Cincinnati Tops Q2 Earnings, Rev - Analyst Blog

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Telecom services provider, Cincinnati Bell Inc. ( CBB ), reported second-quarter 2013 adjusted earnings of 4 cents per share, beating the Zacks Consensus Estimate of 2 cents. The results deteriorated from the year-ago earnings of 5 cents.

Revenues declined 15.3% year over year to $312.0 million but surpassed the Zacks Consensus Estimate of $304.0 million.

Adjusted EBITDA decreased 25.3% year over year to $104.2 million in the reported quarter. EBITDA margin was 33%versus 38% in the prior-year quarter.

Segment Results

On Jan 24, 2013, Cincinnati Bell separated the Data Center Colocation segment through an initial public offering of CyrusOne Inc. The company's second-quarter results exclude the operations of CyrusOne Inc.

Wireline revenues fell 1.1% year over year to $181.6 million due to a drop of 19%, 10% and 8% in Other, Voice and Long distance revenues, respectively. This was partially offset by 55% and 4% growth in Data and Entertainment revenues, respectively.

Total local access lines declined 8.10% year over year to 550,000 at the end of the reported quarter and comprised 492,700 in-territory lines and 57,300 out-of-territory lines.

Total High-speed Internet customers for the period were 261,700 (including 194,900 DSL broadband subscribers and 66,800 Fioptics users), up 1.6% year over year.

Cincinnati Bell continues to expand the availability of its Fioptics fiber-to-the-home products suite, which provide entertainment, high-speed Internet and voice services. Fioptics entertainment subscribers reached 66,800 customers at the end of the second quarter, up from 47,100 in the year-ago quarter.

Wireless revenues declined 16.3% year over year to $51.7 million due to lower service (down 4%) revenues. The company exited the second quarter with 370,000 wireless customers, including 223,100 postpaid (down 21.7% year over year) and 146,900 prepaid customers (up 1.2% year over year).

IT Services and Hardware revenues climbed 11.2% year over year to $86.0 million while revenues from Managed and Professional services were up 8.7% year over year. Telecom and IT equipment distribution revenues grew 12.6%.


Cincinnati Bell ended the quarter with net debt of $2.19 billion compared with $2.69 billion at the end of 2012. The company incurred capital expenditure of $45.0 million.


For full-year 2013, Cincinnati Bell expects revenues and adjusted EBITDA of approximately $1.2 billion and $390 million, respectively.

Our Take

We believe that Cincinnati Bell enjoys a comfortable market position owing to its distinguished brand name, attractively priced service bundles as well as proactive marketing and expansion strategies. Cincinnati's Wireline segment remains the prime growth driver for the company based on its strong Fioptics business. Taking up new projects and the spin-off of CyrusOne into a separate entity are expected to work in favor of the company and aid earnings growth in the future.

Other Stocks

Other telecom companies like Frontier Communications Corp. ( FTR ) and CenturyLink Inc. ( CTL ) reported second-quarter results on Aug 7, 2013, after the market closed. Windstream Corporation ( WIN ) reported second-quarter results on Aug 8, 2013, before the market opened. Frontier's adjusted earnings of 6 cents were in line with the Zacks Consensus Estimate, while CenturyLink's adjusted earnings of 69 cents were ahead of the Zacks Consensus Estimate of 67 cents. However, Windstream's adjusted earnings of 7 cents lagged the Zacks Consensus Estimate of 9 cents.

Currently, Cincinnati Bell carries a Zacks Rank #1 (Strong Buy).

CINCINNATI BELL (CBB): Free Stock Analysis Report

CENTURYLINK INC (CTL): Free Stock Analysis Report

FRONTIER COMMUN (FTR): Free Stock Analysis Report

WINDSTREAM CORP (WIN): Free Stock Analysis Report

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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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