Cincinnati Bell reports $328Mn of total revenues for Q2’09 (USA)

www.WirelessFederation.com/news: Cincinnati Bell  today announced second quarter 2009 net income of $26 million, or 11 cents per diluted share, which is a diluted earnings per share increase of 18 percent compared to the second quarter of 2008. Total revenues for the second quarter of $328 million decreased 7 percent from the second quarter of 2008. Operating income decreased $4 million, or 5 percent, to $76 million in the second quarter of 2009, and adjusted earnings before interest, taxes, depreciation and amortization1 (Adjusted EBITDA) of $118 million decreased $1 million or 1 percent compared to last year.

“Cincinnati Bell continues to perform well in this difficult economy,” said Jack Cassidy, president and chief executive officer. “The aggressive expense reductions we implemented in the first half of the year have allowed us to maintain our profitability and increase our cash flow, despite the poor economy. Also, we are pleased with the continuing success of our data center and managed services operations, which had revenue growth of 14 percent compared to last year.” Quarterly Highlights Quarterly revenue fromTechnology Solutions ( News – Alert) totaled $66 million reflecting a year-over-year increase in data center and managed services revenue of $4 million, or 14 percent, offset by a decline in revenue from telecom and IT equipment of $17 million, or 34 percent. The growth in the data center business contributed to a 17 percent increase in Adjusted EBITDA for Technology Solutions, in spite of a 15 percent reduction in total revenue. Utilization of the company’s data center capacity increased to 81 percent during the quarter.

Wireless service revenue in the second quarter of 2009 was $71 million compared to $72 million in the prior year quarter. Higher data revenue, driven by smartphone subscriber growth, was more than offset by lower voice revenue resulting from a year-over-year decline in postpaid voice minutes of use per subscriber. Cincinnati Bell’s focus on smartphone subscriber growth resulted in the net addition of 8,000 smartphone activations in the second quarter of 2009.

Bundled customers increased by 2,000 during the second quarter, driven by the company’s Priced For Life bundled program. With Priced For Life, customers can eliminate price increases by establishing a permanent monthly rate for a bundle of two or more communications services without a contract.

Cincinnati Bell continued to repurchase common stock under the program authorized by its Board of Directors in February 2008. In the second quarter of 2009, common stock repurchases totaled 5 million shares for $13 million. Since the program’s inception, the company has purchased 37 million shares for $111 million, representing 15 percent of shares outstanding at the end of 2007.

The company’s net debt2 decreased by $42 million from the first quarter of 2009 to $1.9 billion. Free cash flow3 of $61 million for the second quarter of 2009 increased $7 million from the prior year period. Cincinnati Bell also amended and extended its revolving credit facility through August 2012.

Financial and Operations Review “This quarter’s earnings per share results are really starting to highlight the benefits of our share repurchase strategy, which contributed to the 18 percent year-over-year increase in diluted earnings per share we generated this quarter,” said Gary Wojtaszek, chief financial officer. “We are also pleased to have completed an extension of our revolving credit facility in the second quarter. We have no significant debt maturities for the next several years.” Wireline Segment Quarterly revenue equaled $194 million, down $9 million or 4 percent from a year ago. Operating income was $67 million compared to $70 million in the second quarter of 2008, and Adjusted EBITDA totaled $94 million, down $3 million or 3 percent from the second quarter of 2008.

Year-over-year total access line loss in the second quarter was 6.6 percent, improving slightly from the first quarter of 2009 and consistent with the overall loss experienced over the past four quarters. Growth in residential and business access lines in the company’s expansion markets continued to partially offset the impact of a loss of access lines in its traditional service area.

Wireless Segment Quarterly revenue from the Wireless segment was $77 million, reflecting lower service and equipment revenue. Compared to the first quarter of 2009, operating income increased by $2 million to $11 million, and Adjusted EBITDA increased by $3 million to $21 million (a 28 percent Adjusted EBITDA margin1), primarily due to lower handset subsidies and lower advertising costs.

Postpaid average revenue per user (ARPU) in the second quarter was $48.43 compared to $47.36 a year ago and included data ARPU growth of 36 percent. This improvement reflects positive momentum in acquiring smartphone subscribers. Prepaid ARPU was $28.00, up $2.25 year-over-year. Postpaid wireless churn in the quarter was 1.95 percent.

Technology Solutions Segment Technology Solutions quarterly revenue was $66 million, down $12 million or 15 percent from the second quarter of 2008. However, second quarter Adjusted EBITDA was $10 million, up 17 percent from a year ago, driven by increased data center revenue. Data center and managed services revenue grew $4 million or 14 percent year-over-year while lower-margin telecommunications and IT equipment revenue declined $17 million or 34 percent. Operating income in the quarter totaled $4 million, up 2 percent from a year ago.

Data center utilization was 81 percent at the end of the second quarter of 2009, up 4 percentage points compared to the first quarter.

2009 Outlook Cincinnati Bell updates its revenue guidance for 2009 and reaffirms its Adjusted EBITDA and free cash flow guidance: Category   2009 Guidance Revenue   $1.3 – $1.4 billion Adjusted EBITDA   Approx. $480 million* Free Cash Flow   Approx. $150 million* *Plus or minus 2 percent Conference Call/Webcast Cincinnati Bell will host a conference call today at 10:00 a.m. (ET) to discuss its results for the second quarter of 2009. 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) 780-1233. Callers located outside of the U.S. and Canada may dial (816) 581-1571. A taped replay of the conference call will be available one hour after the conclusion of the call until 5:00 p.m. on August 18, 2009. 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 1749779.

1 Adjusted EBITDA and Adjusted EBITDA Margin provide useful measures of operational performance. The company defines Adjusted EBITDA as GAAP operating income plus depreciation, amortization, restructuring charges, asset impairments, and other special items. The company defines Adjusted EBITDA margin as Adjusted EBITDA divided by revenues. Adjusted EBITDA and Adjusted EBITDA margin should not be considered as alternatives to comparable GAAP measures of profitability and may not be comparable with these measures as defined by other companies.

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

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

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

About Cincinnati Bell Inc.

With headquarters in Cincinnati, Ohio, Cincinnati Bell (NYSE: CBB) provides integrated communications solutions including local, long distance, data, Internet, and wireless services that keep residential and business customers in Greater Cincinnati and Dayton connected with each other and with the world.

In addition, businesses nationwide ranging in size from start-up companies to large enterprises turn to Cincinnati Bell for efficient, scalable office communications systems as well as complex information technology solutions including data center and managed services.

Cincinnati Bell conducts its operations through three business segments: Wireline, Wireless, and Technology Solutions.

For more information, visit www.cincinnatibell.com.