Cincinnati Bell Posts Q4 Loss as Expected, Revenues Beat - Analyst Blog

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Telecom service provider, Cincinnati Bell Inc. ( CBB ), reported mixed financial results for the fourth quarter of 2014 with the top line surpassing the Zacks Consensus Estimate and the bottom line meeting the same.

On a GAAP basis, quarterly net loss stood at $20.9 million or 10 cents per share compared with a net loss of $30.7 million or 15 cents per share in the year-ago quarter. However, adjusted (excluding special items) loss per share of 7 cents was in line with the Zacks Consensus Estimate.

Cincinnati Bell Inc. - Earnings Surprise | FindTheBest

Quarterly total revenue was $308.3 million, flat year over year but above the Zacks Consensus Estimate of $287 million. Operating income stood at $7.3 million, down 82% year over year owing to higher service costs and depreciation and amortization charges. Meanwhile, adjusted EBITDA (earnings before interest, depreciation and amortization) decreased 13.3% year over year to $78 million in the reported quarter. EBITDA margin was 25% in comparison with 29% in the year-ago quarter.

Cash Flow

In the fourth quarter of 2014, Cincinnati Bell generated $54.4 million of cash from operations compared with $19 million in the prior-year quarter. Quarterly free cash flow was a negative $0.4 million compared with a negative $30.9 million in the year-ago quarter.


Cincinnati Bell ended the reported quarter with cash and cash equivalents of $57.9 million, substantially up from $4.6 million at the end of 2013. Net debt decreased to $1,726.3 million from $2,260.6 million at end-2013.

Segmental Results

Wireline revenues grew 3% year over year to $188.4 million owing to a 34% increase in Entertainment revenues and 3% hike in Data revenues. The improvement was partially offset by an 11% decline in voice revenues. Meanwhile, long distance and VoIP revenues remained same year over year. Meanwhile, investments in the strategic fibre business produced strong wireline revenues for the company.

Total local access lines deteriorated 2.5% from the previous quarter to 480,600, of which residential customers accounted for 238,300 lines while business customers claimed 242,300.

The company lost 6,000 high-speed Internet customers (Fioptics) during the reported quarter, taking its total subscriber tally to 269,900 (including 156,200 DSL broadband users).

Cincinnati Bell continues to expand the availability of its Fioptics fibre-to-the-home product suite, which provides entertainment, high-speed Internet and voice services. Fioptics video subscribers totaled 91,400 at the end of the fourth quarter, substantially up from 3,600 in the year-ago quarter.

IT Services and Hardware revenues moved up 27% year over year to $109.5 million. The upside was driven by 32% higher revenues from Telecom and IT equipment distribution and 19% revenue growth in Managed and professional services.

Wireless revenues declined 65% year over year to $16.8 million owing to lower service revenues (down 64%) and equipment revenues (down 70%).

The company exited the fourth quarter with 82,400 wireless subscribers, including 43,500 and 38,900 post-paid and prepaid customers, respectively. This compares unfavorably with 339,700 wireless customers recorded in the year-ago quarter and 176,800 in the previous quarter.

CyrusOne Results

At present, Cincinnati Bell effectively controls 44% of CyrusOne as an equity method investment, valued at $785 million, as of Dec 31, 2014. CyrusOne reported strong fourth-quarter 2014 revenues of $87 million and adjusted EBITDA of $45 million.


Cincinnati Bell provided its guidance for full-year 2015. The company expects revenues and adjusted EBITDA of approximately $1.1 billion and $297 million (plus or minus 2%), respectively, excluding the wireless segment.

Zacks Rank

Cincinnati Bell currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same space are Vonage Holdings Corporation ( VG ), China Unicom (Hong Kong) Limited ( CHU ) and Chunghwa Telecom Co. Ltd. ( CHT ). All three stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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