Telecom services provider
Cincinnati Bell Inc.
) reported fourth-quarter 2012 adjusted loss of one cent per
share, missing the Zacks Consensus Estimate of 4 cents earning
per share. The results also deteriorated from the year-ago
earnings of 3 cents.
In 2012, adjusted earnings per share came at 11 cents, down
from 24 cents in 2011.
Revenue rose 3.0% year over year to $374.7 million, surpassing
the Zacks Consensus Estimate of $368 million. Revenues for the
year inched up 1% year over year to $1,473.9 million.
Adjusted EBITDA decreased 1.5% year over year to $129.9
million in the reported quarter. EBITDA margin was 35%, down 100
basis points year over year.
In 2012, adjusted EBITDA was $534.6 million, down 1.9% year
over year. EBITDA margin stood at 36%, down 100 basis
points year over year.
revenue inched up 1.0% year over year to $182.1 million driven by
a respective 36%, 13% and 4.0% growth in entertainment, other and
wireline data revenues. The growth was partially offset by 7% and
1% declines respectively in voice and long distance and VoIP
Total local access lines declined 7.8% year over year to
573,900 at the end of the reported quarter and comprised 511,000
in-territory lines and 62,900 out-of-territory lines.
The company lost about 700 high-speed Internet customers
(including Fioptics and DSL) during the reported quarter,
bringing its total subscriber base to 259,400 (including 202,600
DSL broadband subscribers).
Cincinnati Bell continues to expand the availability of its
Fioptics fiber-to-the-home product suite, which provides
entertainment, high-speed Internet and voice services. Fioptics
entertainment subscribers reached 55,100 customers at the end of
the fourth quarter from 39,600 in the year-ago quarter.
revenues declined 17.0% year over year to $56.58 million due to
lower equipment (down 50%) and service (down 13%) revenues.
The company exited the fourth quarter with 397,800 wireless
customers, including 251,300 and 146,500 post-paid and prepaid
customers, respectively. This compares unfavorably with 459,000
wireless customers in the year-ago quarter and 415,600 in the
Revenues from Data Center co-location climbed 18% year over
year to $58.0 million. Data center utilization was 78% on 932,000
square feet of data center space in the reported quarter as
opposed to 88% on 763,000 square feet in the year-ago
IT Services and Hardware revenues grew 15% year over year to
$87.0 million. Revenues from Managed and Professional services
increased 6% while Telecom and IT equipment distribution revenues
Cincinnati Bell ended the fourth quarter with cash and cash
equivalents of $23.6 million, drastically down from $73.7 million
in the year-ago quarter. Net debt increased to $2.67 billion from
$2.46 billion at the end of 2011.
The company incurred free cash flow of ($154.1) million in
2012 compared with $10.5 million at the end of the previous
For fiscal 2013, Cincinnati Bell expects revenue and adjusted
EBITDA of approximately $1.2 billion and $390 million,
The company expects to increase its capital investment on
fiber deployment to consumers and businesses in Cincinnati that
will boost the Wireline business in 2014.
The company is expected to benefit from its expanding data
center business and Fioptics products that are considered key
catalysts for the company's growth in the long term. However,
persistent erosion in local access lines and substantial
investments undertaken to keep pace with updated technologies of
Tier 1 companies - such as
Verizon Communications Inc.
) - will limit the upside potential of the stock in the short
Cincinnati Bell has a Zacks Rank #3 (Hold) rating.
Deutsche Telekom AG
), which has a Zacks Rank #2 (Buy), is another stock we believe
is worth considering in this sector.
CINCINNATI BELL (CBB): Free Stock Analysis
DEUTSCHE TELEKM (DTEGY): Free Stock Analysis
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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