Fourth Quarter Reported Results Compared to Previous Year:
- Total revenue grew 34 percent to $1.16 billion
- Communications services revenue increased 73 percent
- Internet and data revenues grew more than 200 percent and comprised more than 25% of total revenue
- Total EBITDA of $226.4 million represents a 53 percent increase
- Communications Services EBITDA margin improved from 11.4 percent to 19.6 percent
Fourth Quarter Reported Results Compared to Third Quarter:
- Revenue grew 14 percent to $1.16 billion
- EBITDA increased 19 percent to $226.4 million
- EBITDA margin increased from 18.7 percent to 19.6 percent
Full Year Pro Forma 1999 Compared to Pro Forma 1998:
- Total revenue grew 29 percent to $3.90 billion
- Communications services revenue increased 57 percent to $3.68 billion
- Total EBITDA of $760.2 million represents 92 percent growth
- Communications services EBITDA increased 238 percent to $652.8 million
Denver, February 2, 2000 ? Qwest Communications International Inc. (NYSE: Q), the broadband Internet communications company, today announced record revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter and year-end 1999. For the eleventh consecutive quarter Qwest has met or exceeded the consensus of analysts? estimates. The $1.16 billion in total reported revenue for the quarter reflects a 34 percent increase from the $865.1 million recorded in the same period in 1998, while communications services revenue grew 73 percent. On a sequential basis, Qwest reported a 14 percent increase from $1.02 billion in the third quarter of 1999 to $1.16 billion as a result of continued growth in Internet, multimedia and data services. Full year reported revenue increased 75 percent from $2.24 billion to $3.93 billion. Full year 1999 pro forma revenue increased 29 percent from $3.03 billion to $3.90 billion.
Total reported EBITDA for the fourth quarter was up 53 percent to $226.4 million compared to $148.3 million in the fourth quarter of 1998, while communications services EBITDA increased more than 197 percent. Communications services EBITDA grew 19 percent compared to the third quarter of 1999. Pro forma 1999 EBITDA grew 92 percent to $760.2 million from $396.0 million in 1998, despite a 47 percent decline in construction EBITDA resulting from the mid-year completion of 18,500 miles of the U.S. portion of the company?s North American network. Full year 1999 reported EBITDA increased 158 percent from $294.5 million to $759.2 million. Full year 1999 pro forma communications services EBITDA grew 238 percent over 1998.
As a result of strong revenue growth and the company?s ability to carefully manage expenses, communications services EBITDA margin went from 11.4 percent in the fourth quarter of 1998 to 19.6 percent for the same period in 1999. Sequentially, communications services EBITDA increased from 18.7 percent for the third quarter 1999 to 19.6 percent for the fourth quarter in spite of investments for growth in areas such as, CyberCenters(sm), data services, enhanced data sales channels, and broadband local access services.
On a reported basis, the company achieved net earnings of $458.5 million, or $0.60 per diluted share, for the year, compared to a net loss of $844.0 million, or $1.51 loss per share, for 1998. The company reported net earnings of $72.6 million, or $0.09 per diluted share, before non-recurring items, compared to a net loss of $19.4 million, or $0.03 loss per share, before non-recurring items.
Excluding the one-time items of a $414.0 million gain recognized as a result of the KPNQwest initial public offering and $6.5 million of costs directly related to the pending merger with U S WEST, Qwest reported net earnings of $29.4 million, or $0.04 per diluted share, compared to a pro forma net earnings of $0.01 per diluted share during the same period in 1998. Including the non-recurring items, Qwest reported net earnings of $437.0 million, or $0.56 per diluted share, compared to a net loss of $0.03 per share a year ago.
"We are extremely pleased to continue our strong financial performance in our core businesses, while our management team focuses on growing revenues globally through strategic initiatives, including the merger with U S WEST," said Joseph P. Nacchio, Qwest chairman and CEO. "In 1999 we made the necessary investments and commitments to continue to deliver to customers leading-edge broadband Internet communications solutions that will solidly position us as the new Internet communications company of the next decade."
Robert S. Woodruff, Qwest executive vice president and chief financial officer, said, "The financial results for the year reflect Qwest's strong revenue growth and continued margin improvement as a result of our ability to manage expenses. We expect to continue to see strong revenue and EBITDA growth in 2000 led by the demand for Qwest's Internet-based applications and services. In 2000, we anticipate revenue will continue to grow in the range of 30 - 35 percent, with EBITDA growth of approximately 40 - 50 percent."
Woodruff continued, "Our capital spending program for 2000 will be between $2.5 and $2.7 billion to take advantage of growth opportunities by expanding our CyberCenters, creating new global businesses, and by building and selling broadband local access, including Digital Subscriber Line services and expanding Internet and data services."
These estimates do not include the impact of the pending merger with U S WEST or estimated financial synergies.
INTERNET AND COMMUNICATIONS BUSINESS
During the quarter Qwest was awarded a $50 million data communications contract to support the U.S. Department of Energy's (DOE), Energy Sciences Network (ESnet). ESnet will connect DOE?s sites including the national labs, as well as major corporate partners and universities, to Qwest's high-performance broadband Internet communications network. Qwest was selected because it can provide network speeds over the next several years that are 500 times faster than the highest speed available today.
Strong demand continued for Qwest?s hosting and advanced application services. Qwest accelerated CyberCenter construction during the quarter as work on three centers neared completion. Qwest has seven CyberCenters in operation for Web and applications hosting and e-commerce services and is building seven additional facilities in the U.S.
Qwest has contracts with and is providing service to 40 of the top 50 Fortune 500 companies. Contracts secured by Qwest with major national and multi-national corporations increased more than 80 percent compared to 1998. In addition, Qwest and BellSouth Corporation announced contracts totaling more than $250 million in the fourth quarter. The companies said their teaming agreement has produced 27 contracts for communications services, and more than 540 proposals are pending with business customers.
NORTH AMERICAN NETWORK
Qwest?s North American network increased to 24,500 miles in the quarter with the addition of 4,300-miles of network across Canada. The Canadian network joins two existing Qwest U.S. transcontinental routes to deliver a wide variety of broadband Internet solutions, including dedicated access, Web and application hosting, and E-commerce applications. The company also plans to add broadband local access and hosting facilities to serve customers in major markets including Montreal, Toronto and Vancouver.
Qwest announced four California cities would be the first of 25 cities in the U. S. to have high-speed Digital Subscriber Line services through the QwestLink network. The cities are Sacramento, San Diego, San Jose and San Francisco. By the end of 2000, QwestLink networks are scheduled to be completed in 11 cities followed by 14 additional cities in 2001.
Qwest also announced that it would be the first company to offer an all-optical, OC-192 network by mid-2000. Enabled by relationships with emerging technology companies and established market leaders, Qwest's Internet Protocol network will provide customers with unprecedented high-speed capacity at a lower cost.
QWEST/ U S WEST MERGER
The Qwest and U S WEST merger is on schedule to close mid-year. People from both companies are working on 30 teams and are ahead of schedule implementing processes to realize the synergies outlined when the merger was announced. Shareowners of both companies overwhelmingly approved the merger Nov. 2. The Colorado utility commission approved the merger in early January. Hearings are underway or scheduled to begin soon in many other states.
In November, KPNQwest, the European joint venture between Qwest and KPN, the Dutch communications company, completed an IPO. The stock is listed under the symbol ?KQIP? on the Nasdaq and Amsterdam exchange, and the company has a current market capitalization in excess of $28 billion. Qwest owns 44 percent of the KQIP stock, which is currently valued at approximately $12.5 billion. KPNQwest is building an 11,800-mile network in 46 cities throughout Europe. On February 1, 2000 KPNQwest reported revenue of $199 million for the nine months ended December 31
Qwest Communications International Inc. (NYSE: Q) is a leader in reliable, scalable and secure broadband Internet-based data, voice and image communications for businesses and consumers. The Qwest Macro Capacity® Fiber Network, designed with the newest optical networking equipment for speed and efficiency, spans more than 24,500 miles in North America. For more information, please visit the Qwest web site at www.qwest.com.
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This release may contain forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by Qwest with the SEC, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including potential fluctuations in quarterly results, dependence on new product development, rapid technological and market change, failure to maintain rights of way, financial risk management and future growth subject to risks, Qwest's ability to achieve Year 2000 compliance, adverse changes in the regulatory or legislative environment, and failure to complete the merger with U S WEST and achieve projected synergies and financial results timely or at all. This release may include analysts' estimates and other information prepared by third parties, for which Qwest assumes no responsibility. Qwest undertakes no obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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