD‐WAN and Network  Cincinnati Bell from traditional carriers as a Service (NaaS) during 2017 60% 3.0% • Expanded  geographic footprint to accelerate  Focus on  43% 40% 33% momentum in IT services Investing  2.0% Where We Are  20% • Attractive enterprise customer base adding  Winning 0% 1.0% diversification and cross‐selling opportunities FTTP Non‐FTTP Internet Penetration Internet Churn Increased • Pending merger with Hawaiian Telcom expected to  • Integration of OnX progressing well – adding 20  Scale close in the early second half of 2018 offices with access to +2,000 customers • Received approval from the Hawaii Public  • OnX recognized as “Major Player” in IDC  Utilities Commission MarketScape Report 1 • Regulatory approval underway from FCC Category Products Practice Products Design, Application Transformation,  Fioptics High‐speed Internet, Video, Voice Cloud Services Implementation, Monitoring Increased  UCaaS, SD‐Wan, NaaS, Commercial LD &  Financial  Metro‐Ethernet, Dedicated Internet Access,  Communications Enterprise Fiber VoIP Transparency Wavelength Professional Services Program,  Consulting Services Access Lines, Consumer Long Distance,  Application Consulting Services Legacy Switched Access, Digital Trunking, DSL Infrastructure  Hardware, Software, Maintenance  Solutions 6 Page1. IDC  MarketScape:6  Canadian Infrastructure as a Service 208 Vendor Assessment, Feb 2018. 


 
Entertainment & Communications Segment Results Segment Revenue Elements ($ in millions) 1Q18 Y/Y Legacy 40% Fioptics Revenue $174 ‐1% 48% Adj. EBITDA $70 2% Strategic Revenue  Adj. EBITDA marginwith breakdown40%   100 bps Enterprise Fiber for 2 segments 12% Highlights • Strong and consistent performance in the fiber network  ($ in millions) 1Q18 Y/Y business Fioptics $83 13% • Fioptics internet subscribers  of 232,800, up 12% y/y • Fioptics video subscribers of 146,300, up 4% y/y Enterprise Fiber 21 6% • Internet subscriber net adds totaled 2,200 in 1Q18 Legacy 70 ‐14% • Pending merger with Hawaiian Telcom to add operational  scale and expand the Company’s fiber‐centric footprint and  Total $174 ‐1% commercial opportunity to Hawaii 7 Page 7


 
Continued Strong Demand for Fiber Total Fioptics Subscribers Fioptics Addresses Fioptics Penetration (y/y) (in thousands)  (in thousands)  Video 25% 581 545 Internet 40% Voice 18% = 233 207 441 404 141 146 Fioptics Monthly ARPU 100 107 141 140 Video $89 +4% y/y Internet $50 +3% y/y 1Q17 1Q18 1Q17 1Q18 FTTP (1) FTTN (2) Internet Video Voice Voice $29 +6% y/y • Fioptics is available to 580,800 addresses, reaching more than 70% of  CBB continues to win with  Greater Cincinnati – passed 9,200 new FTTP addresses in 1Q18 fiber in a very competitive  environment 1. FTTP: fiber‐to‐the‐premise      2.     FTTN: fiber‐to‐the‐node 8 Page 8


 
IT Services & Hardware Segment Results Segment Revenue Elements Infrastructure  ($ in millions) 1Q18 Y/Y Solutions Cloud 21% 18% Revenue $128 58% Adj. EBITDA $12 63% Adj. EBITDA margin 9% 21 bps Communications Consulting  31% 30% Highlights ($ in millions) 1Q18 Y/Y • Hybrid IT solutions provider well positioned to capitalize on  significant market opportunities presented by UCaaS, cloud,  Consulting $38 n/m security, and infrastructure needs Cloud 23 8% • Year‐over‐year revenue growth across each product practice Communications 41 11% • Continued demand for Communications services– recent  wins: Infrastructure  26 n/m • UCaaS contract to host 32,000 profiles across 96 locations Solutions • SD‐WAN project to provide service to 18 sites Total $128 58% 9 Page 9


 
Strong Momentum in Communications Communications Revenue Communications Metrics (q/q) Reporting Change ($ in millions) • Strength of growing $41 NaaS  $37 564 UCaaS business Locations  further highlighted by transferring SD‐WAN  commercial CLEC 117 operations out of locations  E&C into IT services Hosted UCaaS  178,457 Profiles 1Q17 1Q18 CBTS Trusted provider of Voice services for more than 100 years 10 Page 10


 
Capital Structure and Free Cash Flow Performance ($ in millions) Free Cash Flow Capital Structure Q1 Y/Y 2018 Change • Amended Credit Agreement facility to reduce  Adjusted EBITDA (Non‐GAAP) $79 $6 the LIBOR interest rate spread by 50 basis points  Interest Payments        (27)          (8) from the previous 3.75% to 3.25% per annum – Pension and OPEB Payments          (3)         ‐ Stock‐based Compensation  1(2)          saving $3 million annually Restructuring & Severance related payments          (7)            6 Transaction and Integration Costs          (2)          (2) Working Capital and Other 18 5 Cash Provided by Operating Activities (GAAP)  $59 $5 Capital expenditures        (33)          22 Net Debt Restructuring & severance related payments            7          (6) Preferred stock dividends          (3)         ‐ 4.1x  4.1x Net Leverage(1) Net Leverage(1) Transaction and Integration Costs            2            2 Other            1         ‐ Free Cash Flow (Non‐GAAP)  $33 $23 $1,351 $1,333 • Strong FCF performance primarily due to timing  interest payments and capital expenditures 4Q17 1Q18 1. Calculated as net debt divided by 2018 Adjusted EBITDA Guidance (mid‐point)  11 Page 11


 
Capital Expenditures ($ in millions) Capital Expenditures • Invested $17 million in Fioptics in  FY 2018  1Q18 Y/Y Q1 2018  Guidance Construction $6 ‐$9 $35 ‐ $45 • Passed an additional 8,600   Installation 7 ‐845 –50 addresses during the quarter Other 4 ‐215  Total Fioptics $17 ‐$19 $95 ‐ $110 • Remain on track to build  Enterprise Fiber 5120 35,000 new addresses during  Maintenance 6 ‐140 2018 Total Entertainment & Communications $28 ‐$19 $155‐ $170 • Enterprise Fiber and IT Services  and Hardware capital represent  success‐based projects Total IT Services & Hardware $5 ‐$3 $35 ‐ $40 Total $33 ‐$22 $190 ‐ $210 12 Page 12


 
2018 Outlook • Revenue guidance reflects adoption of new  Reaffirms 2018 Guidance revenue recognition standard • Infrastructure Solutions sales recognized  Revenue $1,200M – $1,275M net of product cost Adjusted EBITDA $320M – $330M • Guidance does not include contribution from  the pending merger with Hawaiian Telcom Impact of New Revenue Standard Selected 2018 Free Cash Flow Items ($ in millions) 2018 (Guidance) Capital Expenditures $190M – $210M As currently presented $1,700 – $1,775  Interest payments $115M – $125M Impact of new revenue recognition ($500) Pension and OPEB payments $15M – $20M As Adjusted $1,200 – $1,275 13 Page 13


 
2018 and Beyond Enhanced Strategic Focus and Flexibility Entertainment & Communications IT Services & Hardware Two Distinct Businesses with  Separate Reporting and  Organizational Structures Fiber continues to differentiate Cincinnati  Transform to become an international  Bell from traditional carriers hybrid cloud solutions provider Focus on investing  •Strong demand for our fiber suite of products • Strengthening North American platform 1 where we are  •Fioptics revenue increased 13% year‐over‐year  winning •Growth in Fioptics internet subscribers more  •Growing UCAAS sales funnel –with wins nationwide than offset DSL declines •IT services business, combined with our network  •The more fiber, the greater the market  Why we win expertise, while being faster and more flexible than  2 penetration the competition • Continued investments in high speed, high  • Enhanced scale and expanded portfolio of  How we win bandwidth fiber network creates future‐ complementary IT offerings to win larger, multi‐ 3 proof asset that has a high barrier to entry faceted deals Significant market  •Growth driven by IoT and 5G  •Growth driven by UCaaS, cloud, and security 4 opportunity infrastructure spend 5 Multiple upside •Network peers trading at ~8‐11x  •IT peers trading at ~8‐10x 14 Page 14


 
Appendix Page 15


 
Consolidated Results ($ in millions, except per share amounts) Three Months Ended March 31, 2018 2017 Revenue $                                                          295.7 $                                                          249.6 Costs and expenses Cost of services and products                                                             149.4                                                             124.1 Selling, general and administrative                                                                68.4                                                                55.3 Depreciation and amortization                                                                51.2                                                                45.8 Restructuring and severance related charges                                                                  0.3                                                                25.6 Transaction and integration costs                                                                  2.2                                                                  0.6 Operating income (loss)                                                                24.2                                                                (1.8) Interest expense                                                                 30.8                                                                18.0 Other components of pension and postretirement benefit plans expense                                                                  3.3                                                                  3.2 Gain on sale of Investment in CyrusOne —                                                            (117.7) Other income, net                                                                (0.4)                                                                (0.4) (Loss) income before income taxes                                                                 (9.5)                                                                95.1 Income tax (benefit) expense                                                                 (1.2)                                                                34.5 Net (loss) income                                                                 (8.3)                                                                60.6 Preferred stock dividends                                                                  2.6                                                                  2.6 Net (loss) income applicable to common shareowners $                                                           (10.9) $                                                            58.0 Basic net (loss) earnings per common share $                                                           (0.26) $                                                            1.38 Diluted net (loss) earnings per common share $                                                           (0.26) $                                                            1.37 Weighted average common shares outstanding (in millions) –         Basic                                                                42.3                                                                42.1 –         Diluted                                                                42.3                                                                42.3 16 Page 16