Citizens Utilities Describes Structure and Strategy of New Telecommunications Company.STAMFORD, Conn.--(BUSINESS WIRE)--Aug. 13, 1998--Citizens Utilities (NYSE NYSE See: New York Stock Exchange : CZN, CZNPr) President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. Daryl A. Ferguson made the following statement today during a conference call with the financial community. The statement pertained to the new telecommunications company See telecom company. to be created as a result of the separation plan announced May 18, its structure and strategy, and the impact of these on Electric Lightwave, Inc., (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ELIX) in which Citizens has an 83% ownership stake. "In May, during its teleconference with investors the day after the separation announcement, Citizens indicated that - in anticipation of the formation of the new telecommunications company -- it was studying the possible integration of Electric Lightwave with its incumbent local exchange carrier ILEC, short for incumbent local exchange carrier, is a local telephone company in the United States that was in existence at the time of the break up of AT&T into the Regional Bell Operating Companies (RBOCs) also known as the "Baby Bells". (ILEC (Incumbent Local Exchange Carrier) A traditional local telephone company such as one of the Regional Bell companies (RBOCs). Contrast with CLEC. See ELEC and TELRIC. ) businesses. I am here today to report the results of that study. "Citizens' telecommunications businesses, which include over 900,000 rural access lines and an 83% interest in Electric Lightwave, will reside under a holding company as yet unnamed. For planning purposes, we refer to this holding company as 'NewCo.' "While there are synergistic synergistic /syn·er·gis·tic/ (sin?er-jis´tik) 1. acting together. 2. enhancing the effect of another force or agent. syn·er·gis·tic adj. 1. opportunities in purchasing, engineering and financing, we have determined that the best strategy is to operate Electric Lightwave and the ILEC businesses as separate and independent entities. "NewCo's strategy will therefore be two-pronged: to grow both its ILEC and competitive local exchange carrier (CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) ) businesses to their fullest potential. The logic behind this strategy is very compelling. "The existing ILEC businesses have the critical mass -- and will have the financial resources -- to become one of the nation's largest rural and suburban ILECs through aggressive internal and external growth. NewCo's ILEC businesses will serve primarily residential and small business customers. "Electric Lightwave will continue to expand its regional network and market its data services nationally to medium and large businesses in urban areas. At this early stage in the company's history, it is our view that there is a great deal of value yet to be gained by further developing Electric Lightwave. "At this time we see the ILEC businesses and Electric Lightwave as separate and distinct entities with different cultures, business strategies, markets and opportunities. "As we have stated before, we believe that the separation will be a positive for Electric Lightwave because it transfers ownership from a diversified, heavily regulated utility company to a new company focused solely on telecommunications. The separation distances Electric Lightwave from the restrictive strategies historically imposed upon it. "In fact - far from limiting Electric Lightwave in any way - the separation actually enlarges its range of value-enhancing opportunities. The company will be able to fully pursue its growth strategies and is in position to eventually participate in the consolidating CLEC industry. "Electric Lightwave is clearly undervalued Undervalued A stock or other security that is trading below its true value. Notes: The difficulty is knowing what the "true" value actually is. Analysts will usually recommend an undervalued stock with a strong buy rating. by the market. For example, on an enterprise value to revenue basis, the CLEC average is 5.6 times; the company is trading at 3.3 times. On enterprise value to property, plant and equipment (PP&E), the CLEC average is 6.9 times and the company is trading at 1.4 times. If Electric Lightwave was traded at CLEC averages, it would be trading at $28 or more, not $8.75. "Electric Lightwave has all of the same options for achieving value as every other developing CLEC. It is our view that there is no strategic limitation whatsoever that should prevent the company from achieving a value comparable to the best of its peers." Citizens Utilities provides Telecommunications Services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. and Public Services Public services is a term usually used to mean services provided by government to its citizens, either directly (through the public sector) or by financing private provision of services. including natural gas distribution, electric distribution, water distribution and wastewater treatment services to approximately 1.8 million customers in 21 states. Citizens owns 83% of Electric Lightwave, Inc., a leading full-service, facilities-based integrated communications services provider, and has a significant investment in Centennial Cellular Corp. (NASDAQ:CYCL), a cellular telephone company. Citizens announced on May 18, 1998 that it intends to separate its telecommunications businesses and public services businesses into two stand-alone, publicly traded companies publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. . This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the statements. These and all forward-looking statements are only predictions or statements of current plans that are constantly under review by the company. All forward-looking statements may differ from actual results because of, but not limited to, changes in the local and overall economy, the nature and pace of technological changes, the number and effectiveness of competitors in the company's markets, success in overall strategy, weath |
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