RNS No 3395t
BELL ATLANTIC CORPORATION
20 October 1999
Contacts:
Dave Frail
212-395-7726
David.Frail@BellAtlantic.com
Jim Crosson
212-395-2285
James.E.Crosson@BellAtlantic.com
Bell Atlantic Grows Adjusted EPS 10.1%
In Third Quarter
Passes Milestones For Long Distance Entry
And Creation of National Wireless and Data Capabilities
NEW YORK - Bell Atlantic (NYSE: BEL) announced today that third quarter 1999
adjusted earnings per share (EPS) of 76 cents rose 10.1 percent over 69 cents in
the third quarter of 1998, with adjusted net income for the quarter increasing
10 percent to $1.2 billion. During the quarter the company also successfully
executed several key strategic actions.
"This was a watershed quarter for Bell Atlantic," said Bell Atlantic Chairman
and CEO Ivan Seidenberg.
"Not only did we meet our financial and operational targets for the quarter, but
we also made major strides in transforming our company into one of the world's
leading communications enterprises.
"We filed with federal regulators for permission to offer long distance service
in New York, and just yesterday received the endorsement of the chairman of the
New York Public Service Commission. We also reached agreement with Vodafone
AirTouch to combine our U.S. wireless properties, accelerated our broadband
deployment plans, and, with our investment in Metromedia Fiber Network,
strengthened our ability to meet our existing large business customers' demand
for broadband services throughout the U.S. and in several international
locations as well.
"All of these moves will enhance the strengths of the national-scale,
full-service powerhouse we are creating through our merger with GTE. We
continued to make progress on the merger during the quarter, and we continue to
aim to complete it in the first quarter of next year. The combined Bell
Atlantic-GTE will have the assets and capabilities to deliver more bandwidth -
wireline or wireless - and a broader range of services to more customers than
anyone in the communications industry."
Adjusted EPS for the first nine months of 1999 increased 10.3 percent, to $2.24
from $2.03 in the first nine months of 1998. Adjusted nine-month net income
available to common shareholders rose 10.5 percent to $3.5 billion from $3.2
billion in the first nine months of 1998.
Consolidated third-quarter revenues grew to $8.3 billion, 5.0 percent higher
than in the year-ago quarter, which continued the trend of improving revenue
growth since the beginning of the year. Proportionate revenues, which include
the company's share of revenues from its unconsolidated wireless investments,
rose 6.3 percent for the quarter. Nine-month consolidated and proportionate
revenues rose 4.6 and 6.2 percent respectively.
The company also continued to lead the industry in expense control, as its
adjusted consolidated expenses rose 4.3 percent for the quarter. These results
were achieved despite incurring some $40 million in expenses for service
restoration efforts following Hurricane Floyd, one of the worst natural
disasters ever to strike Bell Atlantic markets.
Quarterly EPS figures have been adjusted by two cents per share in third
quarter 1999 for costs related to Bell Atlantic-NYNEX merger integration, and by
70 cents per share in third quarter 1998 for charges primarily related to
completion of a retirement incentive program, write-downs of certain
international investments, and merger integration. Reported EPS for third
quarter 1999 was 74 cents per share compared to a loss of one cent per share in
third quarter 1998. Reported net income available to common shareowners for the
quarter was $1.2 billion compared to a reported net loss of $8 million in third
quarter 1998.
Nine-month EPS figures have been adjusted for special item totaling four cents
per share in 1999 and 82 cents per share in 1998, with reported nine-month 1999
EPS of $2.20 increasing 81.8 percent compared to $1.21 in the first nine months
of 1998. Reported net income available to common shareowners, for the nine-month
period was $3.5 billion in 1999 compared to $1.9 billion in 1998.
Highlights of the Domestic Telecom and Global Wireless segments, with related
adjusted and proportionate information, are discussed below.
Domestic Telecom Highlights
With strong growth in data services continuing to complement sustained volumes
for basic services, Domestic Telecom revenues increased 2.9 percent over third
quarter 1998, to $6.6 billion.
"Bell Atlantic took the necessary steps in the quarter to meet the rising demand
for bandwidth from customers in all of our markets," Seidenberg said. "Besides
doubling our targets for the most aggressive deployment of DSL technology in the
country, we expanded our product set to include high-speed data services such as
managed private networks, and we extended our reach through our agreement with
Metromedia Fiber Network."
Approximately 80 percent of Telecom revenue growth came from sales of data
services, with digital data revenues for the quarter, including those from
high-bandwidth, packet-switched and special access services and Bell Atlantics
network integration business, increasing 24.8 percent over third quarter 1998 to
$749 million.
In the enterprise and general business markets:
* The number of data circuits, or "DSO equivalents" in service (digital,
high-bandwidth and packet-switched services as measured in 64-kilobit
voice-grade equivalents) increased 42.2 percent over third quarter 1998.
* Bell Atlantic reached a strategic agreement with Metromedia Fiber Network
(MFN) to invest approximately $1.7 billion in the company and acquire $550
million of capacity on its fiber optic infrastructure. The agreement will
accelerate MFN's infrastructure build-out and speed the deployment of Bell
Atlantic's data services. MFN is a provider of dedicated fiber optic networks
in major U.S. and certain international metropolitan markets, and the
transaction gives Bell Atlantic access to more than 7,000 planned route miles
in metropolitan markets in the U.S. and Europe.
* Bell Atlantic's Data Solutions Group (DSG) increased revenues 25.3 percent
over the prior-year period and continued to expand its portfolio of services.
To enhance its ability to design, install and maintain complex data networks,
DSG agreed to acquire a leading network integrator, Metro/Metropolitan
Technologies. DSG also expanded the reach of its local Frame Relay services
through an agreement with Intermedia Communications, and won a unique
contract to provide a complete set of Internet solutions to
Information-Highway.com, an Internet service provider (ISP) based in British
Columbia, Canada.
* Bell Atlantic ended the quarter with 577,000 basic rate Integrated Services
Digital Network (ISDN) lines in service, up 14.9 percent from third quarter
1998, and the number of primary rate ISDN channels in service increased 50.6
percent to nearly 1.1 million.
In the consumer market:
* In July, Bell Atlantic accelerated deployment of its Infospeed(sm) DSL
service in major metropolitan areas in the Eastern United States, with a target
of making 17 million customer lines DSL-capable by the end of this year. The
company has equipped nearly half of the central offices necessary to meet that
goal. The company and 3Com also reached a landmark retail agreement to offer
consumers one-stop shopping for DSL service - "Broadband In a Box" - in CompUSA,
Staples and other retail outlets.
* By the end of the quarter, Bell Atlantic had increased the number of its
agreements with Internet Service Providers (ISPs) to package Bell Atlantic's
Infospeed DSL service with their Internet access services to 65.
* The number of additional lines, many of which are used for Internet access
and home fax machines, grew approximately 15 percent over third quarter 1998.
Growth in volumes for basic services continued at a steady pace, and reflected
continued acceleration in demand for data connections. The number of access
lines in service increased 3.4 percent to 42.7 million, and the number of
voice-grade equivalents (access lines plus data circuits) rose 13.6 percent in
the quarter to 62.8 million. Business VGEs grew 23 percent to 36.1 million.
Access minutes of use rose 4.2 percent.
Bell Atlantic also continued to see solid growth in demand from consumers for
value-added services. New combinations and price plans helped increase sales of
packages of value-added services by nearly 76 percent over third quarter of
1998, with the number of packages in service increasing to more than 1.7
million. Caller ID revenues for the quarter increased 31 percent compared to
third quarter 1998, as the number of subscribers increased to 7.4 million, with
penetration approaching 28 percent. Home Voice Mail revenues rose 9.6 percent.
In the network services market, special access revenues for the period rose 24.8
percent to $493.1 million. By the end of the third quarter, Bell Atlantic was
providing approximately 1.1 million access lines on a wholesale basis to other
local exchange service providers.
Adjusted quarterly operating expenses for Domestic Telecom of $5.0 billion
increased only 2.4 percent over third quarter 1998 despite the impact of
Hurricane Floyd, payments to competitive local exchange carriers (CLECs) and
continued investment in long distance and data capabilities. Cash expenses
increased only 1.2 percent.
Global Wireless Highlights
Global Wireless Group continued its industry-leading performance in the face of
worldwide competition.
"The businesses that make up our Global Wireless Group are among the strongest
in the U.S. and the world," Seidenberg said. "Not only did they move well past
the 10 million mark for subscribers during the quarter, their disciplined
approach to cost management enabled them to increase their contribution to Bell
Atlantic's earnings growth. In fact, at a time when wireless companies are
seeing margins erode, Bell Atlantic Mobile increased its margins
quarter-to-quarter. We will be well positioned to benefit fully from the full
national scale and scope we will gain from our combination with Vodafone
AirTouch and our merger with GTE."
The number of proportionate subscribers in the quarter rose to 10.6 million, up
33.9 percent over third quarter 1998. Proportionate net customer additions in
the quarter totaled 608,000, approximately 59,000 more than in third quarter
1998.
The Group's total proportionate revenues increased 26.3 percent to $1.5 billion.
Proportionate operating income reached $337 million, an increase of 39.8 percent
over third quarter 1998, with proportionate operating cash flow increasing 31.1
percent to $552 million.
Bell Atlantic Mobile (BAM) added 267,000 net new subscribers in the quarter,
nearly 30 percent more than in third quarter 1998. BAM ended the quarter with
6.9 million customers, up 16.2 percent from third quarter 1998.
Domestic highlights:
* Bell Atlantic and Vodafone AirTouch plc announced during the quarter a
definitive agreement to combine their U.S wireless assets into a new wireless
business with a national footprint, a single brand and a common digital
technology. Including GTE's wireless assets, the new business will serve
approximately 20 million wireless and 3.5 million paging customers throughout
the U.S. Its wireless footprint will cover more than 90 percent of the U.S.
population and 49 of the top 50 U.S. wireless markets.
* BAM total revenue reached nearly $1.1 billion in the quarter, an increase of
18.4 percent over third quarter 1998. Total revenue per subscriber increased
2.3 percent, to $53. BAM's cost controls contributed to operating cash flow
margins of 47 percent, among the best in the industry.
* Nearly one-third of BAM's customers now subscribe to digital services, and
they account for two-thirds of busy-hour usage on the company's network. Some
70 percent of digital subscribers added during the quarter were new BAM
customers.
* The J.D. Power and Associates 1999 U.S. Wireless Customer Satisfaction
Study(sm) ranked BAM highest in overall customer satisfaction in the Boston
market for the fourth year in a row and in the New York market for the second
year in a row. The study cited BAM's superior call quality and customer
service as the main reasons for its high ratings.
* During the quarter, PrimeCo Personal Communications grew its customer base to
1.3 million, 78 percent above third quarter 1998 levels, and launched service
in Ocala, Florida and Corpus Christi and Rio Grande Valley, Texas. PrimeCo
also enhanced its rate plans by lowering PrimeTravel(sm) roaming rates and
bundling long-distance services.
* Total PrimeCo revenues for the quarter grew 60 percent over third quarter
1998, to $209 million, with average monthly revenue per subscriber of $50.
PrimeCo also reported its first positive quarterly operating cash flow,
increasing it $60 million over third quarter 1998.
Bell Atlantic's international wireless portfolio ended the quarter with 3.1
million proportionate subscribers, up 89.1 percent over third quarter 1998.
Proportionate net subscriber additions at the international investments totaled
318,000 for the quarter, 9.3 percent higher than in the prior-year period.
International proportionate revenues for the quarter rose 47.0 percent to $369
million. Proportionate operating income from international wireless investments
increased 98.0 percent over third quarter 1998 to $97 million, with
proportionate operating cash flow growing 87.1 percent to $131 million.
International highlights:
* Omnitel Pronto Italia will release results tomorrow. Based on recent
performance, the company is expected to reach nine million customers early in
the fourth quarter. During the third quarter, the company launched Omnitel
2000, the world's first wireless Web portal that gives any wireless, wired,
or Web user the option of using the portal's voice recognition platform to
navigate the Internet.
* Grupo Iusacell in Mexico passed the one-million-subscriber milestone, as its
customer base grew 80 percent over the prior-year period. EBITDA climbed 50
percent over third quarter 1998, with EBITDA margins increasing from 30 to 36
percent. Iusacell implemented digital service in all of its cell sites,
rolled out a single cellular billing platform, and launched flat-rate pricing
through its One Single Rate plan.
* STET Hellas in Greece also ended the period with more than one million
subscribers, adding nearly 107,000 in the quarter. The company's networks
withstood recent earthquakes in Greece, processing calls even as volumes
peaked at 2,300 percent above normal levels.
* EuroTel Praha, Bell Atlantic's Czech operation, closed out the quarter with
858,000 customers.
Bell Atlantic is at the forefront of the new communications and information
industry. With more than 43 million telephone access lines and more than 10
million wireless customers worldwide, Bell Atlantic companies are premier
providers of advanced wireline voice and data services, market leaders in
wireless services and the world's largest publishers of directory information.
Bell Atlantic companies are also among the world's largest investors in
high-growth global communications markets, with operations and investments in 23
countries.
For further information on quarterly results, visit Bell Atlantic's Newsroom or
Investor Information Websites (www.ba.com and www.bellatlantic.com/invest), or
use Bell Atlantic's Fax on Demand service at 800-329-7310.
NOTE. This press release contains statements about expected future events and
financial results that are forward-looking and subject to risks and
uncertainties. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. The following important factors could affect future results
and could cause those results to differ materially from those expressed in the
forward-looking statements: materially adverse changes in economic conditions in
the markets served by us or by companies in which we have substantial
investments; material changes in available technology; the final outcome of
federal, state, and local regulatory initiatives and proceedings, including
arbitration proceedings, and judicial review of those initiatives and
proceedings, pertaining to, among other matters, the terms of interconnection,
access charges, universal service, and unbundled network element and resale
rates; the extent, timing, success, and overall effects of competition from
others in the local telephone and toll service markets; the timing and
profitability of our entry into the in-region long distance market; the success
and expense of our remediation efforts and those of our suppliers, customers,
joint ventures, noncontrolled investments, and interconnecting carriers in
achieving Year 2000 compliance; the timing of, and regulatory or other
conditions associated with, the completion of the merger with GTE and our
ability to combine operations and obtain revenue enhancements and cost savings
following the merger, and the timing of, and regulatory or other conditions
associated with, the completion of the wireless transaction with Vodafone
AirTouch, and the ability of the new wireless enterprise to combine operations
and obtain revenue enhancements and cost savings.
END
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