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EXHIBIT 20
OpTel, Inc
[OPTEL LOGO]
OPTEL, INC REPORTS RESULTS FOR FIRST QUARTER FOR FISCAL YEAR 1999
STRONG MOMENTUM ON TELEPHONY DEPLOYMENT
DALLAS, January 14, 1999 - OpTel, Inc ("OpTel") today announced its financial
results for the first fiscal quarter ending November 30, 1998. Operating and
financial highlights (in thousands of dollars where appropriate) are as follows:
OPERATING HIGHLIGHTS - compared to first quarter of fiscal 1998
UNITS UNDER CONTRACT
o 542,999 units under contract, up 32%
o 114% increase in units under contract for telecommunications from 49,938 to
106,863
o 21% increase in units under contract for cable television from 361,873 to
436,136
CUSTOMER NUMBERS
o Telecommunications lines up 67% to 10,483
o Cable television customers up 28% to 217,593
Three Months Ended
--------------------------------------------------------------------
Nov. 30, Aug. 31, Percent Nov. 30, Percent
-------- --------- ------- -------- -------
1998 1998 increase 1997 increase
---- ---- -------- ---- --------
FINANCIAL HIGHLIGHTS
TOTAL REVENUE 20,540 20,047 2% 12,252 68%
Cable television 19,183 18,886 2% 11,473 67%
Telecommunications 1,357 1,161 17% 779 74%
EBITDA (1,389) 632 - (1,490) -
Commenting on the Company's results, Louis Brunel, President and Chief Executive
Officer, said:
"In the first quarter, we invested a significant level of time and energy on the
rollout of our new switches and high speed Internet access offering. Compared to
the end of the first quarter of 1998, our phone units under contract more than
doubled. We have gained momentum in our sales of telephony contracts. We have
developed a new access strategy that we believe will expand our addressable
telephone units in Houston alone by more than 200,000 units in this financial
year. Three additional switches will be activated before the end of April and
our high speed Internet access offering is becoming a reality this month in
Dallas, Houston and San Francisco.
However, in focusing principally on these exciting developments, regretfully, we
neglected to advance the marketing and sale of our cable product and accordingly
cable revenue and customer growth each are below expected levels. We are
currently addressing the situation with the launch of direct sales to consumers.
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OpTel, Inc
In view of the foregoing we are reporting a negative EBITDA for the first
quarter. We anticipate recovery of our expected cable growth progressively
during the second fiscal quarter, during which period EBITDA will continue to be
under pressure. During the upcoming period we also expect to aggressively expand
our addressable telephony market and new high speed Internet access product."
OpTel is a leading network based provider of integrated communications services,
including local and long distance telephone and cable television services and
high speed Internet access, to residents of multiple dwelling units in the
United States. The Company currently provides cable television and
telecommunications services in several metropolitan areas including Los Angeles,
San Diego, San Francisco, Phoenix, Denver, Houston, Dallas-Fort Worth, Austin,
Chicago, Indianapolis, Atlanta, Miami-Ft. Lauderdale, Tampa, and Orlando. OpTel
is majority owned by Le Groupe Videotron Ltee ("GVL"), owner of the second
largest cable television operator in Canada.
# # #
For further information, please contact:
Bertrand Blanchette
Chief Financial Officer
214-637-8716
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OpTel, Inc
FINANCIAL RESULTS FOR THE FIRST QUARTER OF FISCAL 1999
TOTAL REVENUES. Total revenues for the first quarter of fiscal 1999 increased by
$8.3 million or 68% to $20.5 million compared to revenues of $12.3 million for
the first quarter of fiscal 1998. Compared to the preceding quarter total
revenues increased by 2% from $20.0 million.
CABLE TELEVISION. Cable television revenues in the first quarter of fiscal 1999
increased by $7.7 million, or 67%, to $19.2 million from $11.5 million in the
comparable period in fiscal 1998, reflecting both a 28% increase in the number
of customers and a 12% increase in the average monthly revenue per customer
which rose from $26.30 in the first quarter of fiscal 1998 to $29.42 in the
first quarter of fiscal 1999. The increase in revenue per customer mainly
resulted from a combination of rate increases following property upgrades and a
change in mix of customers to favor the cities with higher revenues per
customer. The Company maintained basic penetration at 54%.
TELECOMMUNICATIONS. Telecommunications revenues in the first quarter of fiscal
1999 increased by 74% to $1.4 million, up from $0.8 million in the comparable
period in the preceding year, reflecting both a 67% increase in the number of
lines compared to the first quarter of fiscal 1998 and a 11% increase in the
average monthly revenue per line, which rose from $41.70 to $46.30. Since
launching a central office switch in Houston and Dallas during fiscal 1998, the
Company has increased its efforts to market its telephone product.
PROGRAMMING, ACCESS FEES AND REVENUE SHARING. Programming, access fees and
revenue sharing increased from $5.8 million in the first quarter of fiscal 1998
to $9.4 million this year. All of the increased cost is attributed to the
subscriber growth mentioned above.
CUSTOMER SUPPORT, GENERAL AND ADMINISTRATIVE. Customer support, general and
administrative expenses were $12.5 million for the first quarter of fiscal 1999
compared to $8.0 million in the first quarter of fiscal 1998. The increase in
customer support, general and administrative expenses is largely due to an
increase in personnel associated with the expansion of the Company's operations
and the roll-out of telephony and Internet.
EBITDA. The Company's EBITDA for the first quarter of fiscal 1999 was $(1.4)
million compared to $(1.5) million in the first quarter of fiscal 1998.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization was $8.7 million
for the first quarter of fiscal 1999 compared to $5.0 million for the first
quarter of fiscal 1998. This increase is primarily attributable to an increase
in cable and telephone systems and intangible assets resulting from continued
purchases and construction of such systems and from acquisitions of businesses.
INTEREST EXPENSE. Interest expense (net of amounts capitalized) was $13.0
million for the first quarter of fiscal 1999, an increase of $1.2 million over
interest expense of $11.8 million for the first quarter of fiscal 1998. This
increase is attributable to the increase in the Company's indebtedness
associated with the $200 million of its 11.5% Senior Notes due 2008 Notes issued
in July 1998. Interest expense associated with the convertible notes payable to
stockholder was eliminated in March 1998 with the conversion of these notes to
preferred stock.
INTEREST INCOME AND OTHER INCOME. For both the first quarter of fiscal 1999 and
fiscal 1998, interest income and other income was $2.0 million. The Company
invests its cash in money market funds and other conservative instruments
according to its investment policy and certain restrictions of its indebtedness.
CAPITAL EXPENDITURES. For the first quarter of 1999 the Company incurred $23.9
million in capital expenditures compared to $54.9 in 1998 (includes $36.6
acquisition costs).
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OpTel, Inc
FINANCIAL & OPERATIONAL DATA
- --------------------------------------------------------------------------------------------------------------
November February May 31, August 31, November
30, 1997 28, 1998 1998 1998 30, 1998
(1)
CABLE TELEVISION
- --------------------------------------------- ---------- ---------- ---------- --------- ---------
UNITS UNDER CONTRACT (NOTE 2) 361,873 372,138 431,387 432,955 436,136
AS A % OF MARKET (NOTE 3) 12.1% 12.5% 14.4% 14.4% 17.4%
UNITS PASSED 314,744 320,288 397,281 399,210 401,378
BASIC SUBSCRIBERS 170,646 172,643 217,106 216,249 217,593
PENETRATION 54.2% 53.9% 54.6% 54.2% 54.2%
PAY TO BASIC RATIO (NOTE 4) 85.2% 83.9% 86.7% 84.5% 83.6%
AVERAGE MONTHLY REVENUE PER SUBSCRIBER (NOTE 5) $26.30 $27.57 $27.74 $29.05 $29.42
TELECOMMUNICATIONS
- --------------------------------------------- ---------- ---------- ---------- --------- ---------
UNITS UNDER CONTRACT 49,938 61,082 89,731 94,338 106,863
AS A % OF MARKET (NOTE 3) 1.7% 2.0% 3.0% 3.1% 4.3%
UNITS PASSED 17,120 17,551 33,131 35,671 42,299
LINES 6,262 6,375 7,700 9,244 10,483
PENETRATION (LINES) 36.6% 36.3% 23.2% 25.9% 24.8%
AVERAGE MONTHLY REVENUE PER LINE (NOTE 5) $41.70 $43.64 $50.63 $46.09 $46.30
========== ========== ========== ========= =========
- ---------------------------------------------- ------------ ------------ ------------ ------------ ------------
1. These figures include 11,701 units under contract (10,925 cable and 776
telephone) for which owner consents have to be delivered by ICS. These
figures include 5,894 cable television customers and 216
telecommunication lines for which owner consents have to be delivered
by ICS. Although consents for these properties have not been received,
the Company services these units and receives the revenue for these
customers
2. Units under contract represents the number of units currently passed
and additional units with respect to which the Company has entered
into Rights of Entry for the provision of cable television and
telecommunication services, respectively, but which the Company has not
yet passed and which the Company expects to pass within the next five
years.
3. Based on an estimated 3.0 million units (as of March 25, 1998) in MDU's
with greater than 150 units located in the Company's markets as
estimated by REIS Reports Inc and updated using Company estimates as
necessary.
4. In common with most other cable television providers the Company has
revised the method of reporting premium penetration to include all
premium units in the calculation.
5. Represents average monthly revenue per the average number of basic
subscribers/lines for the fiscal periods ended as of the date shown.
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OpTel, Inc
STATEMENT OF OPERATIONS
($'S IN THOUSANDS)
Quarter Ended
November 30,
1998 1997
-------- --------
REVENUES
Cable television $ 19,183 $ 11,473
Telecommunications 1,357 779
-------- --------
Total revenues 20,540 12,252
OPERATING EXPENSES:
Programming, access fees and revenue sharing (9,388) (5,765)
General operating expenses (12,541) (7,977)
Depreciation and amortization (8,709) (5,006)
-------- --------
Total operating expenses (30,638) (18,748)
-------- --------
LOSS FROM OPERATIONS (10,098) (6,496)
OTHER
Net interest expense (10,922) (9,774)
Extraordinary loss on debt extinguishment -- --
-------- --------
NET LOSS $(21,020) $(16,270)
======== ========
EARNINGS ATTRIBUTABLE TO PREFERRED STOCK (4,786) --
-------- --------
NET LOSS ATTRIBUTABLE TO COMMON EQUITY $(25,806) $(16,270)
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CONSOLIDATED BALANCE SHEETS
($'S IN THOUSANDS)
November 30,
1998 1997
-------- --------
ASSETS
Cash and short term investments $ 92,187 30,231
Restricted investments 63,797 68,186
Property, plant & equipment 285,134 185,398
Intangibles 160,015 108,575
Other assets 15,499 6,771
-------- --------
Total $616,632 $399,161
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LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable & other liabilities $ 47,857 $ 31,191
Convertible notes payable to stockholder -- 134,451
Notes payable & deferred acquisition liabilities 429,019 229,424
-------- --------
Total liabilities 476,876 395,066
Stockholders' equity 139,756 4,095
-------- --------
Total $616,632 $399,161
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THE FOREGOING INCLUDES CERTAIN FORWARD LOOKING STATEMENTS THAT ARE IDENTIFIED BY
WORDS SUCH AS "EXPECT" AND SIMILAR EXPRESSIONS. ACHIEVEMENT OF SUCH EXPECTATIONS
IS SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES, INCLUDING, AMONG OTHERS, THE
AVAILABILITY OF ADDITIONAL FINANCING ON A TIMELY BASIS AND ON REASONABLE TERMS,
OBTAINING VARIOUS REGULATORY APPROVALS AND SUCCESSFUL MANAGEMENT OF THE
COMPANY'S EXPANSION PLANS.
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