Bell Atlantic Second Quarter Net Income Rises 11%

Bell Atlantic Second Quarter Net Income Rises 11%

Data Revenues Increase 29% to $580 Million;
Global Wireless Adds 486,000 Subscribers

July 23, 1998


David Frail,

NEW YORK -- Bell Atlantic (NYSE:BEL) today announced second quarter net
income of $1.1 billion, an 11 percent increase over second quarter 1997
net income of $964.7 million. Diluted earnings per share of 68 cents rose
9.7 percent from second quarter 1997 EPS of 62 cents. -2>(1)

Results are adjusted for special items in this quarter related to merger
integration and an enhanced pension offer which resulted in charges
totaling 3 cents per share, and 5 cents per share in the prior-year period
for special items. Reported net income for the quarter was $1.0 billion
compared to $896.8 million, and reported EPS was 65 cents compared to 57
cents in second quarter 1997. Proportionate revenues, which include Bell
Atlantic's Telecom and Global Wireless businesses, increased 4.6 percent.
Operating income for these units grew 8.9 percent, to $2.0 billion.

For the first six months of 1998, net income available to common
shareowners rose 10.9 percent to $2.1 billion, and EPS was $1.34, 9.8
percent higher than $1.22 in the first six months of 1997.

Six-month EPS figures have been adjusted for special items totaling 13
cents per share in 1998 and 20 cents per share in 1997. Reported net
income available to common shareowners of $1.9 billion rose 19.9 percent
over $1.6 billion in the prior-year period. Reported EPS grew 18.6
percent, to $1.21 compared to $1.02.

"Our second-quarter results are on target, with our Telecom and Global
Wireless businesses both delivering solid operating results." said Bell
Atlantic Vice Chairman, President and CEO Ivan Seidenberg.

"Telecom volumes remain very strong, as evidenced by continued growth in
access lines and minutes of use. Especially encouraging is the
acceleration in demand for data services, and our success in participating
in this high-growth market. In fact, data has become one of Telecom's
largest sources of growth.

"Our strong volumes will serve as the foundation for improved top-line
growth in the second half of the year, as we move past the effects of last
July's access charge reductions, build on the momentum of our vertical
service sales campaigns and increase our focus on the data market.

"Global Wireless continues its stellar performance, delivering nearly
500,000 new customers and generating 62 percent growth in operating
income. With 85 million potential customers in the United States and 92
million in international markets, Global Wireless has the market presence
and demonstrated capabilities to sustain this kind of growth and
profitability for years to come."

Bell Atlantic Chairman Ray Smith
said, "Our challenge has been to meet our financial targets while
positioning ourselves for a competitive future and new opportunities. We
are meeting that challenge.

"We are making substantial progress toward
developing full capabilities in the data and long distance markets. We've
begun construction of a region-wide, SONET- and ATM-based data network and
are preparing to roll out high-capacity ADSL lines for the mass market
this quarter. As for long distance, we're beginning to see the light at
the end of the tunnel. With third-party review underway in New York, I'm
confident we will file an application with the FCC in the fall that will
cut the Gordian knot of Section 271.

"At this time last year we were anticipating final approval of our merger
with NYNEX; now we're eager to fully realize the opportunities created by
the merger. I'm confident we will deliver on our 1998 financial targets
and continue to position ourselves to leverage all of the potential in the
world's richest communications market."

Domestic Telecommunications

Strong demand for communications services was reflected in 4.4 percent
growth in the number of access lines in service, to 40.8 million, and an
8.4 percent increase in access minutes of use. Strong volumes helped
offset the effects of approximately $130 million in mandated rate
reductions and grow revenues 2.1 percent compared to second quarter

The market for digital data services continued to be the most dynamic in
telecommunications, as shown by Bell Atlantic's results in data services
and other business services:

  • Revenues from high-bandwidth switched and special access
    services, and from Bell Atlantic's network integration business, known as
    BANI, rose 29 percent over second quarter 1997 levels to $580 million.

  • The number of "DS0" circuits in service (digital, high-bandwidth
    and packet-switched services as measured in 64-kilobit voice-grade
    equivalents) increased more than 42 percent over second quarter 1997.

  • Bell Atlantic ended the quarter with more than 470,000 basic rate
    Integrated Services Digital Network (ISDN) lines in service, up 23 percent
    from second quarter 1997, and more than 650,000 primary rate ISDN channels
    in service, nearly double the second-quarter 1997 total.
  • The
    number of Centrex lines increased 8.7 percent over second quarter 1997 to
    4.6 million.

In residential markets:

  • Caller ID subscribers increased to more than 5.8 million, with
    revenues up 37.6 percent.
  • Revenues from Home Voice Mail service
    rose 19.1 percent.

In wholesale markets:

  • At the end of the quarter, Bell Atlantic
    was providing other carriers with approximately 415,000 resold access
    lines and nearly 50,000 unbundled loops.

Network operating expenses for the quarter totaled $5.2 billion, 1.1
percent higher than in second quarter 1997. Merger-related synergies
helped offset upward pressures from interconnections payments to
competitive local exchange carriers (CLECs) and helped cover costs for
compliance with the Telecommunications Act "checklist," including local
number portability, and investments in growth opportunities.

Wireless Highlights

The Global Wireless group posted record
results for the second quarter, driven by strong performance at Bell
Atlantic Mobile (BAM) and sustained healthy growth in its international
portfolio. Global Wireless ended the quarter with 7.3 million
proportionate customers, nearly 34 percent more than in second quarter
1997. Proportionate net customer additions in the quarter totaled
486,000, an increase of 22.7 percent over second quarter 1997.

proportionate revenues for the quarter reached a record $1.1 billion,
increasing 23.3 percent over second quarter 1997. Contributions from
international ventures and PrimeCo Personal Communications increased,
accounting for more than 50 percent of the growth. Proportionate
operating income for the portfolio totaled $203 million, up 62.2 percent
from second quarter 1997. Domestic highlights:

  • BAM subscribers
    grew more than 17 percent over second quarter 1997. With 224,000 net
    customer additions, BAM ended the quarter with 5.7 million customers.
    Revenues increased nearly $100 million, or 13 percent, to $869.4 million.

  • BAM's DigitalChoicesm price plans, introduced in March, drove up
    the number of digital subscribers to nearly 400,000 at the end of the
    quarter. Twenty percent of new customers are taking a DigitalChoice plan,
    and digital subscribers now generate nearly 25 percent of BAM's busy-hour
    traffic on its high-efficiency CDMA network.

  • BAM reduced acquisition costs per subscriber 17.1 percent, to $194
    compared to $234 in the prior-year period, through control of commission
    expenses, lower handset costs, and by selling through direct distribution
    channels. BAM also reduced cash expense per subscriber by $4 to a record
    low of $24.

  • BAM operating cash flow improved to its highest level ever at
    $348 million, and operating cash flow margins expanded to 46 percent, five
    percentage points higher than second quarter 1997. Operating income grew
    21.7 percent to nearly $220 million.

  • PrimeCo Personal Communications ended the quarter with 90,000 net
    subscriber additions. PrimeCo's total customer base at the end of the
    quarter was 598,000, triple the number in second quarter 1997.

  • Total PrimeCo revenues for the quarter grew to $120 million,
    nearly two and one-half times the level in second quarter 1997, with
    average monthly revenue per subscriber of nearly $61. Bell Atlantic owns
    47.6 percent of PrimeCo.

The International Wireless portfolio contributed 220,000 proportionate net
additions in the quarter, 91.3 percent higher than in the prior-year
period and nearly half of the Global Wireless total. The international
proportionate customer base now exceeds 1.3 million, and Bell Atlantic's
wireless ventures outside the U.S. serve more than eight million
subscribers. International proportionate revenues totaled $186.8 million,
up 73.1 percent over second quarter 1997. Operating income climbed
eightfold and operating cash flow increased three and one-half times over
second quarter 1997. International highlights:

  • Grupo Iusacell in
    Mexico closed the first half of the year with more than 550,000 customers,
    double the number in the same period last year. Iusacell's net customer
    additions in the second quarter were the highest in its history.

  • During the second quarter Grupo Iusacell won two new PCS
    licenses for the fast-growing industrial regions on the Mexico-U.S.
    border. Iusacell now will become a nationwide provider, increasing its
    coverage from 70 percent to more than 80 percent of Mexico's 94 million
  • Omnitel Pronto Italia ended the quarter with almost four
    million customers, as the company increased its share of the Italian
    wireless market to 25 percent. During the second quarter, the company took
    first place in the Grand Prix of Customer Service conducted by

  • STET Hellas closed the quarter with more than 500,000
    subscribers in Greece, an increase of 77 percent over second quarter 1997.
    STET Hellas completed a global public offering on June 4 and ended the
    quarter with a market capitalization of more than $3.5 billion. Bell
    Atlantic owns 20 percent of STET Hellas.

Bell Atlantic - formed through the merger of Bell Atlantic and NYNEX - is
at the forefront of the new communications and information industry. With
more than 41 million telephone access lines and more than 7 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.

Bell Atlantic news releases,
executive speeches, news media contacts and other useful information are
available at Bell Atlantic's News Center on the World Wide Web ( "http://www.ba.com">www.ba.com). To receive news releases by e-mail,
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. Discussion of factors that may affect future results is contained
in our recent filings with the Securities and Exchange Commission.

Click here to
download Consolidated Adjusted Statements of Income - Second Quarter in
Excel Spreadsheet Format.


(1) EPS comparisons for the quarter and
the first six months of 1998 were affected by rounding resulting from a
2-for-1 stock split on June 1. On a pre-split basis, second quarter 1998
EPS would have grown from $1.23 to $1.36 in second quarter 1997, or 10.6
percent. Six-month 1998 EPS on a pre-split basis would have grown from
$2.43 to $2.68, or 10.3 percent. The number of shares outstanding
increased in the quarter by .6 percent. All EPS amounts are on a diluted