Cincinnati Bell 2014 Annual Report Download - page 4

Table of Contents
Form 10-K Part I
Cincinnati Bell Inc.


Overview and Strategy
Cincinnati Bell Inc. and its consolidated subsidiaries ("Cincinnati Bell", "we", "our", "us" or the "Company") provides integrated communications solutions -
including high-speed internet, data, video, and local and long distance voice - that keep residential and business customers in Greater Cincinnati connected
with each other and with the world. In addition, business customers across the United States rely on CBTS, a wholly-owned subsidiary, for the sale and
service of efficient, end-to-end communications and IT systems and solutions. Cincinnati Bell also owns approximately 44% of CyrusOne Inc. (NASDAQ:
CONE) ("CyrusOne"), which specializes in highly reliable enterprise-class, carrier-neutral data center properties.
Our goal is to transform Cincinnati Bell from a legacy copper-based telecommunications company into a fiber-based entertainment, communications and IT
solutions company with growing revenue, growing profits and sustainable cash flows. In an effort to meet our goal, we identified the following key
initiatives:
• continue the expansion of our fiber network
• evaluate opportunities to thoughtfully monetize our CyrusOne investment in order to reduce leverage
• manage the wireless business for cash flows and profitability as we wind down operations
Continue the expansion of our fiber network
We invested $130.0 million of capital in our strategic products during 2014. Revenue from these high demand products totaled $435.6 million, up 21% over
the prior year and more than offset the decline in our legacy products. The primary focus of our strategic investments is the expansion of our Fioptics suite of
products which is designed to compete directly with the cable Multiple System Operators (MSO) serving the Company’s ILEC market area. We invested
$93.1 million in 2014 for Fioptics as demand for the products remains strong. Year-over-year growth is outlined in the table:



Fioptics Revenue (in
millions): $142.4
$100.8
$68.2
Fioptics subscribers (in
thousands):
High-speed internet 113.7
79.9
56.8
Entertainment 91.4
74.2
55.1
Voice 61.0
53.3
40.8
During the year we passed an additional 59,000 addresses with Fioptics and as of December 31, 2014 the product is available to approximately 335,000
customer locations or 41% of Greater Cincinnati. In the third quarter of 2014, we announced a plan to further accelerate the build-out of Fioptics to capitalize
on the heightened demand for the product as well as the unique opportunity created by the pending acquisition of the cable provider in our market.
The Company also invested $25.0 million in fiber and IP-based core network technology to meet increased enterprise demand primarily within its ILEC
geography and in contiguous markets in the Midwest region for high-bandwidth data transport products, such as metro-ethernet and VoIP. We continue to
evolve and optimize network assets to support the migration of legacy products to new technology and as of December 31, 2014, the Company has:
• connected approximately 5,800 commercial buildings with fiber-based services (also referred to as a lit building), including more than 550 multi-
tenant units ("MTU's") lit with fiber;
• expanded the fiber network to span more than 6,600 route miles; and
• provided cell site back-haul services to more than 70% of the 1,100 cell sites in-market, of which approximately 500 are lit with fiber.
4