CTC Communications Group Announces Fourth Quarter and Year End Results, Restructured Lease Financing Agreement and Amended Bank Facility.

Business/Technology Editors

WALTHAM, Mass.--(BUSINESS WIRE)--March 7, 2002

Year End Highlights

-- Revenue Growth of 39% Over Pro Forma Year 2000

-- Annualized Revenue of Over $316 Million

-- Sixteenth Consecutive Quarter of Revenue Growth

-- Access Line Equivalents in Service at 589,000

-- Over 5,300 Customer Locations Active on the Company's PowerPath(SM) Network

-- Restructured Lease Financing Agreement Completed

-- Amended Bank Facility with New Covenants 

-- Continued Execution of Migrating Existing Customers to PowerPath(SM) Network

-- Fully Funded Business Plan

CTC Communications Group (NASDAQ NM: CPTL) - today reported results for the quarter and year ended December 31, 2001.

For the year ended December 31st, 2001, the Company reported revenues of $299.4 million a 39% increase over pro-forma revenues for the calendar year ended December 31, 2000, of $215.3 million.

For the quarter ended December 31st, 2001 the Company reported revenues of $79.1 million, a 27% increase over the $62.3 million reported for the quarter ended December 31, 2000, and a moderate increase over the $78.2 million reported for the quarter ended September 30, 2001. Annualized revenue, based on the quarter ended December 31, 2001, was in excess of $316 million. The Company ended 2001 with 589,000 access line equivalents (ALEs), net of churn, which represents a 30% increase over year-end 2000.

Excluding a charge for the consolidation of collocation sites and other charges, the Company reported an EBITDA loss for the quarter of $3.7 million. For the year ended December 31, 2001, EBITDA losses, excluding these charges, were $22.8 million.

The Company reported a net loss of $124.2 million for the year ended December 31, 2001 compared with a pro forma net loss of $90.9 million for the year ended December 31, 2000.

Robert Fabbricatore, Chairman and Chief Executive Officer of CTC Communications Group, commented, "CTC achieved solid results for 2001 despite the challenges of a recession, customer concerns about the telecom sector in general and the lingering effects of the September tragedies here in the Northeast. The Company has adapted to this difficult environment and continues to concentrate on profitable on-net growth, expanding margins, disciplined business management, achieving the goals set forth in our business plan and moving toward profitability. While the effects of the economy may affect short term operating metrics, we do not believe that they will affect the Company's long term ability to achieve our goals through improved revenues, margins and operating results."

Fabbricatore continues, "CTC customers continue to indicate strong demand for our integrated portfolio of services, as evidenced by sixteen consecutive quarters of revenue growth and more than 15,000 customers representing over 50,000 locations including 5,300 customer locations on the PowerPath(SM) Network at year-end. We believe that CTC is properly positioned in these difficult economic times to improve margins within our existing customer base through migration to our own converged, IP based PowerPath(SM) Network."

Fabbricatore addresses customer migrations; "The Company has made great progress in the migration of our existing customer base to Company owned facilities on the PowerPath(SM) Network. When CTC migrates customers to the network, not only do customers receive a significant reduction in network expense but CTC also benefits by a more than doubling of its incremental margin. Today CTC can reach over 62% of its existing customer base with Company owned fiber facilities and by year-end will increase to 78%. We believe the cost savings associated with this initiative will ultimately yield over $1 million per month to the Company. The migration project is scheduled to be substantially completed in the Spring of this year. The Company's success in this effort has also shown the strength and scalability of our operating systems and implementation teams. CTC's provisioning teams have averaged between 150 and 225 customer activations per week from new installations as well as migrations of existing on-net customers to Company owned fiber facilities. These results have helped CTC to demonstrate that the engine that the Company has built to grow installations and scale the business to more than 1,000 installations per month is effective and on track."

Fabbricatore addressed the telecom sector, "CTC is in the unique position of being one of the strongest telecom players in our marketplace. The telecom sector has been hard hit and CTC still stands as an attractive alternative to the incumbents. Our targeted marketing to medium and larger accounts is highly successful as CTC is continually invited to work with larger multi-location, multi-state accounts looking for alternatives. Our customers select CTC because of its reputation for outstanding customer service and its ability to provide a full portfolio of services. When customers contract with CTC for network services, they select an average of two to three services and in locations where local dial tone is available on our network, our customers select this product more than 50% of the time."

The Company has entered into an agreement to restructure approximately $48 million in outstanding capital leases. Subject to meeting the conditions for financing, the Company will also receive up to an additional $40 million in capital lease financing from the finance subsidiary of a major vendor for equipment purchases in 2002. The financing subsidiary will receive common stock warrants, which could total approximately 6.5% of the outstanding shares of common stock if the Company elects to utilize all of the 2002 financing. The initial warrants will be issued at an exercise price of $4.10. Subsequent warrants would be issued quarterly with an exercise price based on a 5-day average of CTC's stock price.

In addition, the Company announced that the agreement covering its $225 million bank loan has been amended to include new covenants as well as an increase in the interest rate grids. The bank syndicate will receive common stock warrants which could total 3.25% of the outstanding shares of common stock of the Company. The issuance, terms and prices of the warrants are structured in the same manner as the warrants issuable under the restructured lease financing agreement.

Quarter ending December 31, 2001 Revenue and EBITDA Analysis

For the quarter ended December 31, 2001, total revenue grew approximately $1 million from the September 30, 2001 quarter. However, on-net revenue grew approximately $2 million sequentially, reflecting the Company's focus to on-net revenue growth and migration of existing customers to the Company's PowerPath(SM) Network.

Revenues from local services remained even with September 2001 quarter revenues of $44.3 million. The Company was able to offset negative economic effects to its account base with the generation of new business as well as through migration of existing customer revenues to the network.

Toll revenues for the quarter dropped slightly from $18.1 million in the September 2001 quarter to $17.9 million in the December 2001 quarter due primarily to continued economic pressures and seasonality of calling patterns.

Data revenues for the quarter increased from $15.8 million in the September 2001 quarter to $16.9 million in the December 2001 quarter or 7% sequentially, as a result of to continued strong demand for Internet and Frame Relay services available from the Company's PowerPath(SM) Network.

Margin for the quarter decreased from 20.7% in the September 2001 quarter to 20.0% in the December 2001 quarter. The overall decline is primarily due to additional leased expenses incurred during the quarter as a result of the PowerPath(SM) Network expansion. We believe these expenses will be reduced through the Company's fiber migration project.

Selling, general and administrative expenses (SG&A), including a charge for consolidation of collocation sites decreased from $20.4 million in the September 2001 quarter to $20.3 million in the December 2001 Quarter. This reflects the Company's continuing efforts in controlling operating expenses. The Company's SG&A was 26% of revenue for the quarter which we believe is the lowest in the telecom sector.

EBITDA losses, excluding a charge for the consolidation of collocation sites and other charges, decreased from $4.2 million in the September 2001 quarter to $3.7 million in the December 2001 quarter.

Net losses increased from $35.2 million ($1.30 per share) in the September 2001 quarter to $42.4 million ($1.57 per share) in the December 2001 quarter, due primarily to the additional interest expense associated with higher borrowings and depreciation expense associated with the expansion of the Company's network infrastructure.

Fabbricatore concluded, "While CTC and our customers continue to feel the effects of the economy and concerns in the telecom sector in early 2002, we remain confident that CTC is properly positioned to increase market share and improve operating metrics for the year. The Company believes we have a superior and that we lead our peers in productivity and operating efficiency. Our model allows us to manage profitable growth in a soft economy. CTC has built a network infrastructure that other carriers refer to in their futures, one to which medium and larger business customers are attracted because of cost savings, flexibility and expanding network opportunities. Throughout 2002, CTC will focus its resources on those opportunities which we believe can provide the greatest return while maintaining the financial discipline that is necessary to maintain a fully funded growth plan."

Investor Conference Call Schedule

The Company will host an investor conference call on Thursday March 7, 2002 at 1:15 PM Eastern time. There will be an initial presentation by management and then the lines will be opened for questions and answers. Topics will include operating results for the December quarter and fiscal year 2001, lease and bank agreements, as well as other appropriate subjects.

In addition to the standard call in procedure, this Investor Conference Call will be audio broadcast live over the Internet for those who would like to participate via this medium. It should be noted that the Internet audio broadcast is listen only and there is no capability to ask questions.

To participate via the traditional dial in conference call, please call 877-797-1768 and ask for the CTC Communications Group Conference call. The call will start promptly at 1:15 PM Eastern Time. To participate via the audio broadcast on the Internet, please access www.ctcnet.com; follow the link on the home page and register.

For those unable to participate, the conference call will be replayed through March 14, 2002. Please call 877-519-4471 and use PIN# 3150830 for the replay. Replay will also be available through March 14, 2002 under the Investor Relations section of CTC's website at www.ctcnet.com.

About CTC Communications

CTC is a rapidly growing "next generation" Integrated Communications Carrier utilizing advanced technology and providing its customers with converged voice, data, Internet and video services on a broadband, packet-based network, called the PowerPath(SM) Network. The Company serves medium and larger business customers from Virginia to Maine, which includes the most robust telecommunications region in the world--the Washington D.C. to Boston corridor.

CTC's Cisco Powered IP+ATM packet network and its 450 member sales and service teams, provide contiguous marketing and technology coverage throughout the Northeast and Mid-Atlantic States. The Company, through its dedicated commitment to exceptional customer service, has achieved an industry-leading market share in the Northeast. CTC can be found on the worldwide web at www.ctcnet.com.

The statements in this press release that relate to future plans, events or performance are forward-looking statements that involve risk and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements including the success of the Company's business plan, the ability to attract new customers the deployment and activation of fiber access to the PowerPath(SM) Network, reduced operating costs, migration of customers on-net, improved margins, attainment of positive EBITDA, access to capital, actual funding requirements and other forecasts for 2002. Readers are, accordingly, cautioned not to place undue reliance on these forward-looking statements. Additional information about these risks and uncertainties is set forth in the Company's most recent report on Forms 10-K and 10-Q. CTC undertakes no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect results, events or circumstances after the date hereof.

                    CTC Communications Group, Inc.
                             Balance Sheet

                                                  December 31,
                                               2001           2000
          Assets

Cash and cash equivalents                $ 66,289,140    $ 80,029,442
Restricted cash - current                     550,000            --
Accounts receivable, net                   47,059,065      43,137,423
Other current assets                        4,762,692      10,137,037

 Total current assets                     118,660,897     133,303,902

Property and equipment, net               230,325,297     195,741,815

Other assets                               11,502,131      15,082,876
Restricted cash - noncurrent                6,950,000            --

Total assets                             $367,438,325    $344,128,593


 Liabilities and Stockholders' Deficit

Capital leases/ notes payable            $ 36,390,724    $ 29,039,834
Accounts payable and accrued expenses      61,294,062      52,743,629

 Total current liabilities                 97,684,786      81,783,463

Capital leases long term                   60,324,538      52,763,576
Notes payable long term                   225,000,000     103,018,589
Other                                       2,665,710            --

 Total long term liabilities              287,990,248     155,782,165

Series B preferred stock                  222,812,360     203,249,272

Stockholders' deficit                    (241,049,069)    (96,686,307)

Total liabilities and
 stockholders' deficit                   $367,438,325    $344,128,593



                    CTC Communications Group, Inc.
                       Statements of Operations

                                       Three months ended December 31,
                                            2001             2000

Revenues:                              $ 79,138,873    $ 62,305,870

Costs and expenses:
 Cost of telecommunication revenue       63,332,161      49,631,465
  (excluding depreciation)
 Selling, general and administrative     19,546,527      17,236,227
 Depreciation and amortization           22,971,711      13,978,528
 Consolidation of collocation
  and other costs                           800,000       3,110,300

Total costs and expenses                106,650,399      83,956,520

Loss from operations                    (27,511,526)    (21,650,650)

Interest income/(expense), net           (9,622,399)     (2,510,706)
Other expense                              (250,000)           --

Total other expense                      (9,872,399)     (2,510,706)

Net loss                               ($37,383,925)   ($24,161,356)


Preferred stock dividends
 and accretion                            5,028,800       4,709,420

Net loss applicable to
 common stockholders                   ($42,412,725)   ($28,870,776)


EBITDA excluding collocation and
 other expenses                          (3,739,815)     (4,561,822)
EBITDA                                   (4,789,815)     (7,672,122)

Loss per common share:
 Basic and diluted                     ($      1.57)   ($      1.09)

Shares in computing loss per common share
 Basic and diluted                       27,099,925      26,512,528



                    CTC Communications Group, Inc.
                       Statements of Operations

                                    Year ended December 31,
                              2001           2000            2000
                                             (B)           Pro forma
                                                             (A)(B)
Revenues:                $299,438,481    $216,928,604    $215,278,467

Costs and expenses:
 Cost of telecommunication
  revenue (excluding
  depreciation)           240,518,899     168,885,166     168,103,119
 Selling, general and
  administrative           81,734,316      75,791,337      75,764,350
 Depreciation and
  amortization             77,002,257      41,989,202      41,989,202
 Consolidation of
  collocation and other
  costs                       800,000       3,110,300       3,110,300

Total costs and expenses  400,055,472     289,776,005     288,966,971

Loss from operations     (100,616,991)    (72,847,401)    (73,688,504)

Interest income/
 (expense), net           (23,305,941)    (11,922,965)    (11,922,965)
Other expense                (250,000)           --              --

                          (23,555,941)    (11,922,965)    (11,922,965)
Loss before extraordinary
 item and cumulative
 effect of change in
 accounting principle    (124,172,932)    (84,770,366)    (85,611,469)

Extraordinary item- early
 extinguishment of debt          --        (2,430,456)     (2,430,456)

Loss before cumulative
 effect of change in
 accounting principle    (124,172,932)    (87,200,822)    (88,041,925)

Cumulative effect of
 accounting change in
 principle                       --        (2,878,949)     (2,878,949)

Net loss                ($124,172,932)  ($ 90,079,771)  ($ 90,920,874)


Preferred stock dividends
 and accretion             19,563,089      12,085,818      12,085,818

Net loss applicable to
 common stockholders    ($143,736,021)  ($102,165,589)  ($103,006,692)


EBITDA                    (23,864,734)    (30,858,199)    (31,699,302)

Loss per common share:
 Basic and diluted             ($5.34)         ($4.01)         ($4.05)

Loss per common share
 before cumulative
 effect:
 Basic and diluted             ($5.34)         ($3.90)         ($3.93)

Loss per common share
 before extraordinary
 item and cumulative
 effect:
 Basic and diluted             ($5.34)         ($3.81)         ($3.84)

Shares used in computing
 loss per common share
 Basic and diluted (C)     26,903,518      25,453,368      25,453,368


(A) Proforma reflects the twelve months ended December 31, 2000 under
    applicable provisions of SAB101.
(B) Year ended December 31,2000 is the sum of the nine month
    transition period ended December 31, 2000 and the quarter ended
    March 31, 2000.
(C) Recalculated the weighted average shares for the proforma twelve
    months ended December 31, 2000.