EXHIBIT 99
U S WEST (REGISTERED TRADEMARK)
INVESTOR RELATIONS
April 21, 1999
- --------------------------------------------------------------------------------
Note to investors: U S WEST (NYSE: USW) will hold a live teleconference call at
9:00 a.m. MDT (11:00 a.m. EDT) today to discuss first quarter, 1999 results.
Participants should call 1-888-569-5033 by the scheduled start time. A replay
will be available starting at noon MDT, through 6 p.m. MDT on Wednesday, Apr. 28
by calling 1-888-203-1112 and entering confirmation number 652668.
- --------------------------------------------------------------------------------
U S WEST Announces First Quarter Earnings Results
-- PCS, DSL, Internet Access Products Achieving Strong Growth --
-- Accelerating Revenues, Slowing Expenses Expected to Yield Growth
Through Remainder of Year --
DENVER - U S WEST (NYSE: USW) today announced first quarter diluted earnings per
share of $.78, unchanged from pro forma first quarter 1998 earnings.
Results were aided by overall revenue growth of 5.7 percent, better than the 5.0
percent normalized growth in fourth quarter, 1998. Capitalizing on the
opportunity in the high-growth wireless and data markets, the company's
quarterly results were offset by increased investment in these areas. Additional
spending to increase the company's electronic sales capabilities and continue
improving its infrastructure - spending which is expected to ease later in the
year - also affected first-quarter earnings.
"The continued strength in our revenues led to bottom-line results that met
first quarter expectations," said Sol Trujillo, president and CEO. "However, our
first quarter spending was well above last year. That was driven not only by our
own growth and long-distance compliance initiatives, but also by the escalating
costs for a customer base that has increasingly complex demands. For the year,
we expect to achieve our full-year growth of around 10 percent, but it will be
dependent on our ability to moderate the current cost trend and execute on
certain investments and initiatives, including those we announced in February.
"Meanwhile, our growth initiatives continue to show very strong results," he
added. "Our wireless offering continues to increase penetration, our Internet
access product is showing incredible growth, our industry-leading DSL data
offering continues to perform well, and our electronic commerce effort is
starting to build momentum."
- more -
U S WEST First Quarter Earnings - Page 2
Trujillo said the company drove strong quarterly revenue growth in several ways.
U S WEST's data and wireless businesses posted strong subscriber growth gains
for the quarter. U S WEST Dex, the company's directory and Internet Yellow Pages
business, turned in very good quarterly results. Additionally, the core
telephony business benefited from strength in its deployment of vertical
services.
o First quarter data revenues grew to nearly $380 million, up 31 percent over
first quarter 1998. !NTERPRISE - which manages the company's in-region and
out-of-region emerging data products, including digital subscriber line,
Internet access, ATM and Frame Relay - grew revenues by 50 percent over
first quarter 1998 to $173 million for the quarter. Customer levels for the
company's Internet access service, uswest.net, grew by almost 50,000 to
nearly 200,000.
o Customers opting for the company's high-speed digital subscriber line (DSL)
data product, MegaBit Services, grew by about 10,000 for the quarter and
now total more than 30,000. U S WEST expects to have more than 100,000 DSL
subscribers by year's end.
o During the quarter, the company's Advanced PCS wireless product grew its
customer base to nearly 220,000 - a gain of about 35,000 for the quarter in
what is traditionally the slowest quarter of the year in the wireless
business. On a weighted average basis, these customer levels now represent
about 2 percent penetration. Average monthly revenue per subscriber
remained at $54. Nearly 50 percent of all PCS customers continue to take
advantage of Advanced PCS' first-in-the-nation integrated features. The
company estimates it will have more than 370,000 subscribers by the end of
1999.
o U S WEST Dex grew revenues at 6.5 percent compared to first quarter 1998,
led by strong print directory results in Minneapolis and Phoenix. In
addition, Dex accelerated its efforts in the Internet advertising and
commerce arena, with sales of more than 6,000 Internet advertising items,
such as web sites, links and banners. Dex's Internet Yellow Pages, the
region's leading on-line directory, is attracting nearly 2 million visits
per month, nearly three times the amount of usage compared with first
quarter 1998. During the quarter, Dex also invested in Flycast, a leading
Web advertising network, and signed long-term distribution agreements with
Flycast and DoubleClick, another on-line advertising network.
o Total "growth subscribers" (customers for the company's PCS, DSL and
Internet access service) now total 450,000, up nearly 95,000 for the
quarter -- a three-fold increase over first quarter 1998. Investment in
these growth initiatives negatively impacted EPS by $0.16 for the quarter
versus $0.08 for first quarter, 1998. This spending is expected to peak by
third quarter 1999.
o In the core telephony business, vertical services continued to show
strength. The company added more than 300,000 Caller ID subscribers during
the quarter. Residential Caller ID penetration is now at 35.7 percent. And
more than 20,000 customers signed up for "No Solicitation," a recently
introduced service that combats unwanted sales calls.
- more -
U S WEST First Quarter Earnings - Page 3
On the expense side, Trujillo said he believes the spending growth rate peaked
during the first quarter and should slow later in the year as first quarter
initiatives begin to take effect and infrastructure spending eases. The
quarter's increased spending resulted primarily from:
o additional spending for data, wireless and electronic commerce growth
initiatives;
o accelerated spending to create new electronic channel capabilities and
infrastructure enhancements;
o additional expenses related to mandates, such as year 2000 compliance and
interconnection to enable the company more rapid entry into the
long-distance market;
o escalating network costs, including pro-active maintenance and delivery
of increasingly complex products.
During the quarter, the company saw continuing impacts from competition in its
local telephony business in both line growth and pricing. It now has re-sold
nearly 444,000 lines to competitors. It also opened five additional states to
1-plus pre-subscription for intraLATA toll calls. This contributed to the 14.7
percent decline in intraLATA toll revenues versus first quarter 1998.
Other first quarter highlights include:
Volumes and Penetration:
o Residential subscriber levels at the end of the quarter for the company's
most popular custom calling features continued to grow, with Voice
Messaging now at 19.3 percent penetration (tops in the industry) and Call
Waiting at 36.5 percent penetration.
o Sales of the company's bundled "Custom Choice" package for residential
customers surpassed 800,000 during the quarter.
o The addition of 569,000 access lines over the past 12 months for a growth
rate of 3.5 percent. On a "voice-grade-equivalent" basis, business access
line growth was 15.8 percent.
o On the small business side, total access lines equipped with Centrex 21
services grew to 450,000, an 89 percent year-over-year increase.
Sales and Revenues:
o A 16.7 percent increase compared with first quarter 1998 in private line
and special access revenues, which totaled $279 million - a reflection of
the company's growing data networking services business and its ability to
successfully compete in one of the most highly competitive segments of the
telecommunications market.
o During the quarter, consumer revenues from vertical services increased by
nearly 16 percent, compared to first quarter 1998.
- more -
U S WEST First Quarter Earnings - Page 4
o Frame Relay revenues increased by 29 percent quarter-over-quarter and
ISDN revenues jumped by 62 percent quarter-over-quarter.
Costs and Margins:
o Absorbed approximately $85 million in incremental expenses related to
interconnection, number portability and Year 2000 compliance during the
quarter. To date, the company has spent $140 million on Y2K. It expects to
spend another $80 during the balance of 1999.
U S WEST (NYSE: USW) provides a full range of telecommunications services -
including wireline, wireless PCS, data networking, directory and information
services - to more than 25 million customers nationally and in 14 western and
midwestern states. More information about U S WEST can be found on the Internet
at http://www.uswest.com.
Safe Harbor Statement: This document contains statements about expected future
events and financial results that are forward-looking and subject to risks and
uncertainties. For these statements, we claim the safe harbor for
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Factors that could cause actual results to differ
from expectations include: (i) greater than anticipated competition from new
entrants into the local exchange, intraLATA toll, wireless, data and directories
markets, causing loss of customers and increased price competition; (ii) changes
in demand for U S WEST's products and services, including optional custom
calling features; (iii) higher than anticipated employee levels, capital
expenditures and operating expenses (such as costs associated with
interconnection and year 2000 remediation); (iv) the loss of significant
customers; (v) pending and future state and federal regulatory changes affecting
the telecommunications industry, including changes that could have an impact on
the competitive environment in the local exchange market; (vi) a change in
economic conditions in the various markets served by U S WEST's operations;
(vii) higher than anticipated start-up costs associated with new business
opportunities; (viii) delays in U S WEST's ability to begin offering interLATA
long-distance services; (ix) consumer acceptance of broadband services,
including telephony, data and wireless services; and (x) delays in the
development of anticipated technologies, or the failure of such technologies to
perform according to expectations. These cautionary statements by U S WEST
should not be construed as exhaustive or as any admission regarding the adequacy
of disclosures made by U S WEST. U S WEST cannot always predict or determine
after the fact what factors would cause actual results to differ materially from
those indicated by the forward-looking statements or other statements. In
addition, readers are urged to consider statements that include the terms
"believes", "belief", "expects", "plans", "objectives", "anticipates",
"intends", "targets", or the like to be uncertain and forward-looking. All
cautionary statements should be read as being applicable to all forward-looking
statements wherever they appear. U S WEST does not undertake any obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
- ### -
Further information: Larry Thede, 303-896-3550; Rodney Miller, 303-896-3096;
Martha Daniele Paine, 303-896-5706.
NOTE: This release and the financial statements will be available on the
Internet after 7 a.m. (MST) by accessing U S WEST's Internet site:
www.uswest.com.