Citizens ekes out revenue gain

Citizens Communications reported third quarter revenues of about $520 million from its ILEC operations for the quarter ended Sept. 30, 2002, a 2% increase from the year ago quarter. Total revenue for the communications group, however, was flat at $561 million after the company’s Electric Lightwave group posted a 21% drop in revenue.

On the positive side, adjusted EBITDA margin for the ILEC group jumped to 54% for the quarter from 49% in the same quarter a year ago. Additionally the company reached its goal of a 4-to-1 net debt to annualized adjusted EBITDA ratio a quarter earlier than expected. The company also was able to prepay $53 million of debt during the quarte,r and ended the quarter with more than $479 million in cash.

During the quarter, the company also continued to dispose of its natural gas and electric utility assets, closing a deal to sell its Kauai, Hawaii, electric business for $215 million in cash. Citizens still has a gas company is Hawaii and an electric company in Vermont that will likely be on the block.

Like most independent carriers, Citizens saw a slight decline in its access line count, ending the quarter with 2.46 million primary access lines, compared to about 2.49 million at the end of the third quarter 2001. The decrease was more than offset by the addition of almost 42,000 DSL subscribers during this period.

Additionally, according to Jerry Elliott, CFO of Citizens, about 75% of its access line loss can be attributed to the Rochester, NY market where the company acquired lines from Frontier Communications. Of the lines lost in that market, about 80% came from a business downturn in the downtown area.

“We saw a significant drop in lines lost to other wireline providers,” he said during a conference call this morning.