Bell Atlantic Reports First Quarter Net Income Up 11.0 Percent
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Bell Atlantic Reports First Quarter Net Income Up 11.0 Percent
Company Shows Continued Strong Revenue Growth in Core Businesses
April 17, 1997
PHILADELPHIA -- Continued strong business volumes in its telephone
and cellular businesses fueled robust operating and earnings growth
for Bell Atlantic Corporation (NYSE:BEL) in the first quarter. The
company reported first-quarter net income of $515.6 million, an
increase of 11.0 percent over the first quarter of 1996. Earnings per
share were $1.17 in the 1997 quarter, 10.4 percent higher than the
$1.06 in the year-earlier period.
"Demand for our services, including data connectivity, wireless and
value-added services, continues to drive excellent bottom line
performance," said Chairman and Chief Executive Officer Raymond W.
Smith. "With solid fundamentals, we are poised for a terrific year in
Smith also noted that the company has been able to absorb significant
start-up costs for new ventures, such as the PrimeCo personal
communications services (PCS) partnership and international wireless
activities. The chief factors were continued cost control measures
and the strong performance of Bell Atlantic's core business units,
driven by revenue growth of 7.6 percent, including Bell Atlantic's
proportionate share of domestic cellular revenues.
Bell Atlantic's network business registered operating income growth of
12.9 percent, including the costs of complying with the 1996 Telecom
Act and new business entry costs.
"In the first quarter of this year, we had solid telephone network
revenue growth of 4.5 percent driven by strong demand for basic
services and successful stimulation of vertical services," said Bell
Atlantic Vice Chairman James G. Cullen. "We continue to position our
business for increased competition through aggressive product
roll-outs such as Key Connection, a packaged toll offering, and
through new distribution channels, including the opening this summer
of our first center for Bell Atlantic Plus, our one-stop shop for all
telecommunications needs, which we announced last month."
In the network business:
- Access lines in service totaled approximately 20.8 million, up
3.9 percent over the last 12 months. The increase includes 12.9
percent year-over-year Centrex line growth.
- Access minutes of use grew 3.0 percent compared with the
unusually strong first quarter of 1996. Adjusted for the effects
of last year's storms and leap year, access minutes of use were
up approximately 8.0 percent.
- At the end of the first quarter of 1997, Bell Atlantic had nearly
225,000 ISDN (Integrated Services Digital Network) lines in
service, about 45 percent above the total a year earlier.
In the residential market:
- Sales of secondary residential telephone lines, propelled by
continued growth in the use of home computers and other
communications devices, climbed to a record 245,000 in the first
quarter of 1997, more than 19.7 percent above year-earlier levels
and on track to meet the company's 1997 target of one million
additional lines sold.
- First quarter revenues from Home Voice Mail and
central-office-based services such as Caller-ID, Return Call and
Call Waiting were up about 20 percent compared with the 1996
period. Caller ID revenues grew 60.7 percent as the in-service
base rose 55.5 percent. Revenues from Return Call , which in some
markets now features a voice-recorded readout of the calling
party's number, jumped over 19.1 percent from first quarter 1996
In the business markets:
- Bell Atlantic's successful line of customized Centrex packages
for small businesses posted revenues of $53.4 million for the
quarter, up nearly 60.0 percent over the first quarter of 1996.
- Among large business customers, revenues from high-speed Fast
Packet services grew well over 100 percent from the first quarter
levels last year.
- Bell Atlantic Network Integration contributed revenues of $43.2
million, an increase of 17.8 percent over the first quarter of
"With the continuing customer demand for service enhancements and our
preparation for packaging our services for high-value customers, we
are well positioned to remain the provider of choice," Cullen said.
"We will meet our customers' needs in an easy, reasonably priced and
satisfying manner. That class of customer care will be the key to
winning their on-going loyalty."
Network operating expenses for the quarter were approximately $2.4
billion, 1.6 percent higher than in 1996, primarily due to increased
marketing costs, costs of complying with the Telecom Act checklist,
and start-up expenses for the Internet and long distance businesses,
offset by reductions in certain employee costs.
Bell Atlantic's global wireless portfolio of more than 89 million POPs
(people in markets served) continued to post fast growth in its
customer base and revenues in the first quarter of the year.
- The company posted a 23.1 percent gain in net revenues over the
first quarter of 1996, an operating income increase of 18.0
percent, and an operating cash flow improvement of 20.6 percent.
- At the end of the first quarter, the company had 29.6 percent
more customers than in the year-earlier period. The company
added 224,000 new customers in the first quarter of 1997 - a
record for first quarter net customers added - bringing its total
to 4.6 million.
- Penetration rose to 8.15 percent, a 27.3 percent increase over
"First quarter 1997 was another successful period for our wireless
businesses," said Bell Atlantic Vice Chairman Lawrence T. Babbio, Jr.
"Domestically, we brought CDMA (code division multiple access) digital
technology to all but one of our major Bell Atlantic NYNEX Mobile
markets, and by the end of the second quarter our network will be
digital in all markets. We successfully anticipated and prepared for
new competitors in these markets, and maintained our momentum. We had
an excellent operating cash flow margin of 40 percent in BANM,
demonstrating our ability to manage growth and profitability.
"Further, our PrimeCo partnership added a total of 77,000 customers
during the quarter, bringing the venture's subscriber rolls to
114,000. With PrimeCo established as a recognized and respected brand,
we look forward to further successes in the marketplace.
"We also are consolidating the results of our Grupo Iusacell, S.A. de
C.V., investment for the first time following our assumption of
operational control of the business in February. We already are
seeing renewed growth in cellular customers and expect that business
to achieve customer growth targets of 30 percent or better for 1997."
In other international events:
- Omnitel Pronto Italia, Bell Atlantic's consortium providing
wireless service in Italy, added over 200,000 new customers in
the first quarter to total some 913,000 customers in one of the
world's fastest growing mobile operations.
- EuroTel Praha, Bell Atlantic's wireless partnership serving the
Czech Republic, added approximately 140,000 customers since July
1996 on its new digital, GSM (global system for mobile) network.
Including its analog customers, the company has a total of
approximately 200,000 customers.
- EuroTel Bratislava, Bell Atlantic's wireless investment in the
Slovak Republic, began GSM service in February, only three months
after receiving its license from the government.
The combined wireless portfolio added approximately 200,000
proportionate subscribers in the first quarter for a total of 3.1
million subscribers, an increase of 40.9 percent over a year ago.
"In the wireless world, Bell Atlantic has differentiated itself as the
digital choice for a growing customer base in a competitive
marketplace," Babbio said. "We are successfully engaging the new
competitors in their own game, and we are maintaining impressive
growth into the future."
Anticipating a landmark year for the company, Smith said, "We are
heading toward the closing of our merger with NYNEX with great
momentum. The new Bell Atlantic will capitalize on the continued
strength in our core businesses, directed by a strong management team
and serving a customer base hungry for new choices and a company like
ours, which knows how to meet their demands."
Bell Atlantic Corp. (NYSE: BEL) is at the forefront of the new
communications, entertainment and information industry. In the
mid-Atlantic region, the company is the premier provider of local
telecommunications and advanced services. Globally, it is one of the
largest investors in the high-growth wireless communication
marketplace. Bell Atlantic also owns a substantial interest in
Telecom Corporation of New Zealand and is actively developing
high-growth national and international business opportunities in all
phases of the industry.