Cincinnati Bell 2012 Annual Report Download - page 115
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Form 10-K Part II Cincinnati Bell Inc.
postpaid smartphone subscribers at December 31, 2010, a 10% increase from 2010. The increase in smartphone
subscribers increased data usage, and the Company earned $14.54 of data ARPU in 2011 compared to $11.69 in
2010.
Prepaid service revenue was $53.2 million in 2011, a decrease of $1.4 million, or 3%, compared to 2010.
Prepaid subscribers were 148,000 at December 31, 2011, down 6% from a year earlier, due to aggressive
competitor promotions on prepaid service.
Equipment and other revenue in 2011 was $25.2 million, up $5.2 million compared to 2010 primarily due to
higher revenue per smartphone handset sales to consumers and increased sales to a wholesale distributor.
Costs and Expenses
Cost of services and products was $134.2 million, a decrease of $3.2 million, or 2%, compared to 2010. The
decrease was primarily attributable to lower handset subsidies and contract services compared to 2010, which
was partially offset by higher cost of goods sold due to the increase in equipment revenue and higher network
operation costs resulting from increased smartphone penetration and data usage.
SG&A expenses were $55.2 million in 2011, a decrease of $5.9 million, or 10%, compared to 2010,
primarily due to a $2.8 million decrease in third-party service provider and payroll costs and a $2.6 million
decrease in advertising and promotional expenses due to cost reduction initiatives.
Depreciation and amortization was $33.5 million for 2011, essentially flat compared to 2010. In 2011,
Wireless began amortizing its trademark license which added $1.5 million of amortization expense. The increase
in amortization was offset by a decrease in depreciation on tangible assets.
In 2011, Wireless recognized a goodwill impairment loss of $50.3 million and asset impairment losses of
$1.1 million. The goodwill impairment loss arose from declines in revenues and wireless subscribers. Asset
impairments were recognized for canceled capital projects. In 2010, Wireless incurred a $1.0 million
restructuring charge primarily for employee separation costs.
Capital Expenditures
Capital expenditures were $17.6 million in 2011, up $5.9 million, or 50%, compared to 2010. During 2011,
Wireless deployed software upgrades and incurred additional fiber costs to begin its network upgrade to 4G using
HSPA+ technology.
41
Form 10-K