SNET News Release
227 Church Street
New Haven, Connecticut 06510
July 24, 1997
For more information contact: Kevin Moore
(203) 771-2136
SNET Second Quarter Earnings Per Share $0.76
NEW HAVEN, Conn., July 24, Southern New England
Telecommunications Corporation (SNET) (NYSE: SNG)
announced today that second quarter net income was $50.0
million or $0.76 per share compared with $50.5 million
or $0.77 per share in the second quarter of 1996.
"We're holding our own as we position SNET for the
future," said Daniel J. Miglio, SNET's Chairman and
Chief Executive Officer. He added, "Our initiative in
successfully challenging the Federal Communications
Commission's interconnection order enables us to
continue the course we've charted. We are also moving
to a new competitive model that leverages our wholesale
and retail strengths. Our planned restructuring into an
incumbent local-exchange carrier (ILEC) and a
competitive local-exchange carrier (CLEC), which was
approved recently by the Department of Public Utility
Control (DPUC), positions us to compete most effectively
in the wholesale and retail markets. The new structure
will enable our wholesale business, the ILEC, to focus
on remaining the preeminent network provider. And our
retail business, the CLEC, will gain the ability to
compete equally with other CLECs and differentiate its
products through greater marketing flexibility."
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"Our long-distance, wireless and entertainment
growth businesses are progressing well. We are
successfully rolling out SNET americast cable-television
service to selected areas of the state and getting a
very enthusiastic customer response. While we are
satisfied with our 'on plan' results for the quarter,
earnings have been dampened by the full impact of equal
access competition, which was introduced during 1996,
investments we are making in our future like I-SNET and
SNET americast as well as incremental costs for the Year
2000."
Revenues
Consolidated revenues and sales for the second
quarter were up 2.8 percent to $501.6 million. Wireline
revenues rose 4.2 percent to $408.0 million.
Interstate/international long-distance posted very
strong growth, with revenues up 41.0 percent on similar
growth in the customer base. In-state toll revenues
were down 19.2 percent, reflecting the full impact of
intralata toll competition that resulted in lower
message volume and discounted calling plans. Local-
service revenues were up 4.1 percent on strong access-
line growth of 4.3 percent. This was fueled by
continued demand for new business and second residential
lines. Vertical services like caller ID, call blocking
and missed-call dialing also contributed positively to
the local-service revenue gain. Network-access revenues
increased 10.6 percent on growth in interstate and in-
state minutes of use.
Revenues for SNET's wireless business were up 3.9
percent to $58.6 million, and margins continued to
improve.
Revenues from the company's Information and
Entertainment business showed a 2.0 percent gain to
$47.0 million due to growth in Internet access.
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Expenses
Consolidated operating and maintenance expenses for
the second quarter were up 3.3 percent to $295.3
million. Approximately $3 million of that was spent on
computer reprogramming for the Year 2000.
Operating and maintenance expenses in the wireline
business grew 5.6 percent or $13.1 million with over
half of that going to support robust growth in SNET's
interstate/international long-distance business. Other
increases were for higher costs to meet strong service
demand that began in the second half of 1996 and
continues today.
Wireless expenses declined 7.1 percent or $3.2
million. This was due in part to less fraud and bad
debt.
Information and Entertainment operating expenses
rose 32 percent or $5.7 million. SNET's cable-TV
rollout accounted for $4.6 million of that increase.
There were also higher expenses to support the company's
increased customer base for SNET Internet access
service.
Depreciation and amortization expenses were up 7.0
percent for the second quarter as a result of expanded
plant, property and equipment. Interest expense was
down slightly by 1.3 percent or $0.3 million.
SNET is the leading information, communications and
entertainment company in Connecticut, offering a full
range of wireline and wireless voice and data services,
Internet access and cable TV. The company is building
I-SNET[R], a statewide broadband information superhighway
and providing network support services to a wide array
of national and international customers.
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SNET
Preliminary Summary of Consolidated Results
For the Three Months Ended June 30, 1997
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
For the 3 Months Ended Percent
June 30, Change
1997 1996
INCOME STATEMENT
Revenues and Sales $501.6 $487.8 2.8%
Costs and Expenses:
Operating and maintenance 295.3 285.9 3.3%
Depreciation
and amortization 94.4 88.2 7.0%
Taxes other than income 13.4 13.5 (.7%)
Total Costs and Expenses 403.1 387.6 4.0%
Operating Income 98.5 100.2 (1.7%)
Interest expense 22.4 22.7 (1.3%)
Other income, net 3.9 2.1 85.7%
Income Before Income Taxes 80.0 79.6 .5%
Income taxes 30.0 29.1 3.1%
Net Income $50.0 $50.5 (1.0%)
Weighted Average Common Shares
Outstanding (thousands) 65,999 65,626 .6%
Earnings per share $0.76 $0.77 (1.3%)
STATISTICS
Access Lines in Service
(thousands) 2,205 2,114 4.3%
Interstate Minutes of Use
(millions) 2,053 1,933 6.2%
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SNET
Preliminary Summary of Consolidated Results
For the Six Months Ended June 30, 1997
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
For the 6 Months Ended Percent
June 30, Change
1997 1996
INCOME STATEMENT
Revenues and Sales $984.3 $961.8 2.3%
Costs and Expenses:
Operating and maintenance 576.9 554.6 4.0%
Depreciation
and amortization 186.0 177.4 4.8%
Taxes other than income 26.5 27.5 (3.6%)
Total Costs and Expenses 789.4 759.5 3.9%
Operating Income 194.9 202.3 (3.7%)
Interest expense 45.1 45.3 (.4%)
Other income, net 4.0 5.8 (31.0%)
Income Before Income Taxes 153.8 162.8 (5.5%)
Income taxes 57.7 60.1 (4.0%)
Income Before
Extraordinary Charge 96.1 102.7 (6.4%)
Extraordinary Charge,
Net of Tax (3.7) -
Net Income $ 92.4 $102.7 (10.0%)
Weighted Average Common Shares
Outstanding (thousands) 65,922 65,505 .6%
EARNINGS PER SHARE
Income Before
Extraordinary Charge $1.46 $1.57 (7.0%)
Extraordinary Charge,
Net of Tax (0.06) -
Net Income $1.40 $1.57 (10.8%)
STATISTICS
Access Lines in Service
(thousands) 2,205 2,114 4.3%
Interstate Minutes of Use
(millions) 4,101 3,905 5.0%