FIRST QUARTER HIGHLIGHTS
Reported results compared to the previous year:
- Communications services revenue grew sixteen-fold to $737.2 million
- EBITDA grew 33-fold to $155.4 million
Pro forma results compared to the previous year:
- Communications services revenue grew 36 percent to $737.2 million
- Total revenue grew 30 percent to $878.4 million
- EBITDA nearly doubled
- Internet and data services revenue grew more than 100 percent
Denver, April 21, 1999 ? Qwest Communications International Inc. today reported strong first quarter 1999 results reflecting the company?s continued rapid growth, momentum and success in winning large, high-profile business accounts. Qwest exceeded the consensus of analysts? earnings estimates.
The company?s board approved a two-for-one stock split in the form of a stock dividend for shareholders of record as of the close of business on May 3, 1999. The split requires shareowner approval of an increase in the company?s authorized number of shares at the Qwest 1999 annual meeting on May 5, 1999. The new shares will be distributed on May 24, 1999. This is the second two-for-one split since the company went public in June of 1997.
On a reported basis, communications services revenue for the quarter grew 1,600 percent from $42.6 million to $737.2 million, while total revenue grew five-fold over the first quarter of 1998 from $177.1 million to $878.4 million. Total EBITDA grew 33-fold for the quarter from $4.5 million to $155.4 million compared to the same period last year.
For the three months ending March 31, 1999, pro forma communications services revenue grew to $737.2 million, a 36 percent increase over the same period in 1998. Total revenue was $878.4 million, a 30 percent increase over pro forma revenue for the same period in the previous year. As a result of new service offerings and aggressive customer acquisition efforts, Internet and data communications services continued to post impressive gains and grew by more than 100 percent over 1998. Total EBITDA grew to $155.4 million while communications services EBITDA increased to $100.7 million, representing growth of 95 percent and 98 percent respectively over the same period in 1998. The company reported earnings of $4.8 million, or $0.01 per share, compared to a pro forma loss of ($20.5) million or ($0.06) loss per share for the comparable period.
Commenting on the quarter, Qwest Chairman and CEO Joseph P. Nacchio said, "We?re extremely pleased with the strong first quarter operational results and the progress across all aspects of our business. Our leading-edge technology and services are in high demand and during the quarter we took critical steps in providing end-to-end networking solutions to our customers."
On a sequential basis, Qwest reported double-digit growth in communications services revenue while communications EBITDA was up more than 30 percent from the fourth quarter of 1998.
"Our quarterly results reflect Qwest?s continued momentum and execution while investing for future growth, " said Robert S. Woodruff, Qwest executive vice president and chief financial officer. "Our strong revenue growth along with the continued improved gross margins and selling, general and administrative cost efficiencies, further strengthen our financial position."
Major Customer Wins/Enhanced Service Offerings
During the quarter, the company?s National Accounts Sales Division added a number of high-profile businesses to the Qwest customer roster, including the company?s largest contract to date ? the U.S. Department of Treasury. Qwest also announced agreements with America Online, Ford Motor Company, Delta Air Lines, CNN, Rollins and RE/MAX.
To better serve these customers, the company continued to introduce new service offerings that capitalize on the high-speed capacity of the Qwest network. In March, the company introduced its first service as a result of its partnership with Microsoft, Q.commerce(sm)-Retail, a turnkey solution for the retail industry to create Web-based storefronts.
The company also completed the acquisition of Icon CMT, which accelerated Qwest?s ability to deliver bandwidth enabled applications and network management services ? a market that analysts predict will exceed $100 billion in the next five years. Qwest is leveraging relationships with Icon?s existing premier customers including Bear Stearns, Merrill Lynch, CBS, Swissotel and Pfizer.
Expansion in Europe and the U.S.
Qwest continued to expand its global operations during the quarter. KPN, the Dutch
telecommunications company, and Qwest finalized their KPNQwest joint venture, completed the first of six fiber-optic EuroRingsTM that will interconnect more than 40 cities throughout Europe and signed the venture?s first commercial customer, DANTE. In addition Qwest completed the acquisition of Xlink Internet Service GmbH, Germany?s second-largest provider of Internet services to business and institutional customers.
Earlier this week, Qwest and BellSouth Corporation announced a strategic relationship that will significantly accelerate the companies? efforts to provide a full set of Internet-based and broadband communications services to customers. As part of the agreement, BellSouth will acquire about a 10 percent equity stake in Qwest. The agreement complements Qwest?s end-to-end broadband connectivity strategy by extending its reach into the Southeastern U.S., providing access to 1.5 million business customers and eventually 14 million consumers.
End-to-End Local Connectivity
Qwest took steps during the quarter to gain direct broadband connectivity to customers. The company announced during the quarter that it completed metropolitan area networks in 10 cities and will complete rings in another nine markets by the end of the year. These networks will help insure availability of broadband connectivity and offer better price performance to large and multi-location customers.
In addition, Qwest announced agreements with Covad Communications and Rhythms NetConnections, providers of high-speed digital subscriber line (DSL) connectivity, giving Qwest the ability to provide end-to-end high-speed connectivity to customers in key metropolitan U.S. cities. As a result of these initiatives, Qwest will have high-speed local connectivity in more than 35 markets by the end of the year.
The company continued to make excellent progress on the construction of its nationwide network and remains on schedule for mid-year completion. To date more than 15,000 miles of the 18,815 mile network have been completed. In addition, Qwest has more than 17,000 miles of cable installed and 18,300 miles of conduit in the ground. While total revenue increased over the prior quarter, construction revenue declined to $141.2 million, reflecting Qwest?s successful transition to a leading-edge provider of communications services. Nearly 85 percent of the quarter?s revenue was derived from communications services.
Qwest Communications International Inc. (Nasdaq: QWST) is a leader in reliable and secure broadband Internet-based data, voice and image communications for businesses and consumers. Headquartered in Denver, Qwest has more than 9,000 employees working in North America, Europe and Mexico. The Qwest Macro Capacity (R) Fiber Network, designed with the newest optical networking, will span more than 18,500 route miles in the United States when it is completed by mid-1999, and an additional 315-mile network route that will be completed by the end of the year. In addition, Qwest and KPN, the Dutch telecommunications company, have formed a venture to build and operate a high-capacity European fiber optic, Internet Protocol-based network that has 2,100 miles and will span 9,100 miles when it is completed in 2001. Qwest also has nearly completed a 1,400-mile network in Mexico. For more information, please visit the Qwest web site at www.qwest.com.
View Attachments A,B, & C
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 complete the network on schedule and on budget, financial risk management and future growth subject to risks, Qwest?s ability to achieve Year 2000 compliance, and adverse changes in the regulatory or legislative environment. 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.The Qwest logo is a registered trademark of Qwest Communications International Inc. in the U.S. and certain other countries.
Qwest Media Contact