Bell Atlantic Third-Quarter Earnings Up 9 Percent on Continued Strength in Core Businesses
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Bell Atlantic Third-Quarter Earnings Up 9 Percent
on Continued Strength in Core Businesses
October 17, 1996
David Stakun, 215-963-6639
PHILADELPHIA - Bell Atlantic Corporation (NYSE: BEL)
announced today that continued strength in core wireline and wireless
business volumes produced third-quarter 1996 net income of $483.3
million, an increase of 9.4 percent compared with adjusted earnings of
$441.9 million in the same period in 1995,
which excludes certain one-time items. Earnings per share were $1.10 for
the quarter, up 8.9 percent versus adjusted third-quarter 1995 results.
Operating revenues from the company's core businesses, including its
proportionate share of Bell Atlantic NYNEX
Mobile revenues, grew 7.6 percent compared with the third quarter of
1995. Quarterly results for 1996 included significant start-up costs in
the company's long-distance and Internet businesses, costs associated
with complying with the Telecommunications Act of 1996, and revenue
reductions from price promotions and product packaging initiatives.
"Strong top-line growth at Bell Atlantic is producing solid earnings
performance even as we gear up for open markets and attractive new
business opportunities," said Bell Atlantic Chairman and Chief
Executive Officer Raymond W.
Smith. "We remain on target to meet our key financial goals
for 1996 as we look ahead to completing our merger with NYNEX."
One-time items included in Bell Atlantic's third-quarter 1995 earnings
consisted of an after-tax gain of approximately $203 million, or $.46 per
share, from the sale of overlapping cellular properties in connection
with the July 1, 1995, combination of Bell Atlantic Mobile and NYNEX
Mobile Communications, and non-recurring charges of about $40 million, or
$.09 per share, associated with certain business development ventures and
In the third quarter, Bell Atlantic's Network revenues grew 5.2
percent compared with the comparable period in 1995. Adjusted for 1995
access charge reductions and competitive price cuts in the toll market,
revenues grew close to 7 percent.
- Access lines in service on September 30, 1996, totaled approximately
20.4 million, up 3.7 percent over the last 12 months. The increase
includes 12.9 percent year-over-year Centrex line growth in the business
- Access minutes of use grew 8.5 percent compared with the third
quarter of 1995.
- At September 30, Bell Atlantic had approximately 184,000 ISDN (integrated services digital
network) lines in service, 38 percent above the total a year earlier.
"The Network business is producing solid operating income
growth as we continue to stimulate revenue growth and strengthen our
competitive position by stepping up marketing, new product development
and corporate brand advertising," said Bell Atlantic Vice Chairman
James G. Cullen.
"In the consumer market, we're sustaining strong sales of additional
lines and vertical services such as Caller ID, Answer Call, Return Call
and new service packages."
In the residential market:
- Continued growth in home computer use propelled gross sales of secondary residential
telephone lines to nearly 233,000 in the third quarter, more than 60
percent above year-earlier levels. Gross sales for the first nine months
of 1996 are more than 25 percent higher than year-end 1995 totals.
- Third-quarter revenues from Answer Call and central-office-based services such as Caller ID, Return Call and Call Waiting were up about 25 percent compared with the 1995 period. Caller ID revenues grew about 75 percent
as subscribers reached 2.2 million, for a penetration rate of 17.1 percent, compared with 10.5 percent a year ago. Revenues from Return Call, in some markets now featuring a voice-recorded readout of the calling party's number, jumped well over 50 percen
t from third-quarter 1995 levels.
In the business markets:
- Bell Atlantic's successful line of customized Centrex packages for small businesses posted revenues of $41.5 million for the quarter, up nearly 65 percent compared with the
third quarter of 1995.
- Among larger business customers, revenues from high-speed Fast-Packet data
services grew well over 100 percent from third-quarter 1995 levels.
Network operating expenses for the third quarter amounted to $2.5
billion, 5.4 percent higher than in the 1995 period. Adjusting for
increased new-business start-up expenses for long-distance and Internet, expenses were up
4.5 percent, driven primarily by demand growth, increases in sales and
marketing activities, systems and software upgrades, and compliance with
the Telecommunications Act's competitive "checklist."
Bell Atlantic continued to improve network operating efficiency, as
access lines per network employee increased to 362 as of September 30,
1996, from 335 as of the same time a year earlier, an improvement of more
than 8 percent.
Equity income from Bell Atlantic's wireless investment portfolio
of 85 million proportionate worldwide POPs (people in markets served)
increased 53.6 percent compared with third-quarter 1995 results. Equity
income of $98.3 million from Bell Atlantic NYNEX Mobile was 41.0 percent
higher than third-quarter 1995 levels.
"Domestically, our cellular business continues to produce strong
results even with the advent of new competition," said Bell Atlantic
Vice Chairman Lawrence T.
Babbio, Jr. "Very shortly, PrimeCo, our PCS (personal
communications services) consortium, will be launching service in key
markets across the country. Internationally, the growth we're seeing in
Italy has been spectacular. In short, we continue to demonstrate that we
have the talent to establish a truly successful global enterprise."
For Bell Atlantic NYNEX Mobile:
- The number of subscribers surpassed four million in the quarter, as
232,000 new customers were added, reflecting an annual growth rate of
more than 36 percent.
- Operating revenues grew approximately $160 million, or 32.1 percent,
to $657.3 million.
- Operating cash flow margin was 41 percent, with operating cash flow
growth of more than 26 percent.
- Omnitel Pronto Italia, Bell Atlantic's consortium operating the
second wireless license in Italy, achieved world-record subscriber growth
in its first 10 months of commercial operations, signing up more than
560,000 customers to its digital GSM (global system for mobile) service.
- EuroTel, Bell Atlantic's partnership currently serving more than
100,000 customers in the Czech Republic and Slovakia, has acquired 30,000
customers since the inauguration of its digital GSM service in the Czech
"Our impressive third-quarter performance reinforces the solid
foundation for the new Bell Atlantic we will create with the NYNEX
merger," Smith concluded. "I'm confident our combined company
will enjoy enhanced prospects for success across all our businesses - in
traditional markets as well as exciting new ones such as consumer data
services, long distance, Internet, and video. We look forward to the
shareowner vote on the merger in November, to closing the deal early in
1997, and to building a truly world-class global telecommunications
company for the 21st century."
Bell Atlantic Corporation (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.