Cincinnati Bell 2002 Annual Report Download - page 6

Cincinnati Bell
ur Cincinnati-based businesses had a
good year during 2002. In addition to sound financial performance,
in residential and commercial service and across all key product
categories—local telephony, bundled services, ADSL, wireless,
long distance—Cincinnati Bell is an acknowledged leader in market
penetration and customer satisfaction.
All facets of this business are organized around the needs
of our customers. To measure our success, look no further than our
five J.D. Power and Associates awards for customer satisfaction
over the last two years. In 2002, Cincinnati Bell became the first
communications company to win the highest rating in local, long
distance and wireless in the same year. We also repeated the top
rating in local and long distance in consecutive years. Customers
are the ultimate validation of how a business performs, and these
awards are a testament to the unwavering dedication that
Cincinnati Bell employees bring to their jobs every day.
Cincinnati Bell Telephone (CBT), our local exchange
company, provides stability and cash flow. Even as customers’
communication habits increasingly embrace alternatives to tradi-
tional phone service, and as competition appears in new and
different forms, CBT maintained better market share than most of
our metropolitan peers. For the year, CBT’s total access lines
declined two percent while its revenue grew two percent. In
addition, CBT’s operating income grew seven percent and operat-
ing margin of 34 percent was two points better than in 2001. This
performance compares very favorably to our peer group.
Cincinnati Bell Wireless’ (CBW) subscribers surpassed
470,000, a market-leading 27 percent share of the wireless market
in CBW’s operating territory. As growth in the wireless market has
slowed, we are managing this business for profitability and cash
flow. As such, CBW is focused on maintaining its embedded base
of customers while attracting only the most profitable new customers.
CBW’s 2002 performance bears this out. While revenue growth
slowed to five percent, operating income grew 83 percent and
operating margin of 27 percent was 11 points better than 2001.
In addition, postpaid customer churn was best-in-class at less than
two percent. Once again, this performance stacks up well against
our peer group.
Cincinnati Bell Any Distance (CBAD), our long-distance
offering, expanded its market-leading share to 69 percent of the
Cincinnati residential market and 43 percent of the small and
medium business market. CBAD also reported positive operating
income in 2002.
ZoomTown, our ADSL service, is now available to 85 per-
cent of our local access lines and we closed 2002 with nearly
75,000 subscribers, representing a nine percent penetration of
addressable lines.
The performance of our bundled service offerings con-
tinues to be a core strength of our business. Complete Connections,
our services bundle, has almost 289,000 subscribers, and has pene-
trated an industry-leading 40 percent of our residential access lines.
Operational Overview
O
Cincinnati Bell grew
revenue by three percent
while reducing total
operating expenses by three
percent during 2002.
()
4