News

Cincinnati Bell Delivers Revenue and Earnings Growth in 2008
Investments in Wireless and Technology Solutions drive solid full-year performance

• Diluted earnings per share of 12 cents, up 183 percent;
• Net income of $29 million, up 123 percent;
• Revenue of $326 million, down 7 percent;
• Returned $21 million to shareholders through repurchase of 11 million common shares;
• Announces a 7 percent employee headcount reduction and suspension of company contributions to the salaried 401K plan;
• Reiterates 2009 guidance

CINCINNATI - May 5, 2009 - Cincinnati Bell Inc. (NYSE:CBB) today announced first quarter 2009 earnings of 12 cents per diluted share compared to earnings of 4 cents per diluted share in the first quarter of 2008, an increase of 183 percent. First quarter 2009 net income was $29 million compared to $13 million in the first quarter of 2008, an increase of 123 percent, and operating income increased $23 million, or 41 percent, to $80 million in the first quarter of 2009. Adjusted earnings before interest, taxes, depreciation and amortization1 (Adjusted EBITDA) was $113 million, or $7 million lower than last year. Total revenues for the first quarter of 2009 of $326 million decreased $23 million or 7 percent from the first quarter of 2008.

"Cincinnati Bell's results this quarter reflected a soft economy," said Jack Cassidy, president and chief executive officer. "An increase in the local unemployment rate, a contraction in the capital markets, and an increase in delinquencies all contributed to mixed financial results. We will continue to create solutions that help our customers reduce costs and conserve capital and remain focused on expense controls as we manage through this challenging environment."

Quarterly Highlights

• Quarterly revenue from Technology Solutions totaled $63 million reflecting a year-over-year increase in data center and managed services revenue of 24 percent, or $5 million and a decline of 37 percent, or $19 million, in revenue from telecom and IT equipment, which was the result of a lack of capital spending in the customer base. In the quarter, the company added a net of 62,000 square feet of data center capacity, and 25,000 square feet of new capacity began billing to customers during the quarter.
• Wireless service revenue in the first quarter of 2009 was $71 million compared with $72 million in the prior year quarter. Higher data revenue driven by smartphone subscriber growth was more than offset by lower voice revenue resulting from a year-over-year decline in postpaid voice minutes of use per subscriber. Cincinnati Bell's focus on smartphone subscriber growth resulted in the addition of 10,000 smartphone activations in the first quarter of 2009. Also, for the third year the company confirmed through independent third-party drive tests that it operates the best wireless network in Cincinnati and Dayton.
• During the quarter, Cincinnati Bell renewed its focus on marketing the value of bundled services with the introduction of the Priced For Life bundled program. With Priced For Life, customers can eliminate price increases by establishing a permanent monthly rate for a bundle of two or more communications services without a contract. Launched on March 9th, the program helped drive quarterly net additions of 1,800 bundled customers.
• Cincinnati Bell continued to repurchase common stock under the program authorized by its Board of Directors in February 2008. In the first quarter of 2009, common stock repurchases totaled $21 million or 11 million shares, representing 5 percent of shares outstanding at the end of 2008. Since the program's inception, the company has purchased $98 million or 32 million shares, representing 13 percent of shares outstanding at the end of 2007.

Financial and Operations Review "We continue to be concerned about the overall impact of the economy on our business and are moving aggressively to reduce expense, maintain our profitability and generate cash flow," said Gary Wojtaszek, chief financial officer. "In addition to the pension and retiree healthcare plan changes we announced earlier in the year, we will also reduce our headcount by approximately 7 percent, suspend company contributions to the 401K plan for salaried and non-represented employees for the remainder of the year and reduce other discretionary expenses as part of our overall cost management efforts."

"We are pleased with our financial results, which combined with our annual 2009 guidance highlight the strength of our business model," said Gary Wojtaszek, chief financial officer. "Additionally, the positive free cash flow our business generates combined with a lack of significant bond maturities until 2013, provides us with a great amount of flexibility to repurchase our debt at attractive rates, retire some of our equity and also continue to opportunistically invest in the business so we can continue to grow revenue and earnings."

Wireline Segment
Quarterly revenue equaled $196 million, down 3 percent or $7 million from a year ago. Operating income was $75 million compared to $47 million in the first quarter of 2008, which included a restructuring charge of $23 million associated with the company's early retirement program. Adjusted EBITDA totaled $93 million, down 3 percent or $3 million from the prior year quarter.

Year-over-year total access line loss in the first quarter was 6.7 percent. Growth in residential and business access lines in the company's expansion markets continued to partially offset the impact of a loss of access lines in its traditional service area.

Wireless Services
Quarterly revenue from the Wireless segment was $76 million reflecting lower equipment and prepaid service revenue. Operating income equaled $9 million and Adjusted EBITDA was $18 million, a decline of $4 million from the first quarter of 2008. The decrease was primarily due to increased expenses to support growing smartphone activations in the quarter.

Postpaid average revenue per user (ARPU) in the first quarter was $48.01 compared to $47.47 a year ago and included data ARPU growth of 26 percent. This improvement reflects positive momentum in acquiring smartphone subscribers. Prepaid ARPU was $27.67, up $1.50 year-over-year. Postpaid wireless churn in the quarter was 2.3 percent compared with 3.0 percent in the fourth quarter of 2008.

Technology Services
Technology Solutions quarterly revenue was $63 million, down $12 million or 16 percent from the first quarter of 2008. Data center and managed services revenue grew $5 million or 24 percent year-over-year while lower-margin telecommunications and IT equipment revenue declined $19 million or 37 percent. Operating income in the quarter totaled $3 million, up 3 percent from a year ago. First quarter Adjusted EBITDA was $8 million, up 16 percent from a year ago.

Quarterly capital expenditures were $11 million compared to $22 million in the prior year quarter. Billable data center capacity at the end of the first quarter was 271,000 square feet, which included a net increase of 62,000 square feet of capacity during the quarter. A total of 25,000 square feet began billing in the first quarter leading to a 77 percent utilization rate.

2009 Outlook
Cincinnati Bell confirms its financial guidance for 2009:



Conference Call/Webcast
Cincinnati Bell will host a conference call today at 10:00 a.m. (ET) to discuss its results for the first quarter 2009. A live webcast of the call will be available via the Investor Relations section of www.cincinnatibell.com. The conference call dial-in number is (866) 780-1233. Callers located outside of the U.S. and Canada may dial (816) 581-1571. A taped replay of the conference call will be available one hour after the conclusion of the call until 5:00 p.m. on May 19, 2009. For U.S. callers, the replay will be available at (888) 203-1112. For callers outside of the U.S. and Canada, the replay will be available at (719) 457-0820. The replay reference number is 9445107. An archived version of the webcast will also be available in the Investor Relations section of www.cincinnatibell.com.

Safe Harbor Note
Certain of the statements and predictions contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. In particular, statements, projections or estimates that include or reference the words "believes," "anticipates," "plans," "intends," "expects," "will," or any similar expression fall within the safe harbor for forward-looking statements contained in the Reform Act. Actual results or outcomes may differ materially from those indicated or suggested by any such forward-looking statement for a variety of reasons, including, but not limited to: Cincinnati Bell's ability to maintain its market position in communications services, including wireless, wireline and Internet services; general economic trends affecting the purchase or supply of telecommunication services; world and national events that may affect the ability to provide services; uncertainty in U.S. and world securities markets that could result in increased costs for the Company and limit its financing alternatives; changes in the regulatory environment; any rulings, orders or decrees that may be issued by any court or arbitrator; restrictions imposed under various credit facilities and debt instruments; work stoppages caused by labor disputes; and Cincinnati Bell's ability to develop and launch new products and services. More information on potential risks and uncertainties is available in recent filings with the Securities and Exchange Commission, including Cincinnati Bell's Form 10-K report, Form 10-Q reports and Form 8-K reports. The forward-looking statements included in this release represent company estimates as of May 5, 2009. Cincinnati Bell anticipates that subsequent events and developments will cause its estimates to change.

Use of Non-GAAP Financial Measures
This press release contains information about adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), net income excluding special items, free cash flow, and net debt. These are non-GAAP financial measures used by Cincinnati Bell management when evaluating results of operations and cash flow. Management believes these measures also provide users of the financial statements with additional and useful comparisons of current results of operations and cash flows with past and future periods. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of Adjusted EBITDA, net income excluding special items, free cash flow, and net debt to comparable GAAP financial measures have been included in the tables distributed with this release and are available in the Investor Relations section of www.cincinnatibell.com.

¹Adjusted EBITDA provides a useful measure of operational performance. The company defines Adjusted EBITDA as GAAP operating income plus depreciation, amortization, restructuring charges, asset impairments, and other special items. Adjusted EBITDA should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with this measure as defined by other companies.

Net income excluding special items provides a useful measure of operating performance. Net income excluding special items should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with net income excluding special items as defined by other companies.

Free cash flow provides a useful measure of operational performance, liquidity and financial health. The company defines free cash flow as SFAS 95 cash provided by (used in) operating, financing and investing activities, adjusted for the issuance and repayment of debt, the repurchase of common stock, and the proceeds from the sale or the use of funds from the purchase of business operations. Free cash flow should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities, or the change in cash on the balance sheet and may not be comparable with free cash flow as defined by other companies. Although the company feels that there is no comparable GAAP measure for free cash flow, the attached financial information reconciles free cash flow to the net increase (decrease) in cash and cash equivalents.

Net debt provides a useful measure of liquidity and financial health. The company defines net debt as the sum of the face amount of short-term and long-term debt and unamortized premium and/or discount, offset by cash and cash equivalents



About Cincinnati Bell Inc.
With headquarters in Cincinnati, Ohio, Cincinnati Bell (NYSE: CBB) provides integrated communications solutions-including local, long distance, data, Internet, and wireless services-that keep residential and business customers in Greater Cincinnati and Dayton connected with each other and with the world.

In addition, businesses nationwide ranging in size from start-up companies to large enterprises turn to Cincinnati Bell for efficient, scalable office communications systems as well as complex information technology solutions including data center and managed services.

Cincinnati Bell conducts its operations through three business segments: Wireline, Wireless, and Technology Solutions. For more information, visit www.cincinnatibell.com.