Feb 20, 2002 12:00 PM

Allegiance Telecom’s Q4 earnings fall short of expectations

Allegiance Telecom posted a net loss for fourth quarter 2001 of $125.6 million, or $1.09 per share, slightly worse than the 97-cents-per-share loss anticipated by analysts polled by Thomson Financial-First Call.

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The competitive carrier posted an EBITDA (earnings before interest, taxes, depreciation and amortization) loss for the quarter of $27.7 million. For fiscal 2001, Allegiance reported a net loss of $431.8 million, or $3.82 per share, which also was slightly worse than the $3.70-per-share loss expected by analysts. EBITDA loss for the year was $112.2 million.

However, EBITDA loss as a percent of revenue stood at 14.6% for the quarter, an improvement over the 19.6% posted in Q3 2001 and the 31.5% posted in Q4 2000. Moreover, 16 of the carrier’s 36 markets were EBITDA-positive, on a pre-overhead basis, during the quarter.

Consolidated revenue for the quarter was $151.8 million, a 12.3% increase compared with the previous quarter and 59.8% better than fourth quarter 2000. Revenues for the year were $516.9 million, an 81.2% increase year over year. Allegiance also reported it sold 190,000 lines in the quarter, a 4.4% increase over the previous quarter, and a 25% increase compared with fourth quarter 2000.

The company added two markets in the fourth quarter--Pittsburgh and West Palm Beach/Boca Raton, Fla.--completing its network build.

Allegiance Chairman and CEO Royce Holland called the results “solid,” particularly in the midst of a slumping global economy. He said the company is “at an operational inflection point” and would now shift its focus from “the rapid deployment of networks to a rapid path to profitability.”

The company reiterated its previous guidance for 2002. Revenues are expected to reach about $800 million, and Allegiance anticipates turning EBITDA-positive in the second half of the year. In addition, Allegiance plans to activate Sonet rings in two markets to replace leased capacity, resulting in 24 markets with fiber networks. However, the company has reduced its capital expenditure budget for the year to $215 million to $240 million, compared with the previous forecast of $225 million to $250 million.--Glenn Bischoff, Senior News Writer