GTE Reports 11% Operational Earnings Per Share Growth in FirstQuarter; Strong Volume Growth Yields 7% Revenue Growth

STAMFORD, Conn. -- GTE Corp. today announced that operational earnings per shareincreased 11 percent in the first quarter of 1997. Consolidated net income for the quarter was $665 million, or 69 cents per share, compared with $608 million, or 62 cents per share, in the first quarter of 1996, excluding gains on sales of non-strategic telephone properties of $8 million or 1 cent per share.

"These excellent results reflect strong volume increases and underscore the

strength of our core operations -- both domestic and international," said GTE

Chairman and Chief Executive Officer Charles R. Lee "It's a real

accomplishment to deliver double-digit earnings growth while, at the same time,

making strategic investments required to succeed in our industry's new

environment of competition and opportunity. During the quarter, we continued to

invest in rolling out new service offerings, such as long distance, video and

Internet access, as well as the

start-up of our wireless digital PCS operations. We believe GTE is extremely

well-positioned for the future," Lee added.

"In addition to quality service at a competitive price, customers want a

bundled array of telecommunications services, with a single bill and single

point of contact. As the first major local exchange carrier to deliver a full

array of bundled services and true one-stop shopping, GTE is in a unique

position to satisfy these needs," Lee noted.

Consolidated revenues and sales increased 7 percent to $5.28 billion in the

quarter, compared to $4.95 billion in the year-ago quarter. The increase is

driven primarily by the continued growth of core domestic and international

wireline and wireless services:

  • Domestic access lines grew by 1.5 million lines, or 8%, including 4.8%

    growth in switched access lines;

  • Domestic access minutes of use grew by 14%, to 19.8 billion minutes;

  • Domestic cellular customers grew 30%, with 260 thousand new customers in the


  • Sales of new and expanded services grew 58%, to $385 million, including

    voice messaging, data services, long distance, Caller ID and Internet access;

  • International network revenue reached $537 million, up 10%, including over

    40% growth in cellular customers within Canada and the Dominican Republic.

Revenues from other services and sales grew 13 percent to $990 million, due

to higher worldwide volumes of telecommunications equipment, systems and

solutions, offset, in part, by lower revenues from Directory services, resulting

from the timing of yellow page directory publications.

Domestic and International Milestones Reached In The Quarter

"We've had terrific success in acquiring new customers in intensely

competitive businesses," Lee said. "Just consider the customer milestones

surpassed this quarter:

  • 1 million long-distance customers;

  • 100,000 Internet access customers; and

  • 4 million domestic cellular customers, which we're announcing today.

"These successes, and the well-received launch of our wireless digital PCS

offering in the Cincinnati area, illustrate a key point: GTE can compete and

win -- all these customers had choices of service providers, and they chose

GTE," Lee said.

"Internationally, we continue to make strategic investments and explore new

opportunities for growth in Asia, Latin America and Europe," Lee added.

"In China, I'm pleased with the progress we're making in developing the only

nationwide paging system of its kind," Lee said. "Service was recently

initiated in Shanghai, which complements the five Pearl River Delta cities that

were operational in the fourth quarter of 1996. In addition, GTE's wholly owned

telephone company in the Dominican Republic, CODETEL, recently announced plans

to co-develop the first Internet network access point to serve Latin America,"

Lee added.

Domestic Network Services Revenues Spurred by 8% Access Line Growth,

14% Growth in Minutes of Use, and 30% Growth in Cellular Customers

Revenues from Domestic Network Services, which include GTE's wireline and

wireless operations, increased 6 percent to $3.57 billion for the first quarter,

compared with $3.37 billion in the year-ago quarter. These results were

achieved through the strong growth in wireline and wireless unit volumes, as

well as the new and expanded service offerings. Revenues for data networks,

including ISDN and frame relay, grew by 86 percent over the prior year, while

revenues from such consumer conveniences as Caller ID, Call Waiting and paging

services grew

33 percent. Second lines to the home, which now total over 1.7 million lines,

grew by 24 percent. Access lines per employee, a key indicator of productivity,

increased to 327, representing a 10 percent improvement, from a year ago.

"Wireless results were excellent," said Lee. "The 30 percent growth in

customers places us among the industry leaders, and reflects the success of new

promotions and targeted marketing programs that enabled the winning of new

customers and the retention of our high-value customer base."

During the quarter, GTE added 260,000 new domestic cellular customers, more

than triple the 83,000 customers added during the same quarter in 1996.

Domestic cellular-service revenues totaled $617 million in the quarter, an 11

percent increase over the prior year. At the end of March 1997, GTE had

4,009,000 domestic cellular customers, an increase of over 900,000, or 30

percent, from the prior year. For the quarter, revenues per subscriber averaged

$53, compared with $61 for the same period in 1996, reflecting the impact of new

promotions. Since the first quarter of 1996, GTE's customer churn rate has been

reduced by 20 percent.

Operating Income Grows 8% to $1.3 Billion

During the first quarter, operating income increased to $1.35 billion

representing an 8 percent increase over the $1.25 billion reported a year ago.

This increase is primarily the result of the continued growth in GTE's core

wireline and wireless revenues and the favorable impact of ongoing operating

cost reduction programs. The revenue growth and improved cost position were

offset, in part, by higher selling and marketing expenses associated with the

significant growth in wireless and long-distance customers, the continued

expansion of Internet access and video activities and the launch of PCS services

in the Cincinnati area.

About GTE

With revenues of more than $21 billion in 1996, GTE is one of the largest

publicly held telecommunications companies in the world. In the United States,

GTE offers local and wireless service in 29 states and long-distance service in

all 50 states. GTE was the first among its peers to offer "one-stop shopping"

for local, long-distance and Internet access services. Outside the United

States, where GTE has operated for more than 40 years, the company serves over

6.5 million customers. GTE is also a leader in government and defense

communications systems and equipment, directories and telecommunications-based

information services, and aircraft-passenger telecommunications.

# # #


Additional information about GTE can be found on the INTERNET at http://www.gte.com.