Clearnet Announces First Quarter 1997 Results - Mike Subscribers Now Exceed 15,000 (Part 1 of 2).PICKERING, Ontario--(BUSINESS WIRE)--May 22, 1997--(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). , ME NET.A., 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 CLNTF.) Clearnet Communications Inc. ("Clearnet" or "the Company") today reports the following financial results: -0-
Financial Highlights
3 Months Ended 3 Months Ended
March 31, 1997 March 31, 1996
-------------- --------------
(unaudited) (unaudited)
Revenue $ 13,671,000 $9,012,000
EBITDA (19,677,000) (6,052,000)
Net Loss before
income taxes (36,712,000) (9,737,000)
Net Loss for the period (37,420,000) (10,026,000)
Loss per share (0.94) (0.33)
Capital Expenditures 70,084,000 17,992,000
Subscriber Data:
Mike: -net subscriber additions 4,779 n/a
-total end of period 9,844 n/a
Analogue:
-net subscriber additions 8,450 (558)
-total end of period 62,653 54,070
Total 72,497 54,070
CORPORATE DEVELOPMENTS Mike Subscribers and ARPU (Average Revenue Per User) A calculation often used to determine the overall value of an application. It is also used to rate particular customers, especially in the wireless space, by comparing someone's account to the overall average. Growing - Clearnet is experiencing continued increased demand for Mike. This week the number of Mike subscribers exceeded 15,000 for an increase of 5,156 or 52 percent since the end of the first quarter. Clearnet added 4,779 subscribers in the first quarter and a vast majority of these occurred since certain hardware pricing adjustments were implemented in late February. The average revenue per subscriber unit A Subscriber Unit, or SU is a broadband radio that is installed at a business or residential location to connect to an Access Point to send/receive high speed data wired or wirelessly. Devices commonly referred to as a Subscriber Unit include cable modems, mobile phones, etc. per month ("ARPU") also increased significantly. The Mike ARPU for the first quarter was $61.32 representing a 36 percent increase from the $45.08 ARPU reported for the fourth quarter of 1996. Mike ARPU now exceeds the cellular ARPU reported in the first quarter by each of the public cellular companies in Canada. Mike Vendor Financing Vendor Financing The lending of money by a company to one of its customers so that the customer can buy products from it. By doing this, the company increases its sales even though it is basically buying its own products. Refinanced - Clearnet has amended its Mike bank credit facility to lower its cost of borrowing and to increase availability to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. approximately $47 million of Mike infrastructure payments owed to Motorola which became payable upon Clearnet exceeding certain Mike subscriber levels. The first payment of approximately $23 million was refinanced in the first quarter and the final payment is payable and expected to be refinanced by the end of May. Total Mike bank credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities now approximate $72 million including $25 million in unutilized working capital facilities. Local Competition Ruling Benefits Clearnet - On May 1, the Canadian Radio-television and Telecommunications Commission The Canadian Radio-television and Telecommunications Commission (CRTC, in French Conseil de la radiodiffusion et des télécommunications canadiennes) was established in 1968 by the Parliament of Canada to replace the Board of Broadcast Governors. ("CRTC CRTC Canadian Radio-Television & Telecommunications Commission CRTC Combat Readiness Training Center CRTC Cathode Ray Tube Controller CRTC China Railway Telecommunications Center CRTC Cold Region Test Center CRTC Continuously Regenerated Trap Column ") issued a set of decisions regarding local telecom competition. In particular, the CRTC's decision creates a regulatory framework that enhances the potential for Clearnet's soon-to-be-launched PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. to be a competitive wireless alternative for local telephone service. Local phone service has been provided on a monopoly basis using traditional wireline technology. The CRTC's landmark decision A landmark decision is the outcome of a legal case (often thus referred to as a landmark case) that establishes a precedent that either substantially changes the interpretation of the law or that simply establishes new case law on a particular issue. was issued after a thorough public process involving some 30 interested parties and almost three years of deliberation deliberation n. the act of considering, discussing, and, hopefully, reaching a conclusion, such as a jury's discussions, voting and decision-making. DELIBERATION, contracts, crimes. . The decision sets the conditions governing the introduction of local phone service by competitive service providers across Canada Across Canada was an afternoon program that formerly aired on The Weather Network. The segment ran from early 1999 until mid 2002. The show ran from 3:00PM ET until 7:00 PM ET. and is substantially in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Clearnet's comprehensive recommendations to the CRTC. In particular, Clearnet is pleased by the CRTC's decision to make local subsidies portable. Local subsidies belong to subscribers who will now be able to take these subsidies with them to help pay their local phone bill-- no matter which local service provider they choose. Additionally, the CRTC rejected the proposal that new entrants such as Clearnet pay new "local contribution taxes" and now has included wireless carriers in the toll contribution regime. The CRTC decision allows Clearnet to attain co-carrier status and clearly rewards facilities-based operators such as Clearnet. The CRTC decision effectively broadens Clearnet's potential opportunity to include the $7 billion local phone service segment along with traditional mobile applications of wireless. Connecting Libraries to the Internet - On April 23, Clearnet announced an agreement with the Canadian Library Association The Canadian Library Association (CLA) is a national, predominately English-language association which represents 57,000 library workers across the country. It also speaks for the interests of the 21 million Canadians who are members of libraries. that will see Clearnet offer selected local libraries high-speed Internet See broadband. access in exchange for the right to use library rooftops as cell sites for Clearnet's Mike (TM) and PCS digital networks. Clearnet requires substantial numbers of new sites for its network of digital cells, or radio transmission systems, as it extends its digital wireless telecom services across Canada. There are almost 3,500 local Canadian libraries, and those that fit Clearnet's buildout The construction and implementation of a system. For example, "network buildout" implies constructing the network and going online. plan will be offered either industry-standard payments for rooftop use or high-speed Internet access for library as to location and height connections and community networking. Clearnet will offer libraries use of a portion of its super-fast T1 lines, and in future will offer conversion to a wireless microwave radio Internet connection. Either solution will allow library users and staff to surf the "Information Highway" at unprecedented speed. Mobilair Acquisition Closed - As previously announced, on February 28, 1997, Clearnet closed the acquisition of the wireless communication business of Autostock Inc. known as the Mobilair Communications division for a purchase price of approximately $21.0 million substantially all paid in cash. Mobilair operates entirely in the province of Quebec. Mobilair is believed to be the largest distributor of wireless two-way radio A voice network that provides an always-on connection enabling the user to just "push the button and talk." Also called "dispatch radio," two-way radio has traditionally been used by police, fire, taxi and other mobile fleets. product in Quebec with 14 sales and service outlets and over 130 employees, substantially all of whom were offered employment with Clearnet. Mobilair also provides wireless dispatch communications over an analogue (electronics) analogue - (US: "analog") A description of a continuously variable signal or a circuit or device designed to handle such signals. The opposite is "discrete" or "digital". SMR (Specialized Mobile Radio) The communications services used by police, ambulances, taxicabs, trucks and other delivery vehicles. Throughout the U.S., approximately 3,000 independent operators are licensed by the FCC to offer this service, which provides always-on ("specialized mobile radio See SMR. ") network of approximately 100 transmission sites utilizing over 300 radio channels (including 3.5 MHz (MegaHertZ) One million cycles per second. It is used to measure the transmission speed of electronic devices, including channels, buses and the computer's internal clock. A one-megahertz clock (1 MHz) means some number of bits (16, 32, 64, etc. in Montreal) to approximately 10,000 subscribers. In 1996, Mobilair is also an integration specialist in the field of mobility and public safety. Mobilair had annual combined revenue of approximately $18 million. The results of operations for the three month period ended March 31, 1997 reflect one month of operations of the Mobilair business. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS Revenue ------------------------------------------------------------ Increase (decrease) $ in millions percent ------------------------------------------------------------ 3 month periods ended March 31, 1997 - 1996: Network Revenue 0.9 25.7 Equipment sales, rental and service sales 3.7 69.3 ------------------------------------------------------------ The increase in network revenue resulted from an increase in total subscribers to 72,497 as of March 31, 1997 from 54,070 one year earlier and an increase in average revenue per subscriber unit ("ARPU") per month. The increase includes 4,779 net subscriber additions in the first quarter of 1997, bringing the subscribers on the digital Mike network to 9,844. ARPU was $61.32 per month for the Mike digital network for the three months ended March 31, 1997 representing a 36 percent increase from $45.08 per month for the three month period ended December 31, 1996 (the first three months of commercial operations for the Mike network). The increase in Mike ARPU was due to the increase in the mix of higher revenue generating client units as compared to lower revenue generating dealer units and due to increased airtime air·time n. 1. The time during which a radio or television station is broadcasting. Also called airspace. 2. The time at which a radio or television program is broadcast. usage from the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of certain pre-commercial launch airtime pricing promotions. The churn churn: see butter. for the Mike network was 3.14 percent per month for the three month period ended March 31, 1997. Mike subscriber churn was high in the first quarter primarily because certain Mike pre-commercial launch promotional subscriber packages were completed in the three month period ended March 31, 1997 which resulted in above expected deactivation de·ac·ti·vate tr.v. de·ac·ti·vat·ed, de·ac·ti·vat·ing, de·ac·ti·vates 1. To render inactive or ineffective. 2. To inhibit, block, or disrupt the action of (an enzyme or other biological agent). 3. levels. The churn rate (1) The percentage of customers who cancel their online, cellphone or other subscription service during a certain time period. (2) The percentage of employees who leave the company during a certain time period. See churning. is expected to decrease in future periods. Analogue subscribers increased by 8,583 net subscribers or 15.9 percent to 62,653 at March 31, 1997 from 54,070 at March 31, 1996 despite conversions to the Mike network of 767 and net deactivations of 818. The increase was primarily due to approximately 10,000 analogue subscribers acquired in the Mobilair acquisition. Analogue ARPU increased 1.4 percent to $22.74 per month for the three months ended March 31, 1997 from $22.42 per month for the quarter ended March 31, 1996. The analogue "churn rate (number of subscriber units disconnected, excluding conversions to the Mike network, divided by the average number of units on the network) for the quarter ended March 31, 1997 decreased to 1.57 percent from 2.00 percent per month for the three month period ended March 31, 1996. Equipment sales, rental and service revenue increased significantly during the quarter as compared to the same quarter one year earlier primarily to Mike subscriber unit sales and sales generated by the Mobilair operations for the period. Operating, selling, general and administrative expenses --------------------------------------------------------------- Increase (decrease) $ in millions percent --------------------------------------------------------------- 3 month periods ended March 31, 1997 - 1996 21.8 188.8 --------------------------------------------------------------- Operating costs operating costs npl → gastos mpl operacionales with respect to equipment sales, rental and service increased to $7.0 million from $5.4 million for the three month periods ended March 31, 1997 and 1996, respectively. Operating costs for network service increased to $1.7 million from $0.5 million for the quarters ended March 31, 1997 and 1996 due to increased transmission and related costs for Mike service which were capitalized prior to commercial launch in October 1996. Advertising and promotion expenditures increased to $1.7 million from $0.1 million for the three month periods ended March 31, 1997 and 1996 and were substantially all related to marketing the Mike service. The marketing cost (advertising and promotions, commissions and equipment subsidies) per gross Mike subscriber addition for the three month period ended March 31, 1997 was $600 per unit which includes the full cost of handset The part of the telephone that contains the speaker and the microphone. On a desktop phone, the part you hold in your hand is the handset. On a cellphone, the entire phone is the handset. See multihandset cordless and headset. subsidies incurred in the period. General and administrative expenses increased $15.0 million to $23.0 million for the three month period ended March 31, 1997. The increase was primarily organizational development with respect to the Mike commercial launch and the future launch of the PCS network. As at March 31, 1997, Clearnet had 1,081 employees as compared to 415 employees at March 31, 1996. Increases in operating, selling, general and administrative expenses are consistent with the Company's business plan and are expected to continue to increase throughout 1997. Negative EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become increased in the first quarter of 1997 to $19.7 million which was less than planned and is expected to be negative and increase for the remaining nine months of 1997. Depreciation and amortization --------------------------------------------------------------- Increase (decrease) $ in millions percent --------------------------------------------------------------- 3 month periods ended March 31, 1997 - 1996 10.6 301.9 --------------------------------------------------------------- The increase in depreciation and amortization is due to the depreciation of the digital network equipment which commenced in the fourth quarter of fiscal 1996 upon the commercial launch of the Mike network in October 1996. Foreign exchange --------------------------------------------------------------- Increase (decrease) $ in millions percent --------------------------------------------------------------- 3 month periods ended March 31, 1997 - 1996 2.3 n/a The foreign exchange gain resulted from the translation of the U.S. dollar short-term investments being held to fund planned U.S. dollar denominated capital expenditures. The foreign exchange gain is net of losses on U.S. denominated accounts payable and the amortization of the deferred foreign exchange loss from the translation of the U.S. denominated Senior Discount Notes. Interest expense, net --------------------------------------------------------------- Increase (decrease) $ in millions percent --------------------------------------------------------------- 3 month periods ended March 31, 1997 - 1996 1.6 53.3 Clearnet generated interest income of $5.3 million and $3.3 million for the three month periods ended March 31, 1997 and 1996, respectively, on its short-term investments. Interest expense of $9.8 million and $6.2 million for the three month periods ended March 31, 1997 and 1996, respectively, are net of interest capitalized for assets under development of $0.9 million and $2.8 million. Capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. of interest for assets under development ceased for the Mike digital network upon commercial launch in the fourth quarter of fiscal 1996. Net loss per share ------------------------------------------------------------- Increase (decrease) $ in millions percent ------------------------------------------------------------- 3 month periods ended March 31, 1997 - 1996 0.61 184.8 The average Class A Non-voting shares outstanding was 40,014,000 and 30,770,000 for the periods ended March 31, 1997 and 1996, respectively. In addition, as at March 31, 1997 there were 1,211,000 warrants, which when exercised would entitle en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: the holders thereof to acquire 1,211,000 Class A Non-Voting shares, and 2,796,491 options outstanding. The increase in the average number of shares outstanding was principally a result of the May 1996 issuance of 9.2 million Class A Non-Voting shares. Part 2 of 2 to follow including financial tables. CONTACT: Clearnet Communications Inc. Vincent Surette, 905/ 837-3041 investorrelations@clearnet.com |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion