Cincinnati Bell 2006 Annual Report Download - page 3

A letter from the Chairman, the President & Chief Executive Officer and the Chief Financial Officer
Cincinnati Bell is long known for its industry
leading performance, outstanding customer
service, and unparalleled delivery of products
and services to residential and business customers in
Cincinnati, Dayton, Northern Kentucky and parts of
Indiana. As one of the nation’s only fully integrated
telecommunications companies, Cincinnati Bell
continues to outperform its peers and create value for
our shareholders, employees, and customers.
Solid execution in 2006 produced revenue and earnings
growth throughout our core operations. Our wireless
subscribers grew to 528,000 and fueled wireless service
revenue and EBITDA margin expansion. DSL
penetration increased to 34% and churn reached its
lowest level in company history. Finally, our
Technology Solutions business increased its billable data
center capacity by approximately 20,000 square feet in
2006 as we continue to meet the ongoing needs of
Fortune 500 companies who demand those services.
With approximately 3,000 highly skilled and dedicated
employees, Cincinnati Bell is comprised of a workforce
who takes pride in working at the “hometown”
communications company, bringing quality products
and services to their friends and neighbors. Who better
to understand the needs of the local market than us?
These same employees are committed to the principles
of “corporate community responsibility” and giving
back to their loyal customers. In particular, Cincinnati
Bell’s extraordinary commitment to transforming
Cincinnati’s Taft High School into the Taft
Information Technology High School gained the
attention of the CBS Evening News this year. In
addition to countless hours Cincinnati Bell employees
spend tutoring students, Cincinnati Bell hardwired the
school with five state-of-the-art computer labs and
provides internships and 10 college scholarships every
year. This is only one example of the significant
charitable donations and sponsorships and countless
volunteer hours provided by Cincinnati Bell and its
employees.
Clearly, it is our dedication to our customers and their
desire for products that offer convenience,
entertainment and an outstanding price value, that
drives what we do each and every day.
Revenue and Earnings Growth is Driven by Wireless and
Technology Solutions
Two of our top priorities in 2006 were growing
subscriber revenue and restoring profitability – and we
achieved just that. Our 2006 revenue was $1.3 billion,
an increase of $61 million or 5% over 2005; and our
operating income rose 21%, driving an increase in
earnings per share of 11 cents (excluding special items)
up 55% from last year. Wireless gross activations and
superior network quality prevailed, amid an aggressive
migration of customers from our legacy TDMA
network to our GSM network. Our subscriber base
grew to 528,000 in 2006 and we drove improvement in
both postpaid and prepaid ARPU, which led to a
$21 million increase in wireless service revenue in 2006
and 12 point EBITDA margin expansion in the fourth
quarter 2006 compared to the fourth quarter 2005.
Turning down the TDMA network and switching to
the GSM network not only opens up opportunities for
increased wireless handset interoperability and new
products and services in the future, but it also
eliminated incremental handset subsidies related to the
migration of subscribers to the GSM network, reduced
depreciation expense and further utilized the efficiency
of the GSM network.
Technology Solutions has quickly moved to the
forefront of our business to meet the growing needs of
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