SOURCE: Centennial Communications Corp.

October 04, 2007 07:00 ET

Centennial Communications Announces Fiscal First-Quarter Results; U.S. Wireless Retail Operating Performance Continues at Record Pace

WALL, NJ--(Marketwire - October 4, 2007) - Centennial Communications Corp. (NASDAQ: CYCL)

--  Fiscal first-quarter income from continuing operations of $0.06 per
    diluted share, compared to $0.00 per diluted share from continuing
    operations in the prior-year quarter
    
--  Fiscal first-quarter consolidated adjusted operating income from
    continuing operations of $100.0 million, up 9 percent year-over-year from
    $92.2 million
    
--  Fiscal first-quarter consolidated revenue from continuing operations
    of $248.0 million, up 10 percent year-over-year from $225.4 million
    

Centennial Communications Corp. (NASDAQ: CYCL) ("Centennial") today reported income from continuing operations of $6.3 million, or $0.06 per diluted share, for the fiscal first quarter of 2008 as compared to a loss from continuing operations of $0.3 million, or $0.00 per diluted share, in the fiscal first quarter of 2007. Consolidated adjusted operating income (AOI)(1) from continuing operations for the fiscal first quarter was $100.0 million, as compared to $92.2 million for the prior-year quarter.

"Our U.S. wireless retail business continues to be one of the best growth stories in the industry," said Michael J. Small, Centennial's chief executive officer. "We're adding and keeping high-quality customers and driving strong ARPU by giving our customers more value for their money."

Small continued, "In Puerto Rico, we're focused on attracting and retaining high-value wireless customers and are now attacking this $3 billion telecom market from all sides including large enterprise, small and medium business and residential."

Centennial reported fiscal first-quarter consolidated revenue from continuing operations of $248.0 million, which included $137.6 million from U.S. wireless and $110.4 million from Puerto Rico operations. Consolidated revenue from continuing operations grew 10 percent versus the fiscal first quarter of 2007. The Company ended the quarter with 1,109,900 total wireless subscribers, which compares to 1,041,500 for the year-ago quarter and 1,101,000 for the previous quarter ended May 31, 2007. The Company reported 439,300 total access lines and equivalents at the end of the fiscal first quarter, which compares to 369,000 for the year-ago quarter.


OTHER HIGHLIGHTS

--  The Company announced that it will redeem the remaining $20 million
    aggregate principal amount of its $20 million outstanding 10-3/4 percent
    senior subordinated notes due December 15, 2008.  The redemption will occur
    on or about November 5, 2007 at face value with no prepayment penalties.
    
--  On September 18, 2007, Centennial announced that it completed the
    purchase of Islanet Communications, a provider of data and voice
    communications to business and residential customers in Puerto Rico.
    Islanet also holds 2.5Ghz spectrum suitable for WiMAX technology in Puerto
    Rico.
    
--  On September 18, 2007, the Company also announced that it entered into
    a definitive agreement to purchase 1900 MHz (PCS) wireless spectrum from
    Highland Cellular Holdings, Inc., covering an aggregate of approximately
    400,000 population equivalents (POPs) in Lima and Findlay-Tiffin, Ohio.
    This targeted purchase is contiguous to Ft. Wayne, Indiana and improves the
    Company's Midwest footprint, supporting already strong momentum in its U.S.
    wireless retail business.  The transaction is subject to customary closing
    conditions and is expected to close in the calendar fourth quarter of 2007.
    
--  On October 1, 2007, Centennial announced that it expanded its board of
    directors from nine members to ten members and appointed John J. "Jack"
    Mueller and Paul H. Sunu as new directors.  The Company further stated that
    Robert D. Reid, a managing director of the Blackstone Group, has resigned
    from Centennial's board of directors.
    

CENTENNIAL SEGMENT HIGHLIGHTS

U.S. Wireless Operations

--  Revenue was $137.6 million, a 14 percent increase from last year's
    first quarter.  Retail revenue (total revenue excluding roaming revenue)
    increased 18 percent from the year-ago period primarily driven by a 7
    percent increase in total retail subscribers, and supported by strong
    feature, data, access and equipment revenue.  Roaming revenue decreased 7
    percent from the year-ago quarter primarily due to a 5 percent decline in
    total roaming traffic.
    
--  Average revenue per user (ARPU) was $71 during the fiscal first
    quarter, a 6 percent year-over-year increase.  ARPU included approximately
    $4.28 of data revenue per user, which grew 78 percent from the year-ago
    period.
    
--  AOI was $53.1 million, a 22 percent year-over-year increase,
    representing an AOI margin of 39 percent.  AOI benefited from robust growth
    in retail revenue, partially offset by a decline in roaming revenue.
    
--  U.S. wireless ended the quarter with 697,700 total subscribers
    including 51,400 wholesale subscribers.  This compares to 654,900 for the
    prior-year quarter including 51,300 wholesale subscribers and to 694,500
    for the previous quarter ended May 31, 2007 including 51,400 wholesale
    subscribers.  At the end of the fiscal first quarter, approximately 94
    percent of U.S. retail wireless subscribers were on GSM technology.
    Postpaid subscribers increased 3,000 from the fiscal fourth quarter of
    2007, supported by stable postpaid churn of 2.0 percent.
    
--  Capital expenditures were $7.1 million for the fiscal first quarter.
    

Puerto Rico Wireless Operations

--  Revenue was $81.3 million, an increase of 5 percent from the prior-
    year first quarter, driven primarily by subscriber growth.
    
--  Postpaid ARPU was $67, which rose from $65 when compared to the
    adjusted fiscal fourth quarter of 2007(2).  ARPU grew largely due to an
    increase in data and access revenue, partially offset by a decrease in
    equipment revenue.  ARPU included approximately $6.15 of data revenue per
    user, which increased 75 percent from the year-ago period.
    
    
--  AOI totaled $28.7 million, a 9 percent year-over-year decrease,
    representing an AOI margin of 35 percent.  AOI was pressured by higher
    customer acquisition costs and increased equipment expense related to
    customer retention efforts.
    
--  Puerto Rico wireless ended the quarter with 412,200 subscribers, which
    compares to 386,600 for the prior-year quarter and to 406,500 for the
    previous quarter ended May 31, 2007.  Postpaid subscribers increased 6,500
    from the fiscal fourth quarter of 2007, aided by solid postpaid churn of
    2.3 percent.
    
--  Capital expenditures were $7.5 million for the fiscal first quarter.
    

Puerto Rico Broadband Operations

--  Revenue was $32.0 million, a 6 percent year-over-year increase.  AOI
    was $18.2 million, an 8 percent increase from the year-ago period,
    representing an AOI margin of 57 percent.  Revenue and AOI increased
    primarily due to solid access line growth.
    
--  Switched access lines totaled approximately 80,800 at the end of the
    fiscal first quarter, an increase of 9,000 lines, or 13 percent from the
    prior-year quarter.  Dedicated access line equivalents were 358,500 at the
    end of the fiscal first quarter, a 21 percent year-over-year increase.
    
--  Capital expenditures were $5.5 million for the fiscal first quarter.
    

DEFINITIONS AND RECONCILIATION

(1) Adjusted operating income is defined as net income (loss) before loss from discontinued operations, income from equity investments, minority interest in income of subsidiaries, income tax expense, interest expense, net, loss on disposition of assets, strategic alternatives/recapitalization costs, stock-based compensation expense and depreciation and amortization. Please refer to the schedule below for a reconciliation of adjusted operating income to consolidated net income (loss) and the Investor Relations website at www.ir.centennialwireless.com for a discussion and reconciliation of this and other non-GAAP financial measures.

Reconciliation of adjusted operating income to consolidated net income (loss):

                                                   Three Months Ended
                                                        August 31,
                                               ---------------------------
                                                   2007           2006
                                               ------------   ------------
Adjusted operating income                      $    100,037   $     92,153
Depreciation and amortization                       (33,356)       (32,218)
Stock-based compensation expense                     (3,055)        (1,949)
Strategic alternatives/recapitalization costs            --           (283)
Loss on disposition of assets                          (349)          (205)
                                               ------------   ------------
Operating income                                     63,277         57,498
Interest expense, net                               (48,584)       (50,714)
Income tax expense                                   (8,261)        (7,081)
Minority interest in income of subsidiaries            (152)          (208)
Income from equity investments                           --            253
                                               ------------   ------------
Income (loss) from continuing operations              6,280           (252)
Loss from discontinued operations                      (514)        (1,907)
                                               ------------   ------------
Net income (loss)                              $      5,766   $     (2,159)
                                               ------------   ------------

(2) Please refer to the Company's Form 10-K for the year ending May 31, 2007 and the fiscal fourth-quarter 2007 earnings press release for information regarding prior-period USF charges.


CONFERENCE CALL INFORMATION

As previously announced, the Company will host a conference call to discuss results at 8:30 a.m. ET on Thursday, October 4, 2007. Callers can dial (800) 289-0726 to access the call. The conference call will also be simultaneously webcast on Centennial's Investor Relations website at www.ir.centennialwireless.com. A replay of the conference call will also be available beginning Thursday, October 4 through Thursday, October 18 at both Centennial's Investor Relations website and www.streetevents.com. Callers can also dial (888) 203-1112, Access Code 1622454 to access an audio replay of the conference call.


ABOUT CENTENNIAL

Centennial Communications (NASDAQ: CYCL), based in Wall, NJ, is a leading provider of regional wireless and integrated communications services in the United States and Puerto Rico with over 1.1 million wireless subscribers and 439,300 access lines and equivalents. The U.S. business owns and operates wireless networks in the Midwest and Southeast covering parts of six states. Centennial's Puerto Rico business owns and operates wireless networks in Puerto Rico and the U.S. Virgin Islands and provides facilities-based integrated voice, data and Internet solutions. Welsh, Carson, Anderson & Stowe is a significant shareholder of Centennial. For more information regarding Centennial, please visit our websites http://www.centennialwireless.com/ and http://www.centennialpr.com/.


SAFE HARBOR PROVISION

Cautionary statement for purposes of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995: Information in this release that involves Centennial's expectations, beliefs, hopes, plans, projections, estimates, intentions or strategies regarding the future are forward-looking statements. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the Company's actual results to differ materially from those projected in such forward-looking statements. These risks, assumptions and uncertainties include, but are not limited to: the effects of vigorous competition in our markets, which may make it difficult for us to attract and retain customers and to grow our customer base and revenue and which may increase churn, which could reduce our revenue and increase our costs; the fact that many of our competitors are larger than we are, have greater financial resources than we do, are less leveraged than we are, have more extensive coverage areas than we do, and may offer less expensive and more technologically advanced products and services than we do; changes and developments in technology, including our ability to upgrade our networks to remain competitive and our ability to anticipate and react to frequent and significant technological changes which may render certain technologies used by us obsolete; our substantial debt obligations, including restrictive covenants, which place limitations on how we conduct business; market prices for the products and services we offer may decline in the future; the effect of changes in the level of support provided to us by the Universal Service Fund; the effects of a decline in the market for our CDMA-based technology; the effects of consolidation in the telecommunications industry; general economic, business, political and social conditions in the areas in which we operate, including the effects of world events, terrorism, hurricanes, tornadoes, wind storms and other natural disasters; our access to the latest technology handsets in a timeframe and at a cost similar to our competitors; our ability to successfully deploy and deliver wireless data services to our customers, including next generation 3G and 4G technology; our ability to generate cash and the availability and cost of additional capital to fund our operations and our significant planned capital expenditures, including the need to refinance or amend existing indebtedness; our dependence on roaming agreements for a significant portion of our wireless revenue and the expected decline in roaming revenue over the long term; our dependence on roaming agreements for our ability to offer our wireless customers competitively priced regional and nationwide rate plans that include areas for which we do not own wireless licenses; our ability to attract and retain qualified personnel; the effects of governmental regulation of the telecommunications industry; our ability to acquire, and the cost of acquiring, additional spectrum in our markets to support growth and advanced technologies; the effects of network disruptions and system failures; our ability to manage, implement and monitor billing and operational support systems; the results of litigation filed or which may be filed against us, including litigation relating to wireless billing, using wireless telephones while operating an automobile or possible health effects of radio frequency transmission; the relative liquidity and corresponding volatility of our common stock and our ability to raise future equity capital: the influence on us by our significant stockholder and anti-takeover provisions and other risks referenced from time to time in the Company's filings with the Securities and Exchange Commission. All forward-looking statements included in this release are based upon information available to Centennial as of the date of the release, and we assume no obligation to update or revise any such forward-looking statements.


                      CENTENNIAL COMMUNICATIONS CORP.
                  FINANCIAL DATA AND OPERATING STATISTICS
                              August 31, 2007
                   ($000's, except per subscriber data)


                                                   Three Months Ended
                                              ----------------------------
                                                  Aug-07        Aug-06
                                              -------------  -------------

CONSOLIDATED
------------
Total Wireless Subscribers                        1,109,900      1,041,500
Net Gain - Total Subscribers                          8,900         10,000
Revenue per Average Wireless Customer (1)     $          69  $          67
Retail Penetration (4)                                  8.4%           7.9%
Prepaid & Postpaid Churn - Wireless (5)                 2.3%           2.3%
Monthly MOU's per Wireless Customer                   1,306          1,119

U.S. WIRELESS
-------------

Postpaid Wireless Subscribers                       621,100        585,800
Prepaid Wireless Subscribers                         25,200         17,800
                                              -------------  -------------
Retail Subscribers                                  646,300        603,600
Wholesale Subscribers                                51,400         51,300
                                              -------------  -------------
Total Wireless Subscribers                          697,700        654,900
Total Wireless Gross Adds                            47,300         45,200
Net Gain - Retail Subscribers                         3,200          6,800
Net Gain - Wholesale Subscribers                          0            100
                                              -------------  -------------
Net Gain - Total Subscribers                          3,200          6,900
GSM as a % of Retail Subscribers                       93.8%          80.5%
Revenue per Average Wireless Customer (1)     $          71  $          67
Retail Revenue per Average Wireless
 Customer (2)                                 $          62  $          56
Data Revenue per Average Wireless
 Customer (3)                                 $        4.28  $        2.40
Retail Revenue                                $     119,652  $     101,099
Roaming Revenue                               $      17,952  $      19,322
Retail Penetration (4)                                  7.5%           7.0%
Postpaid Churn - Wireless (5)                           2.0%           1.9%
Prepaid & Postpaid Churn - Wireless (5)                 2.3%           2.1%
Monthly MOU's per Wireless Customer                   1,041            863
Cost to Acquire (6)                           $         325  $         334
Capital Expenditures                          $       7,051  $       5,403

PUERTO RICO
-----------

Postpaid Wireless Subscribers                       409,400        380,800
Prepaid Wireless Subscribers                          2,800          5,800
                                              -------------  -------------
Total Wireless Subscribers                          412,200        386,600
Total Wireless Gross Adds                            35,000         33,800
Net Gain - Wireless Subscribers                       5,700          3,100
Revenue per Average Wireless Customer (1)     $          66  $          67
Data Revenue per Average Wireless
 Customer (3)                                 $        6.15  $        3.51
Penetration - Wireless (4)                             10.3%           9.7%
Postpaid Churn - Wireless (5)                           2.3%           2.5%
Prepaid & Postpaid Churn - Wireless (5)                 2.4%           2.7%
Monthly MOU's per Wireless Customer                   1,725          1,519
Fiber Route Miles                                     1,314          1,251
Switched Access Lines                                80,800         71,800
Dedicated Access Line Equivalents (7)               358,500        297,200
On-Net Buildings                                      2,027          1,786
Capital Expenditures - Wireless               $       7,473  $       7,229
Capital Expenditures - Broadband              $       5,472  $       3,743
                                              -------------  -------------
Capital Expenditures - Total Puerto Rico      $      12,945  $      10,972
                                              =============  =============

REVENUES
--------

U.S. Wireless                                 $     137,604  $     120,421
                                              -------------  -------------
Puerto Rico - Wireless                        $      81,338  $      77,540
Puerto Rico - Broadband                       $      32,004  $      30,311
Puerto Rico - Intercompany                    $      (2,976) $      (2,871)
                                              -------------  -------------
Total Puerto Rico                             $     110,366  $     104,980
                                              -------------  -------------
Consolidated                                  $     247,970  $     225,401
                                              =============  =============

ADJUSTED OPERATING INCOME (8)
-----------------------------

U.S. Wireless                                 $      53,139  $      43,691
                                              -------------  -------------
Puerto Rico - Wireless                        $      28,693  $      31,613
Puerto Rico - Broadband                       $      18,205  $      16,849
                                              -------------  -------------
Total Puerto Rico                             $      46,898  $      48,462
                                              -------------  -------------
Consolidated                                  $     100,037  $      92,153
                                              =============  =============

NET DEBT
--------

Total Debt Less Cash and Cash Equivalents     $   1,936,100  $   2,056,300


(1) Revenue per Average Wireless Customer is determined for each period by
     dividing total monthly revenue per wireless subscriber including
     roaming revenue by the average retail customers for such period.
(2) Retail Revenue per Average Wireless Customer is determined for each
     period by dividing retail revenue (total revenue excluding roaming
     revenue) by the average retail customers for such period.
(3) Data Revenue per Average Wireless Customer is determined for each
     period by dividing data revenue by the average retail customers for
     such period.
(4) The penetration rate equals the percentage of total population in our
     service areas who are retail subscribers to our wireless service as
     of period-end.
(5) Churn is calculated by dividing the aggregate number of retail
     subscribers who cancel service during each month in a period by the
     total number of subscribers as of the beginning of the month.
     Churn is stated as the average monthly churn rate for the period.
(6) Cost to Acquire a new customer is calculated by dividing the sum of
     the cost of phones and marketing expenses less the related
     equipment sales by the gross activations for the period. Cost to
     acquire excludes costs relating to phones used for customer
     retention.
(7) August 2007 and August 2006 excludes 96,800 and 82,700 dedicated
     access line equivalents related to short term contracts.
(8) Adjusted operating income is defined as net income (loss) before loss
     from discontinued operations, income from equity investments, minority
     interest in income of subsidiaries, income tax expense, interest
     expense, net, loss on disposition of assets, strategic
     alternatives/recapitalization costs, stock-based compensation expense
     and depreciation and amortization.



             CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
              (Amounts in thousands, except per share data)


                                                   Three Months Ended
                                              ----------------------------
                                                August 31,     August 31,
                                                  2007           2006
                                              -------------  -------------

REVENUE:
  Service revenue                             $     234,359  $     213,036
  Equipment sales                                    13,611         12,365
                                              -------------  -------------
                                                    247,970        225,401
                                              -------------  -------------

COSTS AND EXPENSES:
  Cost of services (exclusive of
   depreciation and amortization shown below)        46,574         43,242
  Cost of equipment sold                             31,522         28,684
  Sales and marketing                                25,586         22,678
  General and administrative                         47,306         40,876
  Depreciation and amortization                      33,356         32,218
  Loss on disposition of assets                         349            205
                                              -------------  -------------
                                                    184,693        167,903
                                              -------------  -------------

OPERATING INCOME                                     63,277         57,498
                                              -------------  -------------

INTEREST EXPENSE, NET                               (48,584)       (50,714)

INCOME FROM CONTINUING OPERATIONS BEFORE
 INCOME TAX EXPENSE, MINORITY INTEREST
 IN INCOME OF SUBSIDIARIES AND INCOME
 FROM EQUITY INVESTMENTS                             14,693          6,784

INCOME TAX EXPENSE                                   (8,261)        (7,081)
                                              -------------  -------------

INCOME (LOSS) FROM CONTINUING OPERATIONS
 BEFORE MINORITY INTEREST IN INCOME OF
 SUBSIDIARIES AND INCOME FROM EQUITY
 INVESTMENTS                                          6,432           (297)

MINORITY INTEREST IN INCOME OF SUBSIDIARIES            (152)          (208)
INCOME FROM EQUITY INVESTMENTS                            -            253
                                              -------------  -------------

INCOME (LOSS) FROM CONTINUING OPERATIONS              6,280           (252)

Discontinued operations:
  Loss                                                    -         (1,365)
  Loss on disposition                                  (514)             -
  Income tax expense                                      -           (542)
                                              -------------  -------------
Net loss from discontinued operations                  (514)        (1,907)
                                              =============  =============

NET INCOME (LOSS)                             $       5,766  $      (2,159)
                                              =============  =============

EARNINGS PER SHARE:
  BASIC
     EARNINGS PER SHARE FROM CONTINUING
      OPERATIONS                              $        0.06  $       (0.00)
     LOSS PER SHARE FROM DISCONTINUED
      OPERATIONS                              $       (0.00) $       (0.02)
                                              -------------  -------------
     NET INCOME PER SHARE                     $        0.06  $       (0.02)
                                              =============  =============

  DILUTED
     EARNINGS PER SHARE FROM CONTINUING
      OPERATIONS                              $        0.06  $       (0.00)
     LOSS PER SHARE FROM DISCONTINUED
      OPERATIONS                              $       (0.00) $       (0.02)
                                              -------------  -------------
     NET INCOME PER SHARE                     $        0.06  $       (0.02)
                                              =============  =============

WEIGHTED-AVERAGE SHARES OUTSTANDING DURING
 THE PERIOD:
     BASIC                                          107,062        105,211
                                              =============  =============
     DILUTED                                        110,011        105,211
                                              =============  =============

Contact Information

  • For investor and media inquiries please contact:
    Steve E. Kunszabo
    Executive Director, Investor Relations
    732-556-2220