RCN Corporation Reports Record First Quarter 1998 Results
Advanced Fiber Connections Increase 34%; Internal Growth and Internet
Acquisitions Add 146% to Total Service Connections
PRINCETON, N.J., May 12 /PRNewswire/ -- RCN Corporation (Nasdaq: RCNC) today reported record results for the first quarter ended March 31, 1998. Consolidated Pro Forma Total RCN revenues increased 21.4% to $43.0 million as compared to the previous quarter. Advanced Fiber connections increased 34%, while total service connections, including both on-net Advanced Fiber connections and Other connections, increased 146% to 660,000.
"RCN has made tremendous progress this quarter toward achieving our strategic goals, expanding our construction effort to reach new customers, and enhancing shareholder value," said David C. McCourt, Chairman and CEO. "We also recently effected a two-for-one stock split, doubled the size of our New York market and became the largest regional Internet service provider (ISP) in the Northeast. In addition, we've raised $1 billion in senior and senior discount notes in the last six months, successfully prefunding our growth in the Boston to Washington corridor through 1999."
As a result of RCN's aggressive network expansion effort, consolidated Pro Forma Total RCN EBITDA, before one-time, non-recurring charges, was a loss of $9.6 million, compared to a loss of $8.6 million in the previous quarter. EBITDA losses reflect the company's continued investment in the deployment of an advanced fiber-optic network designed and constructed to carry voice, video and high-speed Internet services.
"The advantage of the RCN network is that it is completely flexible and expandable. It is designed and built around the Internet with enough capacity to deliver all telecom services today with additional capacity for advanced future applications," said McCourt.
Net loss for the quarter totaled $67.7 million, including a one-time, non-recurring charge of $44.7 million for in-process research and development related to its Internet acquisitions.
RCN Becomes Northeast's Largest ISP
During the quarter, RCN completed its acquisitions of Erol's Internet, Inc. and UltraNet Communications, Inc., Boston and Washington's largest regional Internet service providers. The company has been able to immediately take advantage of Erol's marketing and operations acumen and UltraNet's network expertise. It added Dennis Spina, former Chairman and CEO of Erol's Internet, to the RCN Board of Directors. Spina was also named President of Internet Services, and is leading the integration of Erol's and UltraNet into RCN.
"There are terrific synergies between RCN's strategic plan and these Internet operations," Spina said. "The integration is ahead of schedule and performing beyond our expectations."
Other Events
Subsequent to the close of the quarter, RCN effected a two-for-one stock split in the form of a 100% stock dividend. As a result of the split, the company's shares outstanding increased from 28.1 million to 56.2 million.
RCN also doubled the size of its New York territory by beginning service to the densely populated Borough of Queens, and expanded its construction efforts to several Boston-area communities, including Arlington, Brookline, Wakefield and Newton.
RCN further expanded its operations in the Boston to Washington corridor by beginning to sell local phone service in the Washington, DC market through a joint venture with a subsidiary of Potomac Electric Power Company. The company expects its telephone switch and 110-channel video headend to be activated by the fourth quarter of this year. In addition, RCN during the quarter signed an agreement with Charles E. Smith Realty Co., Inc., Washington's largest residential property owner, to provide phone, cable and Internet service to 4,200 residents in 16 buildings in Washington, Virginia and Maryland. |
