News

Cincinnati Bell Inc. Completes Nine Consecutive Quarters of Year-over-Year Revenue Growth and Delivers Strong 2007 Performance
Increased profitability from Wireless and Technology Solutions drives full-year improvement

CINCINNATI - February 7, 2008 - Cincinnati Bell Inc. (NYSE:CBB) today announced results for the fourth quarter including revenue of $360 million, an increase of $31 million or 10 percent from the prior year quarter. Operating income was $41 million and included a pre-tax restructuring charge of $38 million related to the company's previously announced restructuring plan. Net income for the quarter was $1 million. Earnings per share on a diluted basis¹ was a 1 cent loss. Excluding restructuring charges, net income was $23 million or 8 cents per share. Adjusted earnings before interest, taxes, depreciation and amortization² (Adjusted EBITDA) equaled $118 million, up $6 million, or 6 percent from a year ago.

"2007 was an outstanding year for Cincinnati Bell. Investments in our Wireless and Technology Solutions segments drove significant rates of revenue and operating income growth," said Jack Cassidy, president and chief executive officer of Cincinnati Bell Inc. "Despite the intense competition in our market, consistent execution of our strategy has produced the ninth consecutive quarter of revenue growth and sixth consecutive quarter of combined Adjusted EBITDA growth in our three operating segments."

Revenue in 2007 totaled $1.3 billion, an increase of $79 million or 6 percent from 2006. Operating income for the year was $282 million with net income of $73 million, or 24 cents per diluted share. Net income excluding special items³ was $96 million or 33 cents per diluted share, up $7 million or 2 cents per share from 2006 also excluding special items. Adjusted EBITDA equaled $473 million representing a year-over-year increase of 3 percent.

Quarterly Highlights

• Quarterly revenue increased 10 percent or $31 million from a year ago reflecting growth of $17 million in service revenue and $15 million in equipment revenue.
• The Technology Solutions segment had quarterly revenue of $78 million, an increase of 26 percent from a year ago representing growth in each of its reported lines of business. This drove a 31 percent increase in operating income and 76 percent increase in Adjusted EBITDA from the fourth quarter of 2006. Adjusted EBITDA reached a record $10 million.
• Wireless sservice revenue in the quarter was $70 million. This led to a 32 percent increase in operating income and a 28 percent increase in Wireless Adjusted EBITDA. Adjusted EBITDA margins expanded 3 points from the fourth quarter of 2006 to 25 percent.
• Wireline segment profitability remained strong. Operating income was $35 million and included a restructuring charge of $34 million. Adjusted EBITDA increased $1 million versus the prior year to $97 million as data, long distance and expansion market revenue growth and expense reductions offset the impact of decreased consumer voice revenue in Cincinnati Bell's traditional operating area.
• In the quarter, Cincinnati Bell further expanded its growing enterprise business. The Company acquired the assets of GramTel USA, Inc. in a transaction valued at $20 million. GramTel is a regional provider of disaster recovery, business continuity and data backup services and operates four data centers in Indiana, Illinois and Michigan. Also, on February 1st Cincinnati Bell finalized its previously announced acquisition of eGIX Inc., an Indiana-based competitive service provider for approximately $18 million plus certain additional, future performance-related payments.
• As a result of initiatives designed to improve its future cost structure, the company incurred a pre-tax restructuring charge of $38 million in the quarter. The charge includes the cost of a previously announced voluntary retirement program for management and costs associated with other anticipated workforce reductions.
• In a separate release issued today, Cincinnati Bell also announced that its Board of Directors has authorized the repurchase of the Company's outstanding common stock in an amount up to $150 million over the next two years.

Cincinnati Bell met or exceeded its 2007 financial guidance:


Financial and Operations Overview
"Combined Wireless and Technology Solutions revenue and EBITDA growth continue to offset Wireline profit erosion caused by consumer access line loss," said Brian Ross, chief financial officer of Cincinnati Bell Inc. "As a result, cash flow remains strong, our balance sheet is solid and our operations are well-positioned for 2008."

Quarterly free cash flow was $10 million, which included a $22 million data center customer prepayment, with which the Company accelerated $20 million of future mandatory pension contributions. Free cash flow for 2007 equaled $59 million.

Capital expenditures were $81 million in the quarter and $234 million, or 17 percent of revenue, for the year. Year-end net debt⁵ totaled $1.98 billion, down $27 million from the end of 2006.

Wireline Segment
Quarterly Wireline revenue equaled $212 million, up $10 million from a year ago mostly related to a large business customer premise wiring project. Operating income was $35 million and included a restructuring charge of $34 million. Adjusted EBITDA totaled $97 million, an increase of $1 million from the fourth quarter of 2006. For the year, segment revenue was $822 million, an increase of $11 million or 1 percent from 2006. Operating income was $253 million, which included pre-tax restructuring charges of $36 million. Adjusted EBITDA was $394 million, down $7 million or 2 percent from 2006.

Year-over-year total access line loss in the quarter was 6 percent. At the end of 2007, expansion market access lines had reached 62,000, up 12,000 lines from the end of 2006. This growth partially offset the impact of the loss of consumer access lines in Cincinnati Bell's traditional service area.

Wireless Services
Quarterly revenue increased 13 percent to $77 million and operating income, which included a pre-tax restructuring charge of $2 million, equaled $8 million. Operating income increased $2 million or 32 percent from a year ago, primarily due to an 8 percent increase in the segment's subscriber base. Adjusted EBITDA was $19 million compared to $15 million in the fourth quarter of 2006. For the year, Wireless revenue totaled $295 million, up $33 million or 12 percent from 2006. Operating income was $34 million with Adjusted EBITDA of $74 million, an increase of $21 million or 39 percent from a year ago.

In the fourth quarter, postpaid net activations were 9,400 compared with 16,000 in the prior year. Postpaid quarterly average revenue per user (ARPU) of $46.14 and churn of 1.59 percent were comparable to the prior year quarter. Prepaid net activations totaled 4,200 in the quarter and ARPU equaled $26.10 compared to 6,100 and $22.71, respectively, in the fourth quarter of 2006.

Technology Services
Technology Solutions quarterly revenue was $78 million, up $16 million or 26 percent from a year ago. Telecommunications and IT Equipment revenue increased $8 million or 17 percent from the prior year while Data Center and Managed Services revenue grew by $7 million or 53 percent compared to the fourth quarter of 2006. Operating income, which included the $1 million impact of pre-tax restructuring charges, totaled $6 million. This reflected an increase of 31 percent from a year ago, while Adjusted EBITDA was a record $10 million, up 76 percent from the fourth quarter of 2006. Total revenue for the year was $258 million, up $42 million or 19 percent from a year ago. Operating income was $18 million while Adjusted EBITDA of $27 million increased 36 percent over last year.

Capital expenditures for the segment, which were $33 million in the fourth quarter and $92 million for the full year, were used primarily to construct new data center space. Billable data center capacity at the end of the fourth quarter was 144,000 square feet, which included 13,000 square feet of GramTel capacity. Utilization was 93 percent compared to 84 percent at the end of the third quarter.

With the commissioning of 24,000 square feet, billable data center capacity increased by 22 percent to 135,000 square feet compared to the end of the second quarter of 2007. Utilization of this billable capacity was 84 percent at the end of the third quarter. Approximately 41,000 square feet of new data center capacity remains under construction, which the company expects to complete by the end of the first quarter of 2008.

2008 Guidance
Cincinnati Bell met or exceeded its 2007 financial guidance:


Conference Call/Webcast
Cincinnati Bell will host a conference call today at 10:00 a.m. (ET) to discuss its results for the fourth quarter of 2007. A live webcast of the call will be available via the Investor Relations section of www.cincinnatibell.com. The conference call dial-in number is 866.278.7926. International callers may dial 904.596.2360. A taped replay call will be available one hour after the conclusion of the teleconference until 5:00 p.m. (ET) on February 21, 2008. For U.S. callers, the replay will be available at 888.284.7564. For international callers, the replay will be available at 904.596.3174. The replay reference number is 227400. An archived version of the webcast will also be available in the Investor Relations section of www.cincinnatibell.com.

Safe Harbor Note
Certain of the statements and predictions contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. In particular, statements, projections or estimates that include or reference the words "believes," "anticipates," "plans," "intends," "expects," "will," or any similar expression fall within the safe harbor for forward-looking statements contained in the Reform Act. Actual results or outcomes may differ materially from those indicated or suggested by any such forward-looking statement for a variety of reasons, including, but not limited to: Cincinnati Bell's ability to maintain its market position in communications services, including wireless, wireline and internet services; general economic trends affecting the purchase or supply of telecommunication services; world and national events that may affect the ability to provide services; changes in the regulatory environment; any rulings, orders or decrees that may be issued by any court or arbitrator; restrictions imposed under various credit facilities and debt instruments; work stoppages caused by labor disputes; and Cincinnati Bell's ability to develop and launch new products and services. More information on potential risks and uncertainties is available in recent filings with the Securities and Exchange Commission, including Cincinnati Bell's Form 10-K report, Form 10-Q reports and Form 8-K reports. The forward-looking statements included in this release represent company estimates as of February 7, 2008. Cincinnati Bell anticipates that subsequent events and developments will cause its estimates to change.

Use of Non-GAAP Financial Measures
This press release contains information about net income excluding special items, free cash flow, net debt and adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA). These are non-GAAP financial measures used by Cincinnati Bell management when evaluating results of operations and cash flow. Management believes these measures also provide users of the financial statements with additional and useful comparisons of current results of operations and cash flows with past and future periods. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of net income excluding special items, Adjusted EBITDA, net debt and free cash flow to comparable GAAP financial measures have been included in the tables distributed with this release and are available in the Investor Relations section of www.cincinnatibell.com.

¹Earnings per share on a diluted basis is calculated as follows: Net income less preferred stock dividends divided by diluted common shares outstanding.

²Adjusted EBITDA provides a useful measure of operational performance. The company defines Adjusted EBITDA as GAAP Operating Income plus depreciation, amortization, restructuring charges, asset impairments and other special items. Adjusted EBITDA should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with Adjusted EBITDA as defined by other companies.

³Net income excluding special items provides a useful measure of operating performance. Net income excluding special items should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with net income excluding special items as defined by other companies.

⁴Free cash flow provides a useful measure of operational performance, liquidity and financial health. The company defines free cash flow as SFAS 95 cash provided by (used in) operating, financing and investing activities, adjusted for the issuance and repayment of debt, the repurchase of common stock, and the proceeds from the sale or the use of funds from the purchase of business operations. Free cash flow should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities, or the change in cash on the balance sheet and may not be comparable with free cash flow as defined by other companies. Although the company feels that there is no comparable GAAP measure for free cash flow, the attached financial information reconciles free cash flow to the net increase (decrease) in cash and cash equivalents.

⁵Net debt provides a useful measure of liquidity and financial health. The company defines net debt as the sum of the face amount of short-term and long-term debt and unamortized premium and/or discount, offset by cash and cash equivalents.

About Cincinnati Bell Inc.
Cincinnati Bell Inc. (NYSE:CBB) is parent to one of the nation's most-respected and best-performing local exchange and wireless providers with a legacy of unparalleled customer service excellence. With headquarters in Cincinnati, Ohio, Cincinnati Bell provides a wide range of telecommunications products and services to residential and business customers in Ohio, Kentucky and Indiana. For more information, visit www.cincinnatibell.com.