CBB Meets Expectations

Revenue inched up 1% year over year to $362.8 million however wasbelow the Zacks Consensus Estimate of $365 million. Theyear-over-year improvement was driven by growth in Data CenterColocation and IT Services and Hardware. The rest of the segmentrecorded declines in earnings.

Wirelinerevenue dipped 1% year over year to $182.4 million. Lower voicerevenue was partially compensated by higher revenuesfrom entertainment, data and long-distance andVoIP earnings.  

The company lost about 1,000 high-speed Internet clients(including Fioptics and DSL) while the reported quarter, bringingthe total subscriber base to 257,200.

Cincinnati Bell continues to expand the availability of itsFioptics fiber-to-the-home product suite, which providesentertainment, high-speed Internet and voice services. Wirelineadded 3,100 Fioptics entertainment subscribers to reach 47,700clients at the end of the first quarter.

Wirelessrevenues declined 11% year over year to $63.7 million due to lowerequipment and service earnings.

The company exited the first quarter with 446,000 wirelesscustomers, including 297,700 and 148,700 post-paid and prepaidcustomers, respectively. This compares unfavorably with 504,000wireless clients in the year-ago quarter and 459,000 in the lastquarter. Post-paid churn deteriorated slightly to 2.2% from 2.1% inthe year-ago quarter and prepaid churn as well deteriorated to 6.4%from 5.5%. Post-paid average revenue per user was $50.82 andprepaid ARPU was $28.53 in the first quarter.

IT Services and Hardwarerevenues grew 4% year over year to $73.2 million. Earnings fromManaged and Professional services increased 26% during Telecom andIT equipment distribution earnings decreased 6%.

For fiscal 2012, Cincinnati Bell expects revenue and adjustedEBITDA of in broad outline $1.5 billion and $530 million,respectively.

We believe Cincinnati Bell remains committed towards expandingits data center business and Fioptics products that are consideredkey catalysts for the company's growth. To boot, increasedsmartphone adoption as then as 3G and 4G services continue to boostdata revenue per user.

However, we remain concerned about Cincinnati Bell's ongoingexpansion into new markets and substantial investments undertakento keep pace with updated technologies of Tier 1 companies such asAT&T Inc.(T) andVerizon Communications(VZ).