GTE's Fourth Quarter Contributes to a Strong 1999 Performance; Company Ends Year with EPS Growth of 14 Percent

IRVING, Texas -- GTE Corporation reported strong financial
results for 1999 with adjusted earnings per share (EPS) of $3.49, a
14 percent increase over the prior year, on net income of $3.4
billion, excluding gains on the sales of properties and other
special items. Including these gains and special items, reported EPS
for 1999 was $4.12 on net income of $4 billion, compared to 1998
reported EPS of $2.24 on net income of $2.2 billion. Revenue of
$25.3 billion for the year grew 9 percent from 1998 adjusted revenue
of $23.3 billion.

Fourth quarter adjusted EPS was 98 cents, excluding a 5 cent net
after-tax gain,
primarily from the sale of GTE Information Systems. Including
this net gain, fourth quarter reported EPS was $1.03. Revenue grew
13 percent in the fourth quarter to $6.7 billion from adjusted
revenue of $6 billion in the fourth quarter of 1998.

GTEs purchase of wireless properties from Ameritech increased
revenue by $186 million and reduced EPS by 2 cents per share in the
fourth quarter. Excluding these new properties, fourth quarter
revenue growth would have been 9 percent and EPS growth would have
been 14 percent. The EPS dilution of 2 cents was caused principally
by the non-cash amortization of goodwill associated with this

"Over the last few years, we have been transforming our company
into a full-service telecommunications provider. Our focus has been
on capturing high-growth opportunities, particularly in the Internet
and data businesses, and in 1999 we made great strides in advancing
this strategy, " said Charles R. Lee, Chairman and CEO of GTE. "Our
newer growth businesses, which include data and our CLEC, increased
revenue by 42 percent, with sales of data products and services
reaching a record $2.5 billion. We began to aggressively market DSL
services, supported by a competitively priced offer. And we
completed our private high-speed fiber network, which will give GTE
an edge in today's competitive marketplace.

"At the same time, we enter the 21st century with
strong core businesses that performed very well in 1999 and provide
a solid foundation for future growth. During the year, we expanded
our wireless footprint with the acquisition of Ameritech's Chicago
and St. Louis wireless properties and substantially increased our
domestic customer base. We also successfully reached agreements to
reposition non-strategic assets and will achieve in excess of $4
billion in after-tax proceeds once all the transactions are

"Also during 1999, we continued to strengthen our international
presence. We repositioned our investment in Canada, acquired a 40
percent ownership interest in the Puerto Rico Telephone Company, and
won a PCS license and began construction of the PCS network for
Buenos Aires, becoming a national provider of wireless services in
Argentina. We also increased our minority
ownership position in our wireless operation in Taiwan, which now
has more than 3 million customers.

"At the same time, we continue to make progress in completing our
merger with Bell Atlantic. All but two states and the FCC have given
their approval and Bell Atlantic has won permission from the FCC to
provide long distance services in New York State. We are optimistic
that we can close our transaction in the near future," said Mr.

Consolidated Results

In 1999, consolidated revenue of $25.3 billion increased $2
billion, or 9 percent, over adjusted revenue of $23.3 billion in
1998. Major contributors to this revenue growth include:

  • Domestic access line growth of more than
    10 percent and access minutes of use growth of 8 percent;
  • Network Services data revenue growth of
    $268 million, or 28 percent, including special access data lines,
    ISDN and DSL;
  • Consumer vertical services revenue growth
    of 14 percent for the year and 18 percent in the fourth quarter;
  • Wireless revenue growth of $675 million.
    When normalized for the newly acquired wireless properties and
    change in the manner of reporting in-collect revenue, growth
    accelerated 11 percent in the fourth quarter and was 7 percent for
    the year;
  • Internetworking data revenue growth of
    $457 million, or 79 percent;
  • International consolidated revenue growth
    of $302 million, or 20 percent, with additional investments
    fueling proportionate revenue growth of $897 million, or 31
  • CLEC bundled offering revenue growth of
    $141 million, or 157 percent;
  • Long-distance revenue growth of $217
    million, or 36 percent;
  • Continued customer growth, including:

Total as of


Increase over

last 12 months



Global access lines*



11 %

Global wireless customers*




Long distance



26 %

CLEC bundles



263 %





*Represents domestic totals plus international proportionate across lines and wireless customers. All other statistics U.S. only.

In the quarter, consolidated adjusted operating income was $1.7
billion, an increase of $243 million, or 16 percent, over the same
quarter last year. For the full year, consolidated adjusted
operating income was $6.2 billion, an increase of $756 million, or
14 percent, above 1998. These increases resulted from revenue growth
and the favorable effects of continuing cost-cutting initiatives.
Operating income includes the losses associated with GTEs
continuing investments in its data and CLEC initiatives.

National Operations

National operations revenue was $6.2 billion for the quarter and
$23.6 billion for the year, increasing $668 million and $1.8 billion
above the respective periods last year. GTEs national operations
generated adjusted operating income of $1.6 billion in the fourth
quarter, an increase of $218 million, or 16 percent, over the same
quarter last year. For the entire year, adjusted operating income
was $5.6 billion, an increase of $453 million, or 9 percent, from
1998. The major business units delivering these results

Network Services

Network Services revenue in the fourth quarter was $4.1 billion,
an increase of $163 million, or 4 percent, from the same quarter
last year. Total year revenue of $15.6 billion grew $326 million, or
2 percent, from 1998. These increases were due to growth in access
lines, minutes of use, data and vertical services, partially offset
by mandated price reductions and intraLATA toll erosion. Over the
past 12 months, total access lines grew 10 percent, fueled by
business switched access line growth of 7 percent and special access
line growth of 36 percent. The strong growth in access lines reflects the
underlying economic strength of the companys wireline markets.
Minutes of use increased 8 percent both in the quarter and full year
compared to the same periods in 1998.

For the full year, data revenue of $1.2 billion
increased $268 million, or 28 percent, from last year. Data revenue
includes special access data lines, frame relay,
CyberPOPSM and DSL. By year-end, the company had obtained
57,000 DSL subscribers through a competitively priced offering and
an aggressive marketing campaign. The latest promotion includes a
free modem with a monthly charge of $49.95, including Internet
access through GTE.net. At year-end, DSL was available from 550
central offices, representing approximately 6 million qualified
lines, or approximately 30 percent of the companys total switched
access lines.

Offsetting the revenue increases were mandated federal and state
price reductions of approximately $73 million in the quarter and
approximately $307 million in the year. In addition, toll revenue
continued to decline due to intraLATA toll competition from
long-distance carriers. Within the local market, approximately
400,000 of the companys 26.1 million domestic access lines have
been lost to resale. However, over half of these were resold through
GTEs CLEC, and the resulting net lines lost by GTE have been less
than 1 percent to date.

Network Services operating income in the fourth quarter was $1.6
billion, an increase of $377 million over the same quarter last
year. For the entire year, adjusted operating income grew $826
million, or 17 percent, to $5.8 billion. These improvements were
principally due to continuing cost-cutting initiatives, including
the employee reduction program initiated in the first quarter of
1999 and the related favorable settlement of employee retirement

Wireless Products and Services

Wireless revenue was $1.1 billion for the
quarter and $3.7 billion for the year, including the Oct. 8
acquisition of Ameritech wireless properties in Chicago, St. Louis
and Central Illinois. Excluding these new properties and adjusting
for a change in the manner of reporting in-collect revenue, growth
accelerated to 11 percent in the fourth quarter and was 7 percent
for the year. Wireless subscribers now exceed 7.1 million, up from
4.8 million a year ago, for a growth rate of 48 percent, including
the newly acquired markets (12 percent before the acquisition).

The favorable revenue and customer growth is
the result of positive customer response to the GTE
CHOICESM pricing plans, which provide bundled minute pricing with expanded footprint options. Introduced early in the year, the GTE CHOICE plans have attracted medium and high-value customers and positioned the company as a national competitor in anticipation of the national wireless venture with Bell Atlantic and Vodafone AirTouch. Due primarily to these new pricing plans, revenue per user per month averaged $46 during the year. Cash operating expense per customer dropped 10 percent to $26, reflecting productivity and process improvements, including the implementation of a single integrated billing system in the fourth quarter.

While revenue growth and cash operating expense show significant
improvement, the GTE CHOICE pricing plans have increased roaming
costs and total customer acquisition expenses through strong
customer additions. As a result, operating cash flow margin
decreased to 28 percent in the fourth quarter from 34 percent the
same quarter last year and 34 percent for the year compared to 39
percent last year. GTE expects these roaming costs to significantly
decline as the company gains a broader national footprint with Bell
Atlantic and Vodafone AirTouch and takes advantage of the next
generation of CDMA technology that enables providers to switch
roaming partners more quickly.


Internetworking revenue was $301 million in the fourth quarter,
an increase of $136 million, or 82 percent, from the same quarter
last year. Revenue for the year exceeded $1 billion, increasing $457
million, or 79 percent, from 1998.

Revenue from business services, which include Web hosting,
virtual private networks and e-business, doubled from the same
quarter last year and increased 73 percent for the entire year.
Revenue from networking services provided to on-line and Internet
service providers increased over 50 percent in both the quarter and
year. In December, GTE completed the initial layer of its fiber
network which is now operational nationwide. This 17,000 mile,
high-speed, high-capacity network spans more than 100 U.S.
metropolitan areas and utilizes the latest in SONET ring
technologies. This network will serve as the foundation for all data
and advanced services provided by GTE business units, including
Internet access, virtual private networks and DSL traffic.

Internetworking revenue does not include data revenue from other
business units, such as traditional data circuits, CyberPOP and DSL
sold by Network Services. Combined data revenue from all business
units for the fourth quarter was $689 million and $2.5 billion for
the year.

Although operating losses from Internetworking increased to $157
million in the fourth quarter and $552 million for the year, current
year operating cash flow, which excludes depreciation, showed slight
improvement from the prior year. GTE continues to invest in
additional network capacity, selling and distribution channels, and
new service offerings to build the scale and scope required to
accelerate additional growth in this business.

Other National Operations

GTE Communications, which includes long-distance, CLEC and large
business accounts, produced revenue in the fourth quarter of $431
million, an increase of $110 million, or 34 percent, from the same
quarter last year, with annual revenue growing $450 million, or 42
percent, to $1.5 billion. This revenue growth was driven in part by
a 26 percent increase in the number of long-distance customers over
the past 12 months, ending the year with 3.4 million customers. In
November, GTE launched its CLEC bundled service offering in Texas
after receiving regulatory approval. GTEs CLEC, with 312,000
customers at year-end, is the largest residential CLEC in the

GTE Directories revenue increased $40 million to $939 million for
the year. Contributing to this revenue growth was the success of
GTEs Internet directory web site, SuperPages.com, which achieved 82
percent growth in revenue to $26 million, 81 percent growth in
customers, and a 96 percent increase in page views compared to

International Operations

Net income from International Operations in the fourth quarter
was $152 million, an increase of 14 percent from the same quarter
last year, while annual adjusted net income increased 25 percent to
$551 million. Proportionate revenues grew to $1.1 billion in the
quarter, an increase of $289 million, or 37 percent, from the same
quarter last year. Despite weak economic growth in Venezuela and
Argentina, proportionate revenue for the year was $3.8 billion, an
increase of $897 million, or 31 percent. The investment in the
Puerto Rico Telephone Company and operations in Latin America and
Taiwan contributed to this increase. Proportionate wireless
customers more than doubled from last year, due to strong demand for
prepaid wireless services in Latin America and rapid growth of the
Taiwan wireless market.

About GTE

With 1999 revenues of more than $25 billion, GTE is a leading
telecommunications provider with one of the industry's broadest
arrays of products and services. In the United States, GTE provides
local service in 28 states and wireless service in 18 states, as
well as nationwide long-distance, directory, and internetworking
services ranging from dial-up Internet access for residential and
small-business consumers to Web-based applications for Fortune 500
companies. Outside the United States, the company serves customers
on five continents.

GTE's community and philanthropic programs target excellence in
education, particularly math, science, technology and literacy. GTE
also supports job training, delivery of health and human services,
and the arts. The company's newest program is GTE Reads, a public
charity designed to create public awareness, increase fundraising
and support organizations dedicated to improving America's literacy
levels. GTE customers can contribute to GTE Reads by checking off a
box on their bill. Others can contribute through GTE SuperPages.com

# # #

Note: All references above to earnings per share (EPS) reflect diluted earnings per share.

Forward-Looking Statements

This announcement contains forward-looking statements. For each
of these statements, GTE claims the protection of the safe harbor
for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. If future events and actual
performance differ materially from GTEs assumptions, actual results
could vary significantly from the performance projected in these
forward-looking statements.

The following important factors could affect future results and
could cause those results to differ materially from those expressed
in this announcement: materially adverse changes in economic
conditions in the markets served by us or by companies in which we
have substantial investments; material changes in available
technology; the final outcome of federal, state, and local
regulatory initiatives and proceedings, including arbitration
proceedings, and judicial review of those initiatives and
proceedings, pertaining to, among other matters, the terms of
interconnection, access charges, universal service, and unbundled
network element and resale rates; the extent, timing, success, and
overall effects of competition from others in the local telephone
and toll service markets; the success of our efforts to expand
service capability in the data communication, long-distance and
enhanced services segments of the telecommunications marketplace and
to provide a bundle of products and services both in and outside of
its traditional service territories; the timing of, and regulatory
or other conditions associated with, the completion of our merger
with Bell Atlantic and our ability to combine operations and obtain
revenue enhancements and cost savings following the merger; and the
timing of, and regulatory or other conditions associated with, the
completion of the wireless joint venture between Bell Atlantic
Corporation and Vodafone AirTouch Plc, and the ability of the new
wireless enterprise to combine operations and obtain revenue
enhancements and cost savings.

GTEs Current Report on Form 10-Q for the quarter ended September
30, 1999 discusses in greater detail the important factors that
could cause its actual results to differ