RNS Number:2815E
Bell Atlantic Corp
24 January 2000
Contact:
Dave Frail
212-395-7726
David-Frail@BellAtlantic.com
Jim Crosson
212-395-2285
James.E.Crosson@BellAtlantic.com
Bell Atlantic Announces Fifth Consecutive Year
Of Double-Digit Earnings Growth;
Fourth Quarter Revenues Rise 6.6% on Strong Sales
Adjusted EPS Increases 11.6% for Quarter, 10.7% for Year
NEW YORK - Bell Atlantic Corp. (NYSE:BEL) announced today that fourth quarter
adjusted earnings per diluted share (EPS) increased 11.6 percent, to 77 cents
from 69 cents in fourth quarter 1998, as the company completed its fifth
consecutive year of double-digit earnings growth. Adjusted EPS for 1999 rose
10.7 percent to $3.01, from $2.72 in 1998.
Fourth quarter adjusted net income available to common shareowners increased
12.3 percent, to $1.2 billion from $1.1 billion in 1998, with 1999 adjusted net
income available to common shareowners rising 10.9 percent, to $4.8 billion from
$4.3 billion in 1998.
"Our fourth quarter results, with the best revenue growth of the year in our
core telecom business and industry-leading wireless performance, are an
indication that the strategies we've put in place -- to focus on high-growth
markets, build high-efficiency networks that help us grow vertically and
diversify our revenue streams - are starting to pay off at the operational
level," said Bell Atlantic Chairman and CEO Ivan Seidenberg.
Highlights include:
- Quarterly revenue growth of 6.6 percent, to $8.6 billion, and annual revenues
totaling $33.2 billion, up 5.1 percent.
- Strong fourth quarter Bell Atlantic Mobile growth, with 815,000 net customer
additions, 363,000 through sales and 452,000 through the Frontier Cellular
acquisition, and 23.1 percent revenue growth.
- Best-ever quarterly International Wireless growth, with 533,000 proportionate
net customer additions.
- Data revenue growth in the quarter of 26.2 percent, to nearly $800 million,
and 25.5 percent for the year, to $2.9 billion.
- A robust wholesale business, with 1.4 million resold lines and 200,000
unbundled loops in service at the end of the year.
- Adjusted expense increases of only 3.1 percent for the quarter and 3.6
percent for the year, including aggressive funding of growth investments.
- Operating margin expansion to 26.2 percent for the year -- 110 basis points
above 1998 - through cost controls, network efficiencies and $750 million in
Bell Atlantic-NYNEX merger synergies.
"Not only did we deliver on our financial targets, we had an outstanding year
strategically," Seidenberg said.
"In December we finally won approval to offer long distance, and three weeks
after opening for business in New York, I can report that customer response is
even better than we expected. We're also making regulatory progress throughout
our region, and our goal is to file in several more states this year.
"The other side of the LD coin is the thriving business we're building for
network services. We believe that competition expands markets, and we've opened
our network because it creates opportunities for us, not just in long distance,
but as a wholesale provider as well. We're retaining a substantial amount of New
York's consumer traffic on our high-efficiency network, and we're very excited
about this growing line of business.
"We expanded our data capabilities with network upgrades, targeted
acquisitions and alliances, and especially our investment in Metromedia Fiber
Network, which will enable us to deliver broadband services end-to-end to 50
cities throughout the country.
"Our Wireless Group's results make us eager to complete our transaction with
Vodafone AirTouch and, with GTE, create a national wireless competitor with
unparalleled coverage, customers and capacity. We're moving quickly, and we're
confident we will be in a position to launch the new company this spring.
"And we continued to make progress on the most important strategic initiative
of all: our merger with GTE. The state approval process is nearly complete, our
discussions with the FCC continue, and we aim for Bell Atlantic and OTE to be
one company around the end of the first quarter.
"We're looking forward to this year," Seidenberg said, "when our long
distance, DSL and national wireless businesses get up to full speed, and we
complete the transformation of Bell Atlantic and GTE into the nation's leading
communications company, with the most complete set of assets serving the best
markets in the industry."
Proportionate revenues, which include Bell Atlantic's share of revenues from
unconsolidated wireless investments, rose 7.5 percent for the quarter and 6.6
percent for the year.
Reported results include charges in each period for special items. Charges in
fourth quarter 1998 totaled 4 cents a share for Bell Atlantic-NYNEX merger
transition costs. Charges in fourth quarter 1999 were $67 million, or 4 cents
per share, for Bell Atlantic-NYNEX merger transition costs and a non-cash,
after-tax charge of $432 million, or 27 cents per share, which is a
non-operating "mark-to-market" accounting adjustment related to the company's
$3.2 billion in notes exchangeable into shares of Cable & Wireless
Communications plc (CWC). The CWC notes may be exchanged beginning in July 2002.
This non-cash charge reflects the difference between the market price of the
underlying CWC shares at the end of the fourth quarter and the exchange price.
Generally Accepted Accounting Principles require that this difference be
recorded as an increase in the company's liability for the notes and a charge to
income. The company will make such an accounting adjustment in future quarters,
recording either a gain or loss, to reflect any difference between the CWC
market price and the exchange price at the end of the quarter (no adjustment is
required if the market price is below the exchange price).
Charges in 1999 totaled 35 cents per share, for the mark-to-market adjustment
and merger transition charges. Charges in 1998 totaled 86 cents per share,
primarily for completion of a retirement incentive program, write-downs of
certain international investments, and merger transition charges.
Reported fourth quarter 1999 net income available to common shareowners was $719
million, or 45 cents per share, compared to $1.0 billion, or 65 cents per share,
in fourth quarter 1998. Reported 1999 net income available to common
shareowners was $4.2 billion, or $2.65 per share, compared to $2.9 billion, or
$1.86 per share, in 1998.
Domestic Telecom Highlights
Healthy demand for core communications services and robust demand for new data
services enabled the Domestic Telecom Group to grow revenues 3.5 percent over
fourth quarter 1998, and 3.0 percent for the year. The number of voice-grade
equivalents (access lines plus data circuits) in service grew 13.2 percent to
64.5 million, with access lines in service growing 3.1 percent to 43 million.
Access minutes of use increased 4.2 percent in the quarter and 5.0 percent for
the full year.
Nearly 80 percent of Domestic Telecom revenue growth for the quarter and the
year came from sales of data services. Data revenues, including those from
high-bandwidth packet-switched and special access services and Bell Atlantic's
network integration business, reached almost $2.9 billion for the year, 25.5
percent over 1998 levels.
The demand for digital connectivity and value-added features continued to grow
in all markets. In the enterprise (large business) and general business markets:
- The number of "DSO" circuits in service (digital, high-bandwidth and
packet-switched services as measured in 64-kilobit voice-grade equivalents)
increased 39.6 percent over year-end 1998, to 23.2 million.
- Bell Atlantic's Data Solutions Group revenues increased 38.4 percent over
fourth quarter 1998, to almost $119 million.
- The company continued to expand its product offerings to help large business
customers manage their complex data networks, and introduced Managed Frame
Access Service, which delivers frame relay services with Bell Atlantic-managed
advanced routing.
In consumer markets:
- By the end of the year, Bell Atlantic had equipped wire centers sewing nearly
7 million qualified households for Infospeed(sm) DSL, the company's
high-bandwidth Internet access service, and began marketing the service to 4.3
million of them. The company aims to have 10 million households qualified by the
end of first quarter, approximately half of all households in its service
territory. BellAtlantic ended the year with approximately 30,000 Infospeed DSL
subscribers.
- Vertical service revenues continued to grow as customers purchased new
packages combining Caller ID, Return Call, Call Waiting, Home Voice Mail and
other features.
Consumer Caller ID revenues increased 26.5 percent in 1999, as the number of
subscribers increased to 7.5 million, and Home Voice Mail revenues rose 9.8
percent. The company also expanded its portfolio of value-added services to
include Talking Call Waiting and Internet Call Manager.
In network services markets:
- At the end of 1999, Bell Atlantic was providing other carriers with
approximately 1.4 million resold access lines and 200,000 unbundled loops.
- Special access revenues for the year increased 26.3 percent to $1.9 billion.
Domestic Telecom's adjusted fourth quarter operating expenses of $5.1 billion
were 1.1 percent above fourth quarter 1998 levels, with cash expenses
decreasing 0.8 percent. For the year, operating expenses totaled $19.8 billion,
1.2 percent above 1998 levels, with cash expenses decreasing one-half of one
percent. The Group produced these results while absorbing costs for long
distance entry, construction of a regional long distance network, Y2K
compliance, and interconnection payments to competitive local exchange carriers.
Wireless Group Highlights
Bell Atlantic's Wireless Group enjoyed one of its strongest fourth quarters
ever, with record subscriber growth for Bell Atlantic Mobile (BAM) and record
growth in new customers in the Group's International Wireless portfolio.
The Wireless Group ended the year with 12 million global proportionate wireless
subscribers, up 39.1 percent over year-end 1998. The figure includes 452,000
added through BAM's acquisition of Frontier Cellular properties in upstate New
York in December. Proportionate net customer additions in the quarter totaled
954,000 (excluding the Frontier customers), 30.5 percent more than in fourth
quarter 1998, with BAM totaling 363,000 net additions, 20.2 percent more than in
the prior-year period. The Group's proportionate net customer additions for the
year totaled 2.7 million, 23.4 percent more than in 1998.
Total proportionate wireless revenues increased 27.5 percent in the quarter to
$1.6 billion, and totaled $5.9 billion for the year, 28 percent higher than
1998. Proportionate operating income reached $293 million in the fourth quarter,
an increase of 50.3 percent over fourth quarter 1998, with proportionate
operating cash flow increasing 32 percent to $536 million. Full-year operating
income totaled $1.1 billion, up 41.2 percent over 1998, with full-year operating
cash flow increasing 29.3 percent to $1.9 billion.
During the quarter, Bell Atlantic, GTE and Vodafone AirTouch continued to move
ahead with the creation of the nation's premier wireless business, as the U.S.
Department of Justice cleared the wireless combination subject to a consent
decree providing for the resolution of overlapping wireless properties. Bell
Atlantic and Vodafone AirTouch also have increased to 100 percent their
ownership of the partnerships operating PrimeCo Personal Communications LP's
Texas markets -- Dallas/Fort Worth, San Antonio and Houston -- by acquiring TXU
Communications' 20 percent interest. PrimeCo will become part of its partners'
national wireless venture.
Other domestic highlights:
- Bell Atlantic Mobile closed out the quarter with 7.7 million customers, up 24
percent from 1998. Quarterly revenues grew 23.1 percent over fourth quarter
1998, to $1.1 billion. For the year, BAM revenues year grew 18.9 percent to
$4.1 billion.
- Underscoring the quality of its network performance and overall customer
service, BAM won numerous service awards during the year, including the highest
customer rating in the Yankee Group 1999 Mobile User Survey; the highest ranking
from the J.D. Power and Associates 1999 U.S. Wireless Customer Satisfaction
Study(sm) in New York and Boston; first place for customer satisfaction in the
1999 Solomon-Wolff Associates annual customer research survey and Wireless
Week's Overall Excellence Award for 1999.
- The primary force behind BAM's strong 1999 growth was the company's popular
digital wireless services. More than 70 percent of all new retail customers and
nearly 40 percent of BAM's total base now subscribe to CDMA digital services,
generating 72 percent of the company's busy-hour network usage. BAM continued
its aggressive rollout of new digital voice and data service offerings,
including:
- Web Access service, featuring Web-enabled digital wireless phones that
allow customers to surf the Web.
- Share-A-Minute(sm), which allows families and small businesses to share
monthly access and local airtime minutes among multiple phones -- all on one
bill.
- "Call Me" service, an option freeing wireless customers from paying for
incoming calls received in their local service area.
On Jan. 18, BAM and GTE Wireless announced they have been selected by General
Motors to establish a nationwide wireless network that will support expansion of
its OnStar in-vehicle services to include personal calling and Internet access.
OnStar estimates that more than four million vehicles will be equipped with
access to its communications services in the next three years.
- At PrimeCo Personal Communications, total revenues for the quarter grew 49.6
percent over fourth quarter 1998, to $230 million, with average monthly revenue
per subscriber of $49. Full-year revenues were $841 million, compared to $509
million in 1998. Average monthly revenue per subscriber for the year was $51.
- During the quarter, PrimeCo grew its customer base to 1.4 million, 53.2
percent over year-end 1998. PrimeCo ended the year with a 3.3 percent
penetration rate of covered P0Ps.
Bell Atlantic's international wireless portfolio ended 1999 with 3.6 million
proportionate subscribers, up 83.7 percent over year-end 1998. International
proportionate net subscriber additions of 533,000, 58.6 percent more than in
fourth quarter 1998, represented more than half of Bell Atlantic's total
wireless customer growth. Net international customer growth for the year was 1.4
million, 32.1 percent higher than in 1998.
Proportionate international revenues for the quarter were $378 million, 37
percent higher than fourth quarter 1998, bringing the full-year total to $1.3
billion, $472 million more than 1998. Proportionate operating income doubled
over fourth quarter 1998, to $82 million, with proportionate operating cash flow
growing 62.7 percent to $135 million. For the year, proportionate operating
income was $302 million, with proportionate operating cash flow of $465 million.
International highlights:
- Omnitel Pronto Italia added a record 4.2 million customers in 1999, driving
its total to more than 10.4 million, a 68 percent increase over the prior year.
On New Year's Day, OPI's network successfully processed 100 million voice and 18
million SMS calls.
- EuroTel Praha added 120,000 customers in December, a new monthly subscriber
growth record for the Czech Republic, closing out the year with 1.1 million
subscribers. During the fourth quarter the company launched the country's first
Internet access service using WAP (Wireless Application Protocol) technology.
- Grupo Iusacell ended 1999 with more than 1.3 million customers. an increase
of 77 percent over 1998. Digital subscribers now total more than 16 percent of
Iusacell's customer base. The company recently placed a US$350 million bond
offering to help fund capital expenditures, expand digital capacity and increase
coverage.
- STET Hellas grew its customer base 71.8 percent over the previous year and
ended 1999 with 1.2 million customers. Net subscriber additions for 1999
increased 66 percent, including 148,000 in the fourth quarter. Through the
introduction of new pricing plans and aggressive promotion of Greece's only
prepaid roaming product, the company's prepaid customers grew to 62 percent of
its total base.
Bell Atlantic is at the forefront of the new communications and information
industry. With nearly 44 million telephone access lines and 12 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.
INTERNET USERS: Further information on quarterly results is available at Bell
Atlantic's News Center or Investor Information sites on the World Wide Web
(www.ba.com and www. bellatlantic. com/invest) or through Fax on Demand at
800-329-7310. To receive news releases by email, visit the News Center and
register for personalized automatic delivery of Bell Atlantic news releases.
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 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
MSCILFELLTISFII
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