GTE Reports 11% Earnings Per Share Gain in Fourth Quarter Volumes Reach All-Time High
STAMFORD, Conn. -- GTE Corp. today announced that fourth-quarter 1996 operational earnings per share increased 11 percent over the same period last year. Net income was $784 million, or 82 cents per share, compared with $719 million, or 74 cents per share, before special items in the fourth quarter of 1995.
For the full-year 1996, earnings per share increased 10 percent. Net income before special items was $2.79 billion, or $2.88 per share in 1996, compared with $2.53 billion, or $2.61 per share in 1995.
1996 was another excellent year for GTE, said GTE Chairman and Chief Executive Officer Charles R. Lee. GTE is achieving its strategic objectives, as well as delivering record financial results, because of our ability to seize opportunities in this new competitive era, Lee continued. Domestically, we have taken advantage of opportunities provided by the 1996 Telecommunications Act, such as successfully rolling out long-distance services nationwide. In just over nine months, we added more than 825,000 long-distance customers. At the same time, we became the first major local telephone company to bundle a full array of services on a single bill -- a single point of customer contact.
These strategic actions, along with the strong revenue growth and productivity improvements in our core businesses, are positioning us for the future and driving double-digit earnings growth, stated Lee. This quarter marks the sixth consecutive quarter of earnings growth of 10 percent or more.
Internationally, we continued to strengthen the company through new growth opportunities. We began a paging services business in China and, just recently, we were awarded a nationwide digital cellular license in Taiwan as part of our participation in the Pacific Communication Services consortium there.
Our success over the past 12 months demonstrates our ability to execute with speed, in an openly competitive market, Lee added.
For the full-year 1996, GTE's consolidated revenues and sales increased 7 percent to $21.34 billion, compared with $19.96 billion in 1995, driven by:
- Record growth in domestic access lines of 1.5 million, or 8 percent
- Record growth of 11 percent in domestic access minutes of use Domestic cellular customer growth of 738,000, or 25 percent
- Revenue growth of 35 percent in new and enhanced services, including voice messaging, data services, long distance, Caller ID and Internet access
- International network revenue growth of 7 percent, spurred by aggressive local rate rebalancing and a 41 percent increase in cellular customers in Canada and the Dominican Republic.
Operating income reached $1.45 billion in the fourth quarter of 1996, representing a 10 percent increase over the fourth quarter of 1995.
For the full-year 1996, operating income reached a record $5.49 billion, up 8.5 percent from $5.06 billion in 1995. This reflects the increased revenue and the favorable effects of ongoing cost-reduction programs. These benefits were partially offset by higher costs associated with the expansion of core wireline and wireless businesses, as well as investment in new revenue initiatives.
Revenues from Domestic Network Services, which include GTE's wireline and wireless operations, increased 6 percent for the full-year 1996 to $13.76 billion, compared with $13.00 billion a year ago. These results were accomplished through the record growth in wireline unit volumes, the introduction of long-distance and Internet access services, the expansion of data and other enhanced services such as CentraNet services, call waiting, Caller ID, 3-way calling, and the continued growth in cellular customers.
Total domestic access lines grew a record 1.5 million, or 8 percent over last year, led by a 1.1 million, or 18 percent, increase in business lines and continued growth in second lines to the home. Minutes of use on GTE's domestic local-exchange network for long-distance calling grew at a record rate of 11 percent.
Access lines per employee, a key indicator of productivity, improved by 13 percent over a year ago to 327, and 30 percent since the end of 1994.
Domestic cellular-service revenues totaled $2.35 billion for the full year, compared with $2.02 billion in 1995. During the year, GTE added 738,000 new domestic cellular customers -- including a record 356,000 customer additions during the fourth quarter -- bringing the total U.S. customers served to 3,749,000, a 25 percent increase over 1995.
Since the fourth quarter of 1995, when we first implemented the targeted marketing programs for domestic cellular, we have reduced churn rates by 19 percent and lowered our bad debt levels by 25 percent, Lee said. We are very pleased with these results, which have provided a balanced approach to profitability and growth.
Our consolidated Canadian and Latin American operations have made impressive advances in 1996, Lee added, surpassing the $2 billion mark in network services revenues, representing a 7 percent improvement. Operational improvements at CANTV, in particular, have been very encouraging. GTE's results have benefited from the effects of a stabilizing economic environment in Venezuela, coupled with the implementation of timely rate increases and overall productivity gains, Lee said. In fact, during the fourth quarter, we boosted our ownership to 26 percent through purchases during the public offering of CANTV shares by the Venezuelan government and in the market thereafter. For the year, CANTV increased access lines by more than 5 percent to 2.6 million lines in service, while the number of access lines per employee grew approximately 22 percent.
Growth In Other Operations
Highlights for the year of GTE's other operations include the following achievements:
- Directory-services revenue grew 10 percent to $1.53 billion -- with strong customer growth including the expansion of GTE SuperPagessm online directory for the Internet, and new out-of-franchise directory offerings
- Other services and sales grew 9 percent to $3.98 billion; notable awards include:
* GTE Supply's multi-year contract with BellSouth to manage the procurement, inventory and distribution of equipment
* GTE Data Services' multi-year contract with Portugal Telecom for state-of-the-art billing and customer care systems
* GTE Government Systems' orders valued at $1.21 billion, including a major award with the Department of Justice for a computer systems contract
* GTE Airfone agreement with USAir to provide Advanced Digital Airfone Service on 380 aircraft, maintaining GTE's leadership position in passenger in-flight communications * GTE and Bell Atlantic NYNEX Mobile team to provide multi-year Federal Wireless contract valued at $300 million.
GTE, with annual revenues and sales exceeding $21 billion, is one of the largest publicly held telecommunications companies in the world. It also is the largest U.S.-based local telephone company and a leading cellular-service provider -- with wireline and wireless operations in markets encompassing about a third of the country's population. Outside the United States, where GTE has operated for more than 70 years, the company serves over 6 million wireline and wireless customers. GTE is also a leader in government and defense communications systems and equipment, aircraft-passenger telecommunications, directories and telecommunication-based information services and systems.