Cincinnati Bell 2001 Annual Report Download - page 31

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The Wireless segment continued significant EBITDA
improvements as CBW leveraged its network investment and
benefited from an embedded customer base, low customer
churn and ongoing promotional efforts. In 2001, EBITDA of
nearly $66 million represented a $48 million improvement over
the prior year. Additionally, EBITDA margin increased 16 margin
points to nearly 27% in the current year.
2000 COMPARED TO 1999
REVEN U E Wireless segment revenue nearly doubled in 2000,
growing 97% to $180 million. Revenue growth of $89 million
was the result of higher service revenue as equipment sales
were virtually unchanged in comparison to 1999. Service rev-
enue continued to grow on the basis of both postpaid and
prepaid subscribership, increasing from $79 million in 1999 to
$167 million in 2000 as a result of relatively high ARPU and low
customer churn.
Approximately 177,000 net subscribers were added during
2000, with growth coming almost equally from the postpaid and
prepaid categories. At the end of 2000, total subscribership
stood at approximately 340,000, a 110% increase versus the end
of 1999. Subscribership of 340,000 represented approximately
10% of the licensed population of potential subscribers within the
Greater Cincinnati and Dayton, Ohio metropolitan areas.
ARPU from postpaid subscribers of $66 in 2000 remained
relatively constant in comparison to 1999 due to pricing pres-
sure from increasing competition. Average monthly customer
churn remained low and was among the best in the industry at
1.42% for postpaid subscribers. Additionally, subscribership to
CBW’s i-wirelessSM prepaid product grew from approximately
11,000 subscribers at the end of 1999 to more than 97,000 at
the end of 2000. This is significant for the reasons noted in the
previous section.
COSTS AND EX P E N S E S Cost of services and prod-
ucts were 45% of revenue during 2000, significantly less than the
64% incurred during 1999. In total, costs of services and products
increased 37% in 2000 to $80 million due primarily to increased
subscribership and associated interconnection charges, incollect
expense, customer care and operating taxes. Gross profit and
gross profit margin also continued their rapid improvement,
increasing to almost $100 million and 55%, respectively. Gross
profit margin of 55% in 2000 represents nearly 20 points in gross
margin improvement versus 36% in 1999.
SG&A expenses increased by nearly $23 million in 2000, or
39%, in support of significant growth in subscribership. In 2000,
the CPGA for postpaid customers was $342, or 9% less than
the $376 incurred in 1999. SG&A expenses also dropped signif-
icantly as a percentage of total revenue, decreasing from 64% of
revenue in 1999 to 45% in 2000.
In 2000, EBITDA of nearly $19 million represented a $44 mil-
lion improvement over 1999. Also increasing was EBITDA margin,
expanding to 10% in 2000, an improvement of more than 38 mar-
gin points versus the –28% EBITDA margin reported in 1999.
OTHE R
The Other segment comprises the operations of the Company’s
CBAD (formerly Cincinnati Bell Long Distance), CBD, ZoomTown
and Public subsidiaries. The results of operations of Cincinnati Bell
Supply are no longer reflected in this segment pursuant to the sale
of this business in the second quarter of 2000. Effective on
January 1, 2002, as further described in Note 3 of
the Notes to Consolidated Financial Statements, ZoomTown’s
managed web hosting activities were merged into Broadwing
Communications and will be reported in the Broadband segment
subsequent to December 31, 2001. ZoomTown’s DSL and
internet operations will be assumed by CBT subsequent to
December 31, 2001. In addition, in February 2002, the Company
announced an agreement to divest 97.5% of CBD. The
Company closed the sale of CBD on March 8, 2002.
$ Change % Change $ Change % Change
2001 2001 2000 2000
($ in millions) 2001 2000 vs. 2000 vs. 2000 1999 vs. 1999 vs. 1999
REVEN U E $166.3 $142.2 $24.1 17% $109.3 $ 32.9 30%
COSTS AND EX P E N S E S:
Cost of services
and products 95.6 84.3 11.3 13% 58.3 26.0 45%
Selling, general
and administrative 44.1 54.3 (10.2) (19%) 26.6 27.7 104%
Total costs
and expenses 139.7 138.6 1.1 1% 84.9 53.7 63%
EBITDA $ 26.6 $ 3.6 $23.0 n/m $ 24.4 $(20.8) (85)%
EBITDA margin 16.0% 2.5% +14 pts 22.3% (20) pts