RCN Reports Strong Third Quarter Results; Continued Growth in Revenues and Connections
PRINCETON, N.J., Oct. 31-- RCN Corporation (Nasdaq: RCNC - news) today reported solid results for the quarter ended Sept. 30, 2000, reflecting continued growth in the Company's revenues and on-net connections, and ongoing progress in customer service improvements.
Key Accomplishments
Marketable homes surpassed 1 million
On-net revenues reached $41.7 million, a 26 percent increase from
previous quarter of $33.2 million
On-net revenues now comprise 39 percent of total revenues
Gross margin increased to 52.3 percent
ResiLink(SM) bundled product now being marketed to more than 264,000 households, up 82 percent from last quarter
75 percent of technicians trained to install all three services -- phone, cable and high-speed Internet -- in one visit
For the quarter ended Sept. 30, 2000, Pro Forma Total RCN revenues were $107.6 million, a 12 percent increase from $96.2 million in the previous quarter. Total on-net connections grew by 15 percent in the third quarter as RCN added 52,672 new on-net connections compared to 49,210 additions in the second quarter (excluding the connections acquired from 21st Century last quarter). The company finished the quarter with 404,839 total on-net connections. As a result of the growth in on-net connections and higher ResiLink sales, the company achieved improvement in its gross margin to 52.3 percent from 50.2 percent the previous quarter.
RCN's Pro Forma Total consolidated quarterly EBITDA in the quarter ended Sept. 30 was a loss of $85.8 million, compared to a loss of $75.8 million in the previous quarter. This was the result of increased operational costs associated with continued growth in its markets. RCN reported a second quarter net loss to common shareholders of $233.8 million, or $(2.70) per common share, compared to a loss of $208 million or $(2.45) in the previous quarter.
``We continue to make headway in our drive to provide tomorrow's telecommunications services today through a state-of-the-art local fiber network. We built to over 200,000 homes and added over 50,000 new on-net connections in the third quarter. With $2.6 billion cash available, we are fully funded to build out to 5 million homes,'' said David C. McCourt, RCN's Chairman and CEO. ``With our unique Megaband(TM) network and our programs to improve the delivery of our services, we are well-positioned to capitalize on the strong demand for our bundled offering.''
Rapid Growth in ResiLink Bundles Continues
ResiLink sales continued to be strong, accounting for 54 percent of the increase in on-net connections this quarter. The revenue per customer is averaging over $128 per month as customers are taking more than 3.5 services each. RCN now markets ResiLink to over 264,000 homes, up 82 percent from last quarter. RCN's ResiLink bundled pricing plans offer consumers various combinations of phone, cable and high-speed Internet services for a flat monthly fee. It is currently offered in portions of the northern California, Boston, New York and Philadelphia metropolitan areas.
Strengthening the Management Team
Earlier this month, RCN named several veteran telecommunications industry executives to key positions. Named to the newly created position of vice-chairman is Robert Currey, a telecom executive with 30 years experience. Currey was head of 21st Century Telecom Group, Chicago's only single-source, facilities-based provider of bundled telecommunications services and a company which RCN acquired earlier this year. And in California, the company named two new VP-GMs with strong backgrounds in the cable industry to head up RCN's San Francisco and Los Angeles operations.
``Our focus has turned to building an organization that can anticipate and respond quickly to our customers' needs,'' said McCourt. ``We will harness Bob's extensive expertise as well as the knowledge and skill of the rest of our highly experienced management team to deliver the best possible customer experience.''
Ongoing Efforts to Improve Customer Service Operations
In an ongoing effort to improve its customer support operations, RCN has trained 75 percent of its technicians to install all three services in one visit. As a result, each technician installed an average of 5.0 services per day in the third quarter, up from 3.1 at the beginning of the year.
``We are making great strides in improving customer service, based on independent customer satisfaction surveys we've undertaken over this past year. This initiative is helping us focus our collective efforts in improving every aspect of how we interact with our customers. Our progress in training technicians and improving call handle times brings us closer to the kind of customer service we want to be known for,'' said Mike Adams, President and Chief Operating Officer.
RCN Regulatory and Network Construction Activity
In the third quarter, RCN continued construction of its high-capacity Megaband(TM) Network. Homes passed, a key indicator of RCN's construction progress, increased by 20 percent in the third quarter to 1,263,199 while marketable homes, or those homes ready for immediate sale of all its services, surpassed the 1 million mark for the first time. RCN is currently active in 16 markets, including the top seven most densely populated in the U.S. The company is building in 90 towns, compared to 81 towns last quarter. RCN laid 1,386 new route miles this quarter, bringing the total fiber-optic route miles to 7,308.
Capital expenditures for the quarter totaled $346.1 million, bringing the total for the year to over $802.2 million.
RCN Analyst Meeting
RCN will be holding its annual analyst and investor meeting at 8 a.m. in New York City on November 2. The meeting will be Webcast on RCN's Web site (http://www.rcn.com). Those who do not have access to the RCN Web site may access the meeting by dialing 888-222-2994. Please refer to confirmation number 82876.
About The RCN MegaBand(TM) Network
RCN's Megaband(TM) Network is a unique broadband fiber-optic platform capable of offering a full suite of communications services -- including fully featured voice, video and high-speed Internet -- to residential customers. The network employs SONET ring backbone architecture, and localized nodes built to ensure RCN's state-of-the-art fiber optics travel to within 900 feet of RCN customers, with fewer electronics and lower maintenance costs than existing local networks. RCN's high-capacity local fiber-optic networks target densely populated areas that represent 44 percent of the U.S. residential communications market located in just 6 percent of its geography.
About RCN Corporation
RCN Corporation (Nasdaq: RCNC - news) is the nation's first and largest facilities-based provider of bundled phone, cable television and high-speed Internet services to the most densely populated markets in the U.S. RCN has more than 1 million customer connections and provides service in the Boston, New York, Philadelphia, Chicago, San Francisco and Washington DC metropolitan markets. Additional information can be found at: rcn.com.
Some of the statements made by RCN in this press release are forward-looking in nature. Actual results may differ materially from those projected in forward-looking statements as a result of a number of factors. RCN believes that the primary factors include, but are not limited to uncertainties relating to economic conditions, acquisitions and divestitures, government and regulatory policies, the pricing and availability of equipment, materials, inventory and programming, RCN's ability to develop and penetrate existing and new markets, technological developments and changes in the competitive environment in which RCN operates. Additional information concerning these and other important factors can be found in RCN's filings with the Securities and Exchange Commission. Statements in this release should be evaluated in light of these important factors. |
