Correction -- Fitch Affirms Cincinnati Bell's IDR at 'B+'; Outlook Stable.

CHICAGO -- (This is a correction to the release of April 28, 2006, with a corrected rating in the text for CBB's senior notes .)

Fitch Ratings has affirmed Cincinnati Bell Inc.'s (Cincinnati Bell) issuer default rating (IDR) rating at 'B+'. In addition, Fitch has affirmed other ratings as listed below. The Rating Outlook is Stable.

Cincinnati Bell, Inc. (CBB)

--IDR 'B+';

--Senior secured credit facility 'BB+/RR1';

--$50 million senior secured notes 'BB+/RR1';

--$746 million senior notes 'BB-/RR3';

--$633 million senior subordinated notes 'B/RR5';

--$129 million convertible preferred stock 'B-/RR6'.

Cincinnati Bell Telephone (CBT);

--IDR 'B+';

--$230 million senior unsecured notes 'BB+/RR1'.

Fitch's rating of CBB reflects the relative stability and lower level of business risk associated with the company's integrated position in the local exchange and wireless businesses and the company's ability to generate strong levels of free cash flow as measured by free cash flow margin (free cash flow as a percentage of revenues). These factors are balanced against the company's highly levered balance sheet relative to its peer group.

The company's strategy is focused on delevering its balance sheet and defending and growing its local exchange and wireless businesses. CBB's wireline business, in which Fitch includes its local, hardware and managed services, and other business segments, accounted for 81% of consolidated revenue and 89% of consolidated EBITDA (excluding restructuring costs and a $42.3 million impairment in the wireless segment) in 2005. Competitive pressure in the wireline business increased in 2005, as evidenced by the 4.1% decline in total access lines year-over-year. Thus far, access-line declines are due primarily to wireless substitution and the substitution of second lines for high-speed data services (both CBB and cable operator-provided). A portion of the competitive losses are attributable to Time Warner Cable, who launched voice services using voice-over-Internet protocol (VoIP) in mid-2004 and a second, Insight Communications Company, Inc., is expected to launch in mid-2006. CBB has been aggressively mitigating pressures from cable operators through bundling wireless and high-speed data services with its wireline voice services (local and long-distance) into a package the company refers to as a 'super bundle.' As of year-end 2005, approximately 26% of the consumer households in its incumbent local exchange operating territory subscribed to a super bundle, up from 20% at year-end 2004. CBB appears to be deflecting to some degree the initial competitive efforts of its cable competitors through its bundling efforts. Following an initial increase in quarterly primary residential access line losses in the second half of 2004, access-line declines have not accelerated in its incumbent territory. However, Fitch is taking a cautious view in that these competitive inroads by cable operators using VoIP are still in the early stages.

Cincinnati Bell Wireless Co. (CBW) is the market share leader in the Cincinnati and Dayton, Ohio, basic trading areas and provides an avenue for CBB to further strengthen its service bundle. In 2005, CBW generated approximately 19% of CBB's revenue and 11% of its EBITDA. Beginning in the third quarter of 2005 and continuing in the fourth quarter of 2005, the company made progress in addressing some of the issues that had affected the wireless business, as postpaid net additions, EBITDA and average revenue per unit (ARPU) had been under pressure since 2003. A major reason for the pressure on the wireless performance metrics was the network quality issues that arose from the transition from the time division multiple access (TDMA) network to the global system for mobile communications (GSM)/general packet radio service (GPRS)) network. In the second half of 2005, postpaid net additions improved significantly. Some pressure on EBITDA remained due to customer acquisition costs associated with growth. In recent quarters, the company has made progress in improving network quality through the installation of additional cell sites, which has led to lower postpaid customer churn. Postpaid customer churn was 1.8% in the fourth quarter of 2005, compared with 2.8% for the fourth quarter of 2004, and 3.7% in the third quarter of 2004. ARPU declines have been caused by lower roaming revenues and migration to lower price plans.

CBB's 'BB-' senior notes rating reflects the subordination to the company's senior secured debt and the Cincinnati Bell Telephone Co. (CBT) notes. At the end of 2005, the capital structure reflected approximately $679 million in CBT notes, secured CBB notes and credit facility debt that was senior to CBB's senior unsecured debt. The notching of the senior secured debt above the senior unsecured debt is indicative of the anticipated recovery by the senior secured debt holders and their first-priority claim on the economic interests of CBT and CBW.

On Feb. 14, 2006, the company completed the acquisition of the remaining 19.9% in the CBW partnership that had been owned by Cingular Wireless LLC (Cingular), for approximately $83 million and financed the transaction by borrowing on its revolving credit facility. Cingular had acquired the stake in CBW through the acquisition of AT&T Wireless Services, Inc. (AT&T Wireless). In August 2004, the two companies agreed to a put/call arrangement that, as amended, became effective in January 2006. The arrangement allowed CBB to acquire Cingular's stake for $83 million, and the August 2004 agreement also modified the roaming arrangement so that EBITDA levels for CBW were largely preserved. The five-year term of the roaming arrangement provides for additional stability in CBW's operations. Given the reductions in total debt achieved by CBB the transaction is not expected to have an effect on CBB's credit profile.

CBB reported total debt outstanding of $2.085 billion at the end of 2005, a reduction of approximately $56 million from year-end 2004. The company met its principal capital structure objective in 2005, which was to refinance the 16% senior subordinated discount notes due 2009 (the 16% notes). In the first step of the refinancing, in February 2005 CBB issued $250 million of senior unsecured debt and $100 million of subordinated notes. Proceeds from the offering and funds drawn from a new five-year $250 million revolving credit facility were used to retire the $438.8 million in debt outstanding under the previous bank facility. In the second step, CBB issued $400 million of new bank term notes (the Tranche B Term Loan) on Aug. 31, 2005, under the terms of the credit facility. CBB used proceeds from the bank notes and a draw on its revolving credit facility to call the 16% notes for $447.8 million. During the remainder of 2005, the revolver was paid down so that at the end of 2005, the company had approximately $250 million of additional capacity remaining under the revolver. CBB has no major maturities until the revolver matures in 2010, and the significant quarterly installments on the term loan do not start until 2011.

At Dec. 31, 2005, CBB had $26 million in cash and in 2005, the company generated $169 million in free cash flow (before incurring $22 million in refinancing fees). CBB's guidance calls for the company to generate approximately $152 million in free cash flow in 2006, not including the acquisition of the 19.9% interest in CBW for $83 million. Based on the company's guidance that revenue is expected to be approximately flat at $1.2 billion and capital spending will approximate 12% of revenue, Fitch estimates capital spending will be at a level similar to the $143 million spent in 2005. Spending could be higher if during the course of business over the year it obtains additional contracts for the data center facility business. The expansion would not begin unless the company had agreements for the use of the capacity.

Fitch's Recovery Ratings (RR), introduced in 2005, are a relative indicator of creditor recovery on a given obligation in the event of a default. A broad overview of Fitch's RR methodology as it relates to specific sectors, including a Case Study webcast, can be found at www.fitchratings.com/recovery.

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