For posterities sake (and so I'll be able to find the numbers a year from now);
WinStar Reports Second Quarter CLEC Revenues More Than Quadrupled Over 1997
Business Wire - August 05, 1998 16:39
NEW YORK--(BUSINESS WIRE)--AUGUST 5, 1998
CLEC Revenue Run Rate Exceeds $130 Million
EBITDA Losses Continue To Decline
WINSTAR COMMUNICATIONS, INC. (NASDAQ - WCII) reported today revenues for the second quarter ended June 30, 1998 increased to $57.3 million, a gain of 21% over the preceding quarter's $47.4 million and more than triple the year ago amount of $16.3 million. Revenues benefited from continued strong growth in the company's telecommunications business, where the addition of new markets and new services led to an over 480% gain in revenue over the prior year.
"WinStar is very focused on executing its business plan, and in the second quarter the company remained solidly on course with the deployment of its network to additional cities, the sale and installation of new lines, and the marketing of an expanded portfolio of voice, data and Internet services," said Nathan Kantor, President and Chief Operating Officer. "The company increased its nationwide sales presence to 26 markets, and we expect to achieve our goal of providing switched services to the 30 largest U.S. markets by the end of this year. At the same time, WinStar's rapid expansion is being managed with intense expense control to produce improvement in margins and other measures of financial performance," added Kantor.
Revenues from CLEC operations increased to $30.0 million, a gain of 61% over first quarter revenues of $18.6 million. CLEC revenues totalled $4.0 million in the year-earlier quarter. The growth was attributable to continued national sales and installation of local, long distance and Internet services for small and medium sized business customers, the geographic expansion of sales and network operations and the rapidly expanding large account business unit. The company's new broadband data services business also achieved significant progress during the second quarter, increasing its revenues 58% from the first quarter. Total CLEC service revenues reached an annual run rate of $134 million at the end of June compared to just $19 million a year ago.
Revenues from other telecommunications services, which consist of wholesale operations, residential long distance and MIDCOM long distance voice services, amounted to $14.7 million for the June quarter. As previously stated, the company expects a gradual attrition of this other revenue over subsequent quarters.
For the first six months of 1998, CLEC revenues reached $51.1 million compared to $6.0 million in 1997.
Information services revenues for the 1998 second quarter amounted to $12.5 million compared to $8.7 million in the 1997 quarter. This gain of 45% was attributable to generally higher demand and the marketing of new products targeted at the information requirements of small and medium sized business. Information services revenues for the first six months of 1998 reached $24.5 million, an increase of 67% over the comparable 1997 amount of $14.7 million.
In line with its plan, WinStar achieved a second consecutive improvement in the quarterly EBITDA loss. The loss was reduced to $48.6 million in the June period compared to $48.9 million in the first quarter. The company recorded a net loss applicable to common shareholders of $105.6 million or $2.77 per share from continuing operations in the 1998 second quarter.
Commenting on the company's most recent performance, William J. Rouhana, Jr., Chairman and Chief Executive Officer, said today, "During the second quarter, WinStar saw further evidence that the financial model associated with the company's fixed wireless network is working. WinStar's operations in New York, our most mature market, achieved a gross margin exceeding 35% in the second quarter, and current trends should lead to positive EBITDA being generated in New York no later than the fourth quarter," Rouhana noted. "This is less than two years after the company began selling switched services in New York."
LINE ORDERS AND INSTALLATIONS INCREASE RAPIDLY
During the second quarter, WinStar continued to add substantial numbers of customers, line orders and line installations. Line orders for the period exceeded 75,000, an increase of over 30% from the first quarter of 1998. Installations of CLEC lines rose to 50,000 during the second quarter, representing approximately 20% sequential growth over the first quarter of 1998. On a cumulative basis, installed lines surpassed 195,000 at June 30.
WinStar continued to expand its telecommunications business and the scope of related support services during the second quarter. Services were being provided in 26 markets at June 30 versus 21 at the end of March. The number of customers being served through WinStar's CLEC operations reached more than 9,000 compared with slightly more than 7,000 three months earlier. Additionally, roof rights, which enable WinStar to install its Wireless Fiber(SM) services on customer buildings, reached 3,000, an increase of over 500 from March 31. This marked the first time more than 500 roof rights had been obtained in a three month period.
Other Major Developments
WinStar reported these additional developments for the most recent quarter:
- WinStar's average bandwidth in the top 50 U.S. markets will rise above 750 MHz with the agreement to purchase 850 MHz of spectrum in New York City from CellularVision USA, Inc.
- In April, the company announced it had agreed to purchase 14.9% of the outstanding common stock of Advanced Radio Telecom Corp. (NASDAQ-ARTT) from private investors. Advanced Radio Telecom holds 38 GHz licenses in the U.S. and Europe.
- WinStar's GoodNet unit was awarded a $40 million broadband backbone service contract from AboveNet, a San Jose, CA, based internet service provider.
- The company's workforce totalled 2,300 at June 30 compared to 2,100 at the end of March and 1,200 a year ago. The number of salespeople at the end of the second quarter stood at 440. The sales and service forces combined totalled 780.
- In May, WinStar signed a master agreement with CIGNA Investments, Inc., to deliver Wireless Fiber services to 96 commercial office buildings owned or managed by CIGNA.
- D&B International Business Information reports was added to WinStar Telebase's Internet site, Dun & Bradstreet @AOL.
- The company obtained CLEC authority in Delaware in July, bringing to 34 the total number of such authorizations, which represent 48 of the largest U.S. markets.
- The company activated a full-duplex ATM-based, point-to- multipoint broadband, fixed wireless demonstration network carrying voice, data and video services in Washington, D.C. WinStar also recently announced an expansion of an agreement with Siemens Telecom Networks under which Siemens will add P-Com point- to-multipoint radios to the network. This agreement will demonstrate the operability of the point-to-multipoint network in a multi-vendor environment.
- WinStar received recognition for its innovative technology and deployment of 17 fully integrated voice and data networks. The company was presented with a SuperQuest Award as "Best New Competitive Local Network" at the SUPERCOMM 98 Conference.
Rouhana concluded his remarks by saying "We are pleased by WinStar's solid progress during the second quarter, including the further rapid evolution of our network. Our achievements are being recognized by industry peers, as was demonstrated by the SuperQuest Award, which arose from the success we have attained in building a national telecommunications company in less than two years time. We expect the national introduction of our point-to- multipoint services in 1999 will add to our technological leadership and service capabilities."
WinStar Communications, Inc. is a national local communications company, serving business customers, long distance carriers, fiber- based competitive access providers, mobile communications companies, local telephone companies, and other customers with broadband local communications needs. The company provides its Wireless FiberSM services using its licenses in the 28 and 38 GHz spectrum. The company also provides long distance, Internet, data and information services.
Except for any historical information contained herein, the matters discussed in this press release contain forward-looking statements that involve risks and uncertainties which are described in the company's SEC reports, including the 10-K for the period ended December 31, 1998, and the 10Q for the period ended March 31, 1998. |
