SOURCE: Cequel Communications Holdings I, LLC

May 05, 2011 08:00 ET

Suddenlink Reports First Quarter 2011 Financial and Operating Results

ST. LOUIS, MO--(Marketwire - May 5, 2011) - Cequel Communications Holdings I, LLC ("Cequel," and together with its subsidiaries, the "Company" or "Suddenlink") today reported financial and operating results for the first quarter 2011.

First Quarter Highlights

  • First quarter revenues of $446.2 million grew 8.2% compared to pro forma first quarter revenues of the prior year.

  • Adjusted EBITDA (as defined herein) for the first quarter of $160.1 million grew 8.4% compared to pro forma first quarter Adjusted EBITDA of the prior year.

  • Revenue generating units ("RGUs") increased 80,200 for the first quarter and 217,200 on a pro forma basis year-over-year, or a 7.4% gain from March 31, 2010. Pro forma residential customer relationships increased 17,400 in the first quarter of 2011.

  • Total average monthly revenue per basic video customer for the first quarter was $122.51, an increase of 10.9% compared to pro forma average monthly revenue per basic video customer for first quarter of the prior year.

  • Bundled customers represented 60.0% of total customer relationships at March 31, 2011, an increase from 55.5% at March 31, 2010, primarily from growth in triple play customer relationships, which represented 21.7% of total customer relationships at March 31, 2011, versus 17.8% at March 31, 2010.

"This was our eighteenth consecutive quarter of pro forma revenue growth," said Suddenlink's Chairman and Chief Executive Officer Jerry Kent. "We grew in every segment of revenue generating units, and it was our second best quarter for RGU gains in our history. Our efforts to provide a superior level of customer care are being rewarded."

First Quarter 2011 Compared to Pro Forma First Quarter 2010

Operating results and year-over-year changes as described below are presented on a pro forma basis to include a cable system in Greenwood, Mississippi that was acquired on August 1, 2010, and exclude two cable systems that were sold on November 30, 2010, as if those transactions had been consummated on January 1, 2010.

First quarter 2011 revenues rose 8.2%, largely attributable to the increase in the number of new telephone, high-speed Internet and digital video customers, an increase in the penetration of existing customers for these services, video and high-speed Internet rate increases, and incremental video revenues from video on demand ("VOD"), high definition television ("HDTV") and digital video recorder ("DVR") services as more customers purchased advanced video services from us. Offsetting this growth in part was a decrease due to the impact of bundling and promotional discounts.

Video revenues increased 2.4%, primarily due to basic video rate increases, increased premium and VOD service revenues, and customer growth in our digital and advanced video services, offset in part by a lower number of basic video customers, and digital customers purchasing fewer digital tiers of service on average. During the twelve months ended March 31, 2011, the Company lost approximately 32,300 basic video customers. Digital video customers grew by approximately 102,100 over the same period.

High-speed Internet revenues increased 12.6%, due to an increase in residential high-speed Internet customers, the impact of rate increases and growth in our commercial high-speed Internet services to small and medium sized businesses. Residential and commercial high-speed Internet customers grew by approximately 71,400 and 3,400, respectively, during the twelve months ended March 31, 2011.

Telephone revenues increased 23.2%, primarily due to an increase in residential telephone customers and growth in our commercial telephone services to small and medium sized businesses. Residential and commercial telephone customers grew by approximately 76,000 and 6,200, respectively, during the twelve months ended March 31, 2011.

Advertising revenues increased 1.3%, largely due to higher local and national automotive ad sales revenue, offset in part by lower political ad sales revenue.

Other revenues increased 16.3% due to, among other things, increased rental revenues for high-definition and DVR capable digital converters, increased home networking services, increased administrative fees associated with the underlying growth of the business, higher franchise fees consistent with video revenue increases, and higher broadcast retransmission fees.

Operating costs and expenses rose 8.0%, primarily due to higher programming costs and retransmission consent expenses, increased net compensation and employee related costs, including contract labor, higher fuel expenses, increased marketing expenses, higher bad debt expense, $3.0 million of compensation expense related to our January 2011 equity distribution, and $0.9 million of acquisition expenses. Offsetting this increase in part was a decrease in non-cash equity compensation and property tax expense.

Adjusted EBITDA (as defined herein) for the first quarter 2011 was $160.1 million, an increase of 8.4% from the same quarter last year, resulting in an Adjusted EBITDA margin of 35.9%.

Income from operations for the first quarter 2011 was $62.9 million, a decrease of 1.4%, compared to $63.8 million for the first quarter 2010 due to increased depreciation expense.

Net loss was $17.0 million for the first quarter 2011, compared to a net loss of $1.6 million for the first quarter 2010.

Key Operating Metrics

Operating metrics as described below are presented on a pro forma basis to include a cable system in Greenwood, Mississippi that was acquired on August 1, 2010, and exclude two cable systems that were sold on November 30, 2010, as if those transactions had been consummated on January 1, 2010.

Suddenlink added 80,200 RGUs in the first quarter of 2011 and served approximately 3.1 million RGUs as of March 31, 2011, an increase of 217,200 RGUs, or 7.4%, over the prior year. Approximately 60.0% of Suddenlink's residential customers subscribe to bundle services, compared to 55.5% a year ago. Suddenlink's ARPU for the first quarter of 2011 was $122.51, an increase of 10.9% compared to first quarter of 2010.

Basic video customers increased by approximately 1,300 customers and digital video customers increased by approximately 28,200 customers during the first quarter of 2011. Estimated basic penetration at March 31, 2011, was 45.4% of estimated homes passed. Digital penetration to basic customers was 55.8%.

Residential high speed Internet customers grew by approximately 30,800 during the first quarter of 2011, reflecting continued consumer demand. At March 31, 2011, estimated residential high speed Internet penetration was 32.9% of high-speed Internet capable homes passed. During the first quarter of 2011, commercial Internet customers increased by approximately 1,000 and commercial fiber customers increased by approximately 30 customers.

Residential telephone customers grew by approximately 19,900 during the first quarter of 2011. At March 31, 2011, estimated residential telephone penetration was 17.4% of telephone capable homes passed. During the first quarter of 2011, commercial telephone customers increased by approximately 1,700 customers.

At March 31, 2011, Suddenlink served approximately 1.3 million customers, and the Company's 3.1 million RGUs were comprised of 1,217,000 basic video, 679,600 digital video, 857,100 residential high-speed Internet and 378,600 residential telephone customers.

Liquidity and Capital Resources

The following discussion of liquidity and capital resources is presented on an actual basis and does not include historical pro forma adjustments reflecting the acquisition of the Greenwood, Mississippi system in August 2010 or divestiture of two cable systems in November 2010.

At March 31, 2011, the Company had approximately $482.1 million in cash and cash equivalents on hand and a $200.0 million undrawn revolving credit facility, reduced by $12.6 million of outstanding letters of credit. Pro forma for the acquisition of the NPG Companies on April 1, 2011, our cash balance was $132.1 million.

Capital expenditures for the three months ended March 31, 2011 were $105.2 million, compared to $79.8 million for the three months ended March 31, 2010. This increase was due to Project Imagine related expenditures, growth in capital expenditures for our commercial services and increased capitalized labor from RGU growth. The Company's bandwidth investment plan, which the Company refers to as Project Imagine, is proceeding as planned. This investment in the Company's existing network, which will be made through 2012, is providing additional capacity to launch video on demand services into new areas, additional capacity for high definition channels and increased Internet speeds for the Company's customers and capacity to launch telephone service in a few additional communities. Capital expenditures for Project Imagine, including success based capital, were approximately $50.6 million during the first quarter 2011. For 2011, we expect capital expenditures to be approximately $330.0 million to $340.0 million, which includes Project Imagine capital expenditures, but does not include capital expenditures for the NPG Companies (as defined herein).

Net cash flows provided by operating activities increased $101.4 million for the three months ended March 31, 2011. This increase is related to the bond premium associated with the issuance of $625.0 million aggregate principal amount of 8.625% Senior Notes due 2017 (the "January Additional Notes"), net changes in current assets and liabilities due to the timing of payments for interest, prepaid expenses, accrued expenses and other payables, and an increase in Adjusted EBITDA. Net cash flows used in investing activities, increased to $109.1 million for the three months ended March 31, 2011, compared to $83.8 million for the three months ended March 31, 2010, primarily as a result of capital expenditures related to Project Imagine and related success based capital expenditures. Net cash flows used in financing activities increased $118.2 million for the quarter ended March 31, 2011 as compared to the quarter ended March 31, 2010, primarily as a result of the issuance of the January Additional Notes, offset in part by the distribution of $491.8 million to Cequel Holdings in connection with issuance of the January Additional Notes, as well as related financing costs.

Free Cash Flow (as defined herein) for the quarter ended March 31, 2011 was negative $17.0 million, compared to positive free cash flow of $6.4 million for the quarter ended March 31, 2010. The decrease in Free Cash Flow for the first quarter 2011 as compared to 2010 is due to additional capital expenditures related to Project Imagine and related success based capital expenditures and increases in cash interest expense, offset in part by improved operating results.

The following Total Leverage Ratios for Cequel and Cequel Communications, LLC do not include the pro forma Adjusted EBITDA for the NPG Companies, acquired on April 1, 2011.

The Total Leverage Ratio (Consolidated Total Debt to Adjusted Pro Forma EBITDA) for Cequel, as defined in and calculated in accordance with the indenture governing the Notes, was 5.99x at March 31, 2011.

The Total Leverage Ratio (Consolidated Total Debt to Adjusted Pro Forma EBITDA) for Cequel Communications, LLC, an indirect wholly owned subsidiary of Cequel, as defined in and calculated in accordance with the Credit Facility, was 3.07x at March 31, 2011.

Senior Note Issuance

On January 19, 2011, Cequel Communications Holdings I, LLC and Cequel Capital Corporation (the "Issuers") issued an additional $625.0 million aggregate principal amount of 8.625% Senior Notes due 2017. The January Additional Notes form a part of the same series as the outstanding $1.2 billion aggregate principal amount of 8.625% Senior Notes due 2017 (the "Original Notes") and were sold at an offering price of 102.875%, yielding an effective interest rate of 7.892%. Suddenlink used the proceeds of the January Additional Notes to repay all of the original capital contributions made by holders of preferred interests of Cequel Holdings, repay a portion of the capital contributions made by holders of common interests of Cequel Holdings, make certain bonus payments, make certain payments to holders of options and restricted common units and pay related fees and expenses of that offering. In addition, on April 1, 2011, we used the remaining portion of the proceeds and cash on hand to fund the acquisition of all of the issued and outstanding capital stock of NPG Cable, Inc., Mercury Voice and Data Company and NPG Digital Phone, Inc. (collectively, the "NPG Companies"), for a purchase price of $350.0 million, subject to a working capital adjustment (the "NPG Acquisition").

The Company has not guaranteed the indebtedness of the Issuers nor pledged any of its assets as collateral to secure any obligations of the Issuers.

Acquisition of Broadband Systems

On April 1, 2011, the Company consummated the acquisition of the NPG Companies for a purchase price of $350.0 million, subject to a working capital adjustment, which was funded using cash on hand (including a portion of the proceeds from the issuance of the January Additional Notes). On a pro forma basis after giving effect to the consummation of the NPG Acquisition, as of March 31, 2011, we would have had approximately $132.1 million of cash on hand.

Conference Call

As previously announced, the Company will host a conference call to discuss its first quarter results at 11:00 a.m. (Eastern Time) on Thursday, May 5, 2011. The dial-in information for the earnings call is as follows:

Within the United States      866-394-9561
International                 281-312-0031
Password                      Cequel Communications
Conference ID                 61854774

A replay of this earnings call will be available at the Investor Relations link on the Company's website (www.suddenlink.com) shortly after the conclusion of the call.

During the conference call, representatives of the Company may discuss and answer one or more questions concerning the Company's business and financial matters. The responses to these questions, as well as other matters discussed during the call, may contain information that has not been previously disclosed.

Quarterly Report

The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's quarterly report for the quarter ended March 31, 2011 which will be posted on the Company's website (www.suddenlink.com) on May 5, 2011.

Current Report

A current report of this earnings release will be posted on the Company's website (www.suddenlink.com) shortly after the conference call on May 5, 2011.

Use of Non-GAAP Financial Measures

The Company uses certain measures that are not defined by Generally Accepted Accounting Principles ("GAAP") to evaluate various aspects of its business. Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. Adjusted EBITDA is a non-GAAP financial measure defined as net income/(loss), plus interest expense, provision for income taxes, depreciation, amortization, non-cash share based compensation expense, (gain)/loss on sale of cable assets, loss on swap termination and loss on extinguishment of debt. Free Cash Flow is a non-GAAP financial measure defined as Adjusted EBITDA, less capital expenditures and cash interest expense. Adjusted EBITDA and Free Cash Flow may not be necessarily comparable to similarly titled measures of other companies. Furthermore, Adjusted EBITDA and Free Cash Flow have limitations as analytical tools and should not be considered in isolation from, or as an alternative to, net income or loss, operating income, cash flow from operations or other combined income or cash flow data prepared in accordance with GAAP. A reconciliation of Net Loss to Adjusted EBITDA is provided in Table 9. A reconciliation of Net Cash from Operating Activities to Free Cash Flow is provided in Table 10.

The Company believes that Adjusted EBITDA and Free Cash Flow provide information useful to investors in assessing the Company's ability to fund operations, service its debt and make additional investments from internally generated funds. In addition, Adjusted EBITDA generally correlates to the covenant calculations under the Credit Facility.

Company Description

The Company, which does business as Suddenlink Communications, is the seventh largest cable broadband company in the United States, supporting the information, communication and entertainment demands of approximately 1.3 million residential customers and thousands of commercial customers in Texas, West Virginia, Louisiana, Arkansas, North Carolina, Oklahoma, and elsewhere. Suddenlink simplifies its customers' lives through one call for support, one connection, and one bill for TV, Internet, telephone, and other services.

Cautionary Note Regarding Forward-Looking Statements

Some statements in this Press Release are known as "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Forward-looking statements may relate to, among other things:

  • competition for video, high-speed Internet and telephone customers;
  • the Company's ability to achieve anticipated customer and revenue growth and to successfully introduce new products and services;
  • the Company's ability to complete Project Imagine and other capital investment plans on time and on budget;
  • greater than anticipated effects of the current, or any future, economic downturn or other factors which may negatively affect its customers' demand for the Company's products and services;
  • increasing programming costs and delivery expenses related to the Company's products and services;
  • changes in consumer preferences, laws and regulations or technology that may cause the Company to change its operational strategies;
  • the Company's ability to effectively integrate acquisitions and to maximize expected operating efficiencies from its acquisitions;
  • the Company's substantial indebtedness;
  • the restrictions contained in the Company's financing agreements;
  • the Company's ability to generate sufficient cash flow to meet its debt service obligations;
  • fluctuations in interest rates which may cause the Company's interest expense to vary from quarter to quarter; and
  • other risks and uncertainties, including those listed under the caption "Risk Factors" in the Annual Report.

These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this Press Release that are not historical facts. When used in this Press Release, the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally intended to identify forward-looking statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements, including our plans, objectives, expectations and intentions and other factors. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to the Company and speak only as of the date on which this Press Release is posted on the Company's website (www.suddenlink.com). The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in the Company's subsequent reports furnished to holders of the Notes.

Tables:
  1  Consolidated Statements of Operations -- three month periods
  2  Pro Forma Consolidated Statements of Operations -- three month periods
  3  Condensed Consolidated Balance Sheets
  4  Condensed Consolidated Statements of Cash Flows
  5  Capital Expenditures
  6  Summary Operating Statistics
  7  Pro Forma Summary of Operating Statistics
  8  Calculation of Free Cash Flow
  9  Reconciliation of Net Loss to Adjusted EBITDA
 10  Reconciliation of Net Cash from Operating Activities to Free Cash Flow
 11  Reconciliation of Cash Interest Expense




TABLE 1
Cequel Communications Holdings I, LLC
Consolidated Statements of Operations (unaudited)
(in thousands)

                                          Three Months Ended
                                              March 31,
                                        ----------------------    Percent
                                           2011        2010       Change
                                        ----------  ----------  ----------
                                          Actual      Actual
Revenues:
  Video                                 $  217,462  $  211,235         2.9%
  High Speed Internet                      109,586      97,156        12.8%
  Telephone                                 34,766      28,194        23.3%
  Advertising Sales                         16,708      16,470         1.4%
  Other                                     67,723      58,086        16.6%
                                        ----------  ----------
Total Revenues                             446,245     411,141         8.5%

Costs and Expenses:
  Operating (excluding depreciation and
   amortization)                           185,681     174,732        -6.3%
  Selling, general and administrative
   (excluding non-cash share based
   compensation expense)                   100,438      88,981       -12.9%
                                        ----------  ----------
Operating costs and expenses               286,119     263,713        -8.5%

                                        ----------  ----------
Adjusted EBITDA                            160,126     147,428         8.6%
                                        ----------  ----------
Adjusted EBITDA Margin (a)                    35.9%       35.9%

  Depreciation and amortization             96,860      82,079       -18.0%
  Non-cash share based compensation
   expense                                     561       1,884        70.2%
  Gain on sale of cable assets                (212)        (64)      231.3%

                                        ----------  ----------
Income from operations                      62,917      63,529        -1.0%
                                        ----------  ----------
Interest expense, net                      (74,546)    (64,956)      -14.8%
                                        ----------  ----------
Loss before provision for income taxes     (11,629)     (1,427)     -714.9%
Provision for income taxes                  (5,325)       (469)    -1035.4%

                                        ----------  ----------
Net income/(loss)                       $  (16,954) $   (1,896)     -794.2%
                                        ==========  ==========

(a)  Represents Adjusted EBITDA as a percentage of total revenue.










TABLE 2
Cequel Communications Holdings I, LLC
Pro Forma Consolidated Statements of Operations (unaudited)
(in thousands)

                                      Three Months Ended
                                          March 31,
                                  --------------------------     Percent
                                      2011          2010         Change
                                  ------------  ------------  ------------
                                     Actual     Pro-Forma (b)
Revenues:
  Video                           $    217,462  $    212,288           2.4%
  High Speed Internet                  109,586        97,352          12.6%
  Telephone                             34,766        28,230          23.2%
  Advertising Sales                     16,708        16,501           1.3%
  Other                                 67,723        58,211          16.3%
                                  ------------  ------------
Total Revenues                         446,245       412,582           8.2%

Costs and Expenses:
  Operating (excluding
   depreciation and amortization)      185,681       175,643          -5.7%
  Selling, general and
   administrative (excluding
   non-cash share based
   compensation expense)               100,438        89,253         -12.5%
                                  ------------  ------------
Operating costs and expenses           286,119       264,896          -8.0%

                                  ------------  ------------
Adjusted EBITDA                        160,126       147,686           8.4%
                                  ------------  ------------
Adjusted EBITDA Margin (a)                35.9%         35.8%

  Depreciation and amortization         96,860        82,079         -18.0%
  Non-cash share based
   compensation expense                    561         1,884          70.2%
  Gain on sale of cable assets            (212)          (64)        231.3%

                                  ------------  ------------
Income from operations                  62,917        63,787          -1.4%
                                  ------------  ------------

Interest expense, net                  (74,546)      (64,956)        -14.8%
                                  ------------  ------------
Loss before provision for income
 taxes                                 (11,629)       (1,169)       -894.8%
Provision for income taxes              (5,325)         (469)      -1035.4%

                                  ------------  ------------
Net income/(loss)                 $    (16,954) $     (1,638)       -935.0%
                                  ============  ============

(a)  Represents Adjusted EBITDA as a percentage of total revenue.

(b) Pro forma to include the impact of the acquisition of a cable system in
Greenwood, Mississippi, which occurred on August 1, 2010, and exclude the
disposition of two cable systems, which occurred on November 30, 2010, as
if those transactions had been consummated on January 1, 2010.










TABLE 3
Cequel Communications Holdings I, LLC
Condensed Consolidated Balance Sheets (unaudited)
(in thousands)


                                                   March 31,   December 31,
                                                      2011         2010
                                                  -----------  ------------
ASSETS
Cash and cash equivalents                         $   482,094  $    289,685
Accounts receivable, net                              141,169       148,280
Prepaid expenses                                       18,387        16,072
                                                  -----------  ------------
  Total current assets                                641,650       454,037

Property, plant and equipment, net                  1,344,219     1,328,479
Intangible assets, net                              2,075,890     2,083,376
Other assets, net                                      61,593        48,346
                                                  -----------  ------------
  Total assets                                    $ 4,123,352  $  3,914,238
                                                  ===========  ============

LIABILITIES AND MEMBER'S EQUITY
Accounts payable and accrued expenses             $   264,191  $    200,219
Deferred revenue                                      115,241       112,239
Current portion of long-term debt                      20,382        20,382
Other current liabilities                              78,120        80,248
                                                  -----------  ------------
  Total current liabilities                           477,934       413,088

Long-term debt, less current portion                3,783,186     3,145,739
Deferred tax liabilities                               27,331        25,185
Other long-term liabilities                            23,862        32,756
                                                  -----------  ------------
  Total liabilities                                 4,312,313     3,616,768

Total member's equity                                (188,961)      297,470
                                                  -----------  ------------
  Total liabilites and member's equity            $ 4,123,352  $  3,914,238
                                                  ===========  ============




TABLE 4
Cequel Communications Holdings I, LLC
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)

                                                       Three Months Ended
                                                            March 31,
                                                      --------------------
                                                        2011       2010
                                                      ---------  ---------
Net cash provided by operating activities             $ 183,390  $  82,019

Net cash used in investing activities                  (109,128)   (83,766)

Net cash provided by/(used in) financing activities     118,147        (83)
                                                      ---------  ---------

Increase/(decrease) in cash and cash equivalents        192,409     (1,830)
Cash and cash equivalents, beginning of period          289,685    257,003
                                                      ---------  ---------
Cash and cash equivalents, end of period              $ 482,094  $ 255,173
                                                      =========  =========










TABLE 5
Cequel Communications Holdings I, LLC
Capital Expenditures (unaudited)
(in thousands)

                                                        Three Months Ended
                                                            March 31,
                                                        -------------------
                                                          2011      2010
                                                        --------- ---------

Customer premise equipment                              $  45,938 $  36,768
Scalable infrastructure                                    13,799     8,190
Line extensions                                             1,201     1,663
Upgrade/rebuild                                             5,976     6,415
Commercial                                                  6,555     1,941
Support capital                                            31,726    24,779
                                                        --------- ---------
                                                        $ 105,195 $  79,756
                                                        ========= =========








TABLE 6
Cequel Communications Holdings I, LLC
Summary Operating Statistics (unaudited)
Approximate as of:


                                    March 31,   December 31,    March 31,
                                      2011          2010          2010
                                  ------------  ------------  ------------
                                     Actual        Actual        Actual
                                  ------------  ------------  ------------
Revenue Generating Units (RGU):
Basic video customers (a)            1,217,000     1,215,700     1,243,900
Digital video customers (b)            679,600       651,400       575,700
Residential high-speed Internet
 customers (c)                         857,100       826,300       783,900
Residential telephone customers
 (d)                                   378,600       358,700       302,200
                                  ------------  ------------  ------------
Total RGUs (e)                       3,132,300     3,052,100     2,905,700

Quarterly net customer additions
 (losses)                            Actual        Actual        Actual
                                  ------------  ------------  ------------
Basic video customers                    1,300       (12,600)        4,800
Digital video customers                 28,200        20,000        30,600
Residential high-speed Internet
 customers                              30,800        11,700        34,800
Residential telephone customers         19,900        13,000        21,800
                                  ------------  ------------  ------------
Total RGUs (e)                          80,200        32,100        92,000

Average Revenue per Unit (ARPU):     Actual        Actual        Actual
                                  ------------  ------------  ------------
Pro forma average monthly revenue
 per basic video customer (f)     $     122.51  $     118.32  $     110.58

Customer Relationships               Actual        Actual        Actual
                                  ------------  ------------  ------------
Total customer relationships (g)     1,298,000     1,273,000     1,279,500
Double play relationships (h)          496,300       481,700       482,100
Double play penetration (i)               38.2%         37.8%         37.7%
Triple play relationships (j)          282,300       266,700       227,500
Triple play penetration (k)               21.7%         21.0%         17.8%
Total bundled customers (l)            778,600       748,400       709,600
Bundled penetration (m)                   60.0%         58.8%         55.5%

Estimated Customer Penetration       Actual        Actual        Actual
                                  ------------  ------------  ------------
Estimated basic penetration (n)           45.4%         45.4%         46.9%
Estimated digital penetration (o)         55.8%         53.6%         46.3%
Estimated residential high-speed
 Internet penetration (p)                 32.9%         31.8%         30.5%
Estimated residential telephone
 penetration (q)                          17.4%         16.3%         14.2%

Commercial Customers                 Actual        Actual        Actual
                                  ------------  ------------  ------------
Commercial Internet (r)                 40,600        39,800        37,400
Commercial fiber (s)                     1,000           970           830
Commercial telephone (t)                12,800        11,100         6,600









TABLE 7
Cequel Communications Holdings I, LLC
Pro Forma Summary Operating Statistics (unaudited)
Approximate as of:


                                 March 31,    December 31,     March 31,
                                   2011           2010           2010
                               -------------  -------------  -------------
                                   Actual         Actual     Pro Forma (u)
                               -------------  -------------  -------------
Revenue Generating Units
 (RGU):
Basic video customers (a)          1,217,000      1,215,700      1,249,300
Digital video customers (b)          679,600        651,400        577,500
Residential high-speed
 Internet customers (c)              857,100        826,300        785,700
Residential telephone
 customers (d)                       378,600        358,700        302,600
                               -------------  -------------  -------------
Total RGUs (e)                     3,132,300      3,052,100      2,915,100

Quarterly net customer
 additions (losses)                Actual     Pro Forma (u)  Pro Forma (u)
                               -------------  -------------  -------------
Basic video customers                  1,300         (9,700)         5,100
Digital video customers               28,200         20,400         30,500
Residential high-speed
 Internet customers                   30,800         12,800         34,900
Residential telephone
 customers                            19,900         13,000         21,900
                               -------------  -------------  -------------
Total RGUs (e)                        80,200         36,500         92,400

Average Revenue per Unit
 (ARPU):                           Actual     Pro Forma (u)  Pro Forma (u)
                               -------------  -------------  -------------
Pro forma average monthly
 revenue per basic video
 customer (f)                  $      122.51  $      118.41  $      110.50

Customer Relationships             Actual     Pro Forma (u)  Pro Forma (u)
                               -------------  -------------  -------------
Total customer relationships
 (g)                               1,298,000      1,280,600      1,290,600
Double play relationships (h)        496,300        486,400        487,200
Double play penetration (i)             38.2%          38.0%          37.7%
Triple play relationships (j)        282,300        268,400        229,200
Triple play penetration (k)             21.7%          21.0%          17.8%
Total bundled customers (l)          778,600        754,800        716,400
Bundled penetration (m)                 60.0%          58.9%          55.5%

Estimated Customer Penetration     Actual        Actual      Pro Forma (u)
                               -------------  -------------  -------------
Estimated basic penetration
 (n)                                    45.4%          45.4%          46.9%
Estimated digital penetration
 (o)                                    55.8%          53.6%          46.2%
Estimated residential
 high-speed Internet
 penetration (p)                        32.9%          31.8%          30.4%
Estimated residential
 telephone penetration (q)              17.4%          16.3%          14.1%

Commercial Customers               Actual     Pro Forma (u)  Pro Forma (u)
                               -------------  -------------  -------------
Commercial Internet (r)               40,600         39,600         37,200
Commercial fiber (s)                   1,000            970            830
Commercial telephone (t)              12,800         11,100          6,600


(a) Basic video customers include all residential customers who receive video cable services. Also included are commercial or multi-dwelling accounts that are converted to equivalent basic units ("EBUs") by dividing the total bulk billed basic revenues of a particular system by the most prevalent retail rate paid by non-bulk basic customers in that market for a comparable level of service. This conversion method is consistent with methodology used in determining costs paid to programmers. Our methodology of calculating the number of basic video customers may not be identical to those used by other companies offering similar services.

(b) Digital video customers include all basic video customers that have one or more digital set-top boxes or cable cards in use.

(c) Residential high-speed Internet customers include all residential customers who subscribe to our high-speed Internet service. Excluded from these totals are all commercial high-speed Internet customers, including small and medium sized commercial cable modem accounts and customers who take our scalable, fiber-based enterprise network services.

(d) Residential telephone customers include all residential customers who subscribe to our telephone service. Residential customers who take multiple telephone lines are only counted once in the total. Excluded from these totals are all commercial telephone customers.

(e) Total RGUs represents the sum of basic video, digital video, residential high-speed Internet and residential telephone customers.

(f) Average revenue per basic video customer represents the total revenue for a quarter, divided by three, divided by the average basic video customers for the quarter.

(g) Customer relationships represent the number of residential customers who receive at least one level of service, encompassing video, high-speed Internet or telephone services, without regard to the number of services purchased. For example, a residential customer who purchases only high- speed Internet service and no basic video service will count as one customer relationship, and a residential customer who purchases both basic video and high-speed Internet services will also count as only one customer relationship.

(h) Double play customer numbers reflect residential customers who subscribe to two of our core services (video, high-speed Internet and telephone).

(i) Double play penetration represents double play customers as a percentage of customer relationships.

(j) Triple play customer numbers reflect residential customers who subscribe to all three of our core services (video, high-speed Internet and telephone).

(k) Triple play penetration represents triple play customers as a percentage of customer relationships.

(l) Total bundled customers represents the sum of double play and triple play customers.

(m) Bundled penetration represents total bundled customers as a percentage of customer relationships.

(n) Estimated basic penetration is calculated as basic video customers divided by the estimated total homes passed of the Company.

(o) Estimated digital penetration is calculated as digital video customers divided by basic video customers.

(p) Estimated residential high-speed Internet penetration is calculated as residential high-speed Internet customers divided by the estimated homes passed of the Company where residential high-speed Internet service is currently available.

(q) Estimated residential telephone penetration is calculated as residential telephone customers divided by the estimated homes passed of the Company where residential telephone service is currently available.

(r) Commercial Internet customers consist of commercial accounts that receive high-speed Internet service via a cable modem. Commercial Internet customers are not included in Total RGUs.

(s) Commercial fiber customers are commercial accounts that receive broadband service optically, via fiber connections. Commercial fiber customers are not included in Total RGUs.

(t) Commercial telephone customers are commercial accounts that subscribe to our telephone service. Commercial telephone customers are not included in Total RGUs.

(u) Pro forma to include the impact of the acquisition of a cable system in Greenwood, Mississippi, which occurred on August 1, 2010, and exclude the disposition of two cable systems, which occurred on November 30, 2010, as if those transactions had been consummated on January 1, 2010.



TABLE 8
Cequel Communications Holdings I, LLC
Calculation of Free Cash Flow (unaudited)
(in thousands)

                                                       Three Months Ended
                                                            March 31,
                                                      --------------------
                                                        2011       2010
                                                      ---------  ---------

Adjusted EBITDA                                       $ 160,126  $ 147,428
Capital expenditures                                   (105,195)   (79,756)
Cash interest expense                                   (71,978)   (61,231)
                                                      ---------  ---------
Free Cash Flow                                        $ (17,047) $   6,441
                                                      =========  =========







TABLE 9
Cequel Communications Holdings I, LLC
Reconciliation of Net Loss to Adjusted EBITDA (unaudited)
(in thousands)

                                                       Three Months Ended
                                                            March 31,
                                                      --------------------
                                                        2011       2010
                                                      ---------  ---------
Net loss                                              $ (16,954) $  (1,896)
  Add back:
  Interest expense, net                                  74,546     64,956
  Provision for income taxes                              5,325        469
  Depreciation and amortization                          96,860     82,079
  Non-cash share based compensation                         561      1,884
  Gain on sale of cable assets                             (212)       (64)
                                                      ---------  ---------
Adjusted EBITDA                                       $ 160,126  $ 147,428
                                                      =========  =========



TABLE 10
Cequel Communications Holdings I, LLC
Reconciliation of Net Cash from Operating Activities to Free Cash Flow
(unaudited)
(in thousands)

                                                       Three Months Ended
                                                            March 31,
                                                      --------------------
                                                        2011       2010
                                                      ---------  ---------

Net cash provided by operating activities             $ 183,390  $  82,019
Capital expenditures                                   (105,195)   (79,756)
Current income tax expense                                3,178        290
Interest income                                            (149)       (64)
New borrowing bond premium                              (17,969)         -
Changes in assets and liabilities, net                  (80,302)     3,952
                                                      ---------  ---------
Free Cash Flow                                        $ (17,047) $   6,441
                                                      =========  =========








TABLE 11
Cequel Communications Holdings I, LLC
Reconciliation of Cash Interest Expense (unaudited)
(in thousands)

                                                        Three Months Ended
                                                            March 31,
                                                        ------------------
                                                          2011      2010
                                                        --------  --------

Interest expense, net                                   $ 74,546  $ 64,956
Add: interest income                                         149        64
Add: bond premium amortization                               760         -
Less: deferred financing amortization                     (3,144)   (3,425)
Less: bond discount amortization                            (333)     (364)
                                                        --------  --------
Cash interest expense                                   $ 71,978  $ 61,231
                                                        ========  ========

Contact Information

  • Cequel contact information:

    Mary Meduski
    EVP - Chief Financial Officer
    314-315-9603

    Ralph Kelly
    SVP - Treasurer
    314-315-9403

    Mike Pflantz
    VP - Corporate Finance
    314-315-9341