Source: Dobson Communications Corporation
Dobson Communications: Demand for Digital Results in Record Fourth Quarter Growth
Digital Subscribers Increase to 43 percent of Total Customer Base
OKLAHOMA CITY, March 4, 2001 (PRIMEZONE) -- Dobson Communications Corporation (Nasdaq:DCEL) today announced that accelerating demand for digital services resulted in record growth in the quarter ended December 31, 2000.
Total revenues of $144.2 million were 52 percent higher than the fourth quarter last year, and EBITDA of $45.3 million was 38 percent higher than the same quarter of 1999.
These revenue and EBITDA totals do not reflect Dobson's 50 percent joint venture ownership in American Cellular Corporation, which Dobson and AT&T Wireless (NYSE:AWE) acquired in the first quarter of 2000 and which Dobson accounts for on an equity basis ("Loss in investment in joint venture," Table 1). EBITDA represents earnings before interest, taxes, depreciation, amortization, equity in unconsolidated subsidiaries, loss from discontinued operations and extraordinary items.
Dobson's fourth quarter net loss applicable to common shareholders was $66.2 million, or $0.71 per share, based on 93.8 million average shares. The net loss included paid-in-kind preferred stock dividends of $17.6 million and a loss related to American Cellular of $19.2 million.
In the fourth quarter last year, the net loss applicable to common shareholders was $57.6 million, or $1.05 per share, based on an average 54.8 million shares. The Company paid preferred stock dividends of $19.0 million and had a loss from discontinued operations of $24.7 million.
Proportionate Pro Forma Results
Proportionate pro forma results for the quarter reflect more clearly the increasingly rapid shift of Dobson's subscriber base to digital customers (Table 3). Proportionate pro forma results fully reflect Dobson's results and 50 percent of American Cellular's results.
On this basis, total revenues for the fourth quarter were $194.9 million, an increase of 23 percent over the same period last year. Roaming revenues for the quarter were $78.7 million, a 26 percent increase over the final three months of 1999. Roaming minutes-of-use (MOUs) were 60 percent higher for the quarter.
EBITDA for the fourth quarter was $64.2 million, compared with $63.0 million for the fourth quarter last year, on a proportionate pro forma basis.
Fourth quarter gross subscriber additions (post-paid) were approximately 109,800, a gain of 23 percent over gross adds for the same period last year. Eighty-five percent of new additions subscribed to a digital calling plan in the quarter, compared with 78 percent in the immediately previous quarter.
In addition, approximately 53,000 analog customers migrated to digital calling plans during the fourth quarter, a record level since Dobson began offering digital service. Dobson launched a promotion early in the period, offering an entry-level digital phone to analog customers who upgraded with a new one- or two-year contract. Approximately $3.7 million in incremental equipment costs during the quarter were due to the unusually high level of migrations.
"I'm particularly pleased with the growth in EBITDA during a quarter in which we had record gross subscriber growth and record migrations to digital calling plans, as well as turning on a record number of cell sites," said Everett R. Dobson, chairman and chief executive officer. "The demand for digital continued very strong in early 2001. We remain confident in the Company's growth outlook for this year and beyond."
Fourth quarter post-paid customer churn was 2.01 percent, considerably improved over churn of 2.18 percent for the immediately previous quarter and flat with churn for the last quarter of 1999. Consequently, the Company generated record net subscriber additions in the fourth quarter, reporting approximately 60,700, an increase of 31 percent over the same period last year.
In the final period of the year, Dobson added 131,400 net digital customers to its customer base, compared with 93,300 digital net adds in the immediately previous quarter. This reflected strong gross adds, low churn and record migrations to digital calling plans. At the end of the fourth quarter, 43 percent of subscribers were digital, compared with 32 percent just three months earlier.
Average revenue per unit (ARPU) was also very strong. Fourth quarter ARPU of $40 was equal to ARPU for the same period last year, again confirming the positive effect of transitioning Dobson's subscriber base to digital. ARPU would have been even higher if not for the record level of fourth quarter gross adds.
Equipment cost and cost of service in the fourth quarter were higher than previous quarters, reflecting accelerated demand for digital products and services. Dobson originally issued guidance of between 95,000 and 105,000 gross adds in the fourth quarter. The additional 4,800 gross adds increased equipment cost by approximately $1.7 million.
Cost of service in the fourth quarter was increased by approximately $3.2 million by Dobson’s increased acceleration of its network build-out to prepare for increasing digital call traffic in 2001. The majority of this cost involved higher site rental expenses, overtime salary expense and switch expense related to cell sites planned for activation in the first quarter of 2001.
Capital expenditures in the fourth quarter were $34.6 million in the Dobson-only markets and $19.3 million in the American Cellular operations, bringing the respective totals for fiscal 2000 to $134.3 million for Dobson and $68.1 million for American Cellular.
In the fourth quarter, the Company installed almost 100 new cell sites and added approximately 6,000 voice paths, of which 3,700 were digital. Dobson also continued to add cellular digital packet data radios during the fourth quarter, extending CDPD coverage to support the roll-out of its "WebMagic" wireless data product.
Even more remarkable was the impact of the Company's capital spending program for the year as a whole. In completing the rural wireless industry's first 100 percent digital network during fiscal 2000, Dobson:
-- Increased its total number of switches nationwide to 27
(+80 percent);
-- Increased its total cell sites to 1,401 (+191 percent);
-- Increased its total digital voice paths to 15,300 (+438 percent);
and
-- Increased its total voice paths to 33,745 (+256 percent).
The impact of its capital investment is clearly evident in the growth of digital traffic, generated both by Dobson subscribers and by the customers of Dobson’s roaming partners as they roamed on the Dobson network. During the fourth quarter of 2000, 68 percent of call traffic on the Dobson-only network was digital, compared with 37 percent in the fourth quarter last year. Fourth quarter 2000 digital call traffic on the American Cellular network was 62 percent of the total.
"Dobson Communications today is uniquely positioned to capitalize on the most promising growth opportunities in the rural wireless industry," Mr. Dobson concluded. "Our opportunities continue to expand -- in the recent FCC spectrum auction, we bid successfully on 14 PCS licenses in seven states, which should allow us to further strengthen relationships with our key roaming partners nationwide. We hope to announce in the near future our plans for building out 1.9 GHz networks in these 14 markets."
Conference Call to Be Web-Cast
Dobson Communications will host its fourth quarter conference call on Monday, March 5, at 9:00 a.m. (ET). To participate, please call (800) 810-0924; the confirmation code is 767171. The fourth quarter conference call will also be audio web-cast live through Dobson's web site at www.dobson.net.
A replay of the call will be available later that day by dialing (888) 203-1112, using the same confirmation code. The Company plans to archive the conference call on its web site shortly after the actual event.
Dobson Communications is a leading provider of cellular phone services to rural markets in the United States. Headquartered in Oklahoma City, the rapidly growing Company owns or manages wireless operations in 19 states. For additional information on the Company and its operations, please visit its web site at www.dobson.net.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These include, but are not limited to, statements regarding the Company's plans, intentions and expectations. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. These risks include increased levels of competition, shortages of cellular handsets and other key equipment, restrictions on the Company's ability to finance its growth and other factors. A more extensive discussion of the risk factors that could impact these areas and the Company's overall business and financial performance can be found in the Company's reports filed with the Securities and Exchange Commission. Given these concerns, investors and analysts should not place undue reliance on forward-looking statements.
Table 1
Dobson Communications Corporation
Statements of Operations
(Includes American Cellular ownership on an equity basis and other
acquisitions on the basis of actual impact only, not pro forma)
Three Months Ended Year Ended
December 31, December 31,
------------------------------------------
2000 1999 2000 1999
---- ---- ---- ----
($ in thousands, except per share data)
(unaudited)
Operating Revenue:
Service revenue $ 76,081 $ 52,312 $ 272,092 $ 202,344
Roaming revenue 60,993 38,177 224,791 145,473
Equipment &
other revenue 7,111 4,439 25,061 14,391
---------- ---------- ---------- ----------
Total 144,185 94,928 521,944 362,208
Operating Expenses
(excluding
depreciation
& amortization):
Cost of service 38,841 21,774 126,998 89,677
Cost of equipment 16,996 9,950 50,835 28,512
Marketing & selling 23,185 15,692 73,909 50,649
General &
administrative 19,859 14,687 71,687 55,482
---------- ---------- ---------- ----------
Total 98,881 62,103 323,429 224,320
EBITDA 45,304 32,825 198,515 137,888
Depreciation &
amortization (49,020) (27,420) (171,896) (127,440)
---------- ---------- ---------- ----------
Operating income (3,716) 5,405 26,619 10,448
Minority interest (1,398) (1,183) (5,101) (3,308)
Loss from investment
in joint venture (1) (19,185) - (49,622) -
Other income 2,184 442 9,681 3,853
---------- ---------- ---------- ----------
Income before interest
& income taxes (22,115) 4,664 (18,423) 10,993
Interest expense (44,517) (27,144) (151,894) (109,509)
Income tax benefit 18,030 8,544 45,864 37,436
---------- ---------- ---------- ----------
Loss from continuing
operations (48,602) (13,936) (124,453) (61,080)
Loss from discontinued
operations, net of
income tax - (24,680) - (66,491)
Extraordinary expense,
net of income tax - - (20,387) -
---------- ---------- ---------- ----------
Net Loss (48,602) (38,616) (144,840) (127,571)
Dividends on
preferred stock (17,616) (18,964) (126,686) (69,477)
---------- ---------- ---------- ----------
Net loss applicable to
common shareholders $ (66,218) $ (57,580) $ (271,526) $ (197,048)
========== ========== ========== ==========
Basic net loss
applicable to common
shareholders per
common share:
Continuing operations $ (0.52) $ (0.25) $ (1.39) $ (1.11)
Discontinued operations - (0.45) - (1.21)
Extraordinary expense - - (0.23) -
Dividends on
preferred stock (0.19) (0.35) (1.42) (1.27)
Basic net loss
applicable to common
shareholders per
common share: $ (0.71) $ (1.05) $ (3.04) $ (3.59)
---------- ---------- ---------- ----------
Basic weighted average
common shares
outstanding 93,816,208 54,823,354 89,417,829 54,823,354
========== ========== ========== ==========
----------------------------------------------------------
(1) Represents the Company's 50% ownership in the Net Loss
From American Cellular.
Detailed as follows: For the three months For the year ended
ended December 31, 2000 December 31, 2000
---------------------- ----------------
EBITDA 37,336 165,294
Depreciation
and Amortization (46,588) (154,797)
Interest Expense (44,121) (140,970)
Other Income, net 36 536
Income tax benefit 14,967 30,694
-------- --------
Net Loss of
American Cellular (100%) (38,370) (99,243)
======== ========
Table 2
Dobson Communications Corporation
Selected Financial Data
December 31, 2000
------------------
($ in millions)
Cash Equivalents and Restricted Cash
Unrestricted cash and cash equivalents 149.0
Escrow for towers sold to American Tower Company 2.0
Escrow for Interest on Dobson/Sygnet Senior Notes 24.2
=============
Total cash equivalents and restricted cash $ 175.2
=============
Long-term debt: (1)
Dobson Operating Co., L.L.C. credit facility $ 853.6
Dobson/Sygnet credit facility 334.9
DCC 10.875% Senior Notes, net 297.8
Dobson/Sygnet Senior Notes 200.0
Other 3.8
-------------
Total debt $ 1,690.1
=============
Senior Exchangeable Preferred Stock
12.25% $ 313.4
13.00% 206.4
-------------
Total Senior Exchangeable Preferred Stock $ 519.8
=============
Year Ended
December 31, 2000
-----------------
($ in millions)
Capital Expenditures $ 134.3
=============
(1) Does not include our proportionate interest in
American Cellular's total debt of $1.68 billion.
Table 3
Dobson Communications Corporation
Proportionately Consolidated Pro Forma
Selected Financial Information
(Includes 50% of American Cellular's operations to represent
proportionate ownership and pro forma effect of all acquisitions
as if they had occurred at the beginning of the periods presented)
For the Quarter Ended
12/31/99 3/31/00 6/30/00 9/30/00 12/31/00
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue:
Service revenue $ 87,896 $ 89,830 $ 99,012 $106,533 $106,666
Roaming revenue 62,538 63,916 78,699 90,748 78,741
Equipment &
other revenue 7,684 7,691 9,212 9,122 9,463
--------- --------- --------- --------- ---------
Total 158,118 161,437 186,923 206,403 194,870
Operating Expenses
(excluding
depreciation &
amortization):
Cost of service 35,432 34,900 40,303 49,191 49,765
Cost of equipment 14,622 14,868 15,196 16,187 23,001
Marketing & selling 22,130 22,037 22,578 23,789 30,942
General &
administrative 22,953 24,561 25,024 24,410 26,985
--------- --------- --------- --------- ---------
Total 95,137 96,366 103,101 113,577 130,693
--------- --------- --------- --------- ---------
EBITDA (1) $ 62,981 $ 65,071 $ 83,822 $ 92,826 $ 64,177
========= ========= ========= ========= =========
EBITDA Margin 39.83% 40.31% 44.84% 44.97% 32.93%
Pops 9,515,000 9,515,000 9,515,000 9,515,000 9,515,000
Post-paid
Gross Adds 89,500 83,300 76,200 81,200 109,800
Net Adds 45,800 43,000 33,200 26,100 56,500
Subscribers 752,900 795,900 829,100 855,200 913,000
Churn 2.00% 1.74% 1.77% 2.18% 2.01%
Average Service
Revenue per
Subscriber $ 40 $ 39 $ 40 $ 42 $ 40
Average Service
and Roaming
Revenue per
Subscriber $ 69 $ 66 $ 73 $ 78 $ 70
Pre-paid
Net Adds 700 2,900 2,200 3,600 4,200
Subscribers 5,300 8,200 10,400 14,000 18,200
Total
Net Adds 46,500 45,900 35,400 29,700 60,700
Subscribers 758,200 804,100 839,500 869,200 931,200
Penetration 7.97% 8.45% 8.82% 9.14% 9.79%
(1) Includes $1.5 million, $1.7 million, $1.9 million, $2.1 million
and $2.1 million of EBITDA for the quarters ended December 31,
1999, March 31, 2000, June 30, 2000, September 30, 2000 and
December 31, 2000, respectively, related to minority interests.
Table 4
Dobson Communication Corporation
Consolidated Pro Forma Financial Information for cellular
operations applicable to Dobson Communications' 13% Senior
Exhangeable Preferred Stock and 10.875% Senior Notes
(100% of Dobson Communications - includes both DOC LLC and
Dobson/Sygnet on a pro forma basis as if all acquisitions had
occurred at the beginning of the periods and no American
Cellular operations)
For the Quarter Ended
12/31/99 3/31/00 6/30/00 9/30/00 12/31/00
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue:
Service revenue $ 63,889 $ 65,853 $ 72,132 $ 77,056 $ 76,317
Roaming revenue 44,314 47,977 58,692 67,335 62,052
Equipment &
other revenue 5,668 5,836 6,726 6,759 7,149
--------- --------- --------- --------- ---------
Total 113,871 119,666 137,550 151,150 145,518
Operating Expenses
(excluding
depreciation &
amortization):
Cost of service 28,032 27,317 31,952 38,295 39,278
Cost of equipment 11,508 12,270 11,997 11,972 17,136
Marketing & selling 17,578 18,126 18,016 17,993 23,349
General &
administrative 17,560 18,468 19,050 18,858 20,255
--------- --------- --------- --------- ---------
Total 74,678 76,181 81,015 87,118 100,018
--------- --------- --------- --------- ---------
EBITDA (1) $ 39,193 $ 43,485 $ 56,535 $ 64,032 $ 45,500
========= ========= ========= ========= =========
EBITDA Margin 34.42% 36.34% 41.10% 42.36% 31.27%
Pops 7,070,000 7,070,000 7,070,000 7,070,000 7,070,000
Post-paid
Gross Adds 62,500 60,900 52,400 56,300 76,000
Net Adds 29,100 30,900 20,000 13,300 36,300
Subscribers 537,300 568,300 588,300 601,600 639,200
Churn 2.13% 1.81% 1.87% 2.41% 2.13%
Average Service
Revenue per
Subscriber $ 41 $ 39 $ 41 $ 43 $ 41
Average Service
and Roaming
Revenue per
Subscriber $ 69 $ 68 $ 75 $ 81 $ 74
Pre-paid
Net Adds 200 1,500 1,900 3,500 4,400
Subscribers 3,500 5,000 6,900 10,400 14,800
Total
Net Adds 29,300 32,400 21,900 16,800 40,700
Subscribers 540,800 573,300 595,200 612,000 654,000
Penetration 7.65% 8.11% 8.42% 8.66% 9.25%
(1) Includes $1.5 million, $1.7 million, $1.9 million, $2.1 million
and $2.1 million of EBITDA for the quarters ended December 31,
1999, March 31, 2000, June 30, 2000, September 30, 2000 and
December 31, 2000, respectively, related to minority interests.
Table 5
American Cellular Corporation
Consolidated Financial Information
(100% American Cellular, exclusive of Dobson’s operations)
For the Quarter Ended
12/31/99 3/31/00 6/30/00 9/30/00 12/31/00
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue:
Service revenue $ 48,014 $ 47,953 $ 53,759 $ 58,954 $ 60,699
Roaming revenue 36,447 31,877 40,015 46,827 33,378
Equipment &
other revenue 4,033 3,712 4,972 4,727 4,628
--------- --------- --------- --------- ---------
Total 88,494 83,542 98,746 110,508 98,705
Operating Expenses
(excluding
depreciation &
amortization):
Cost of service 14,799 15,166 16,701 21,791 20,974
Cost of equipment 6,227 5,196 6,399 8,431 11,731
Marketing & selling 9,106 7,822 9,124 11,593 15,185
General &
administrative 10,785 12,186 11,948 11,104 13,461
--------- --------- --------- --------- ---------
Total 40,917 40,370 44,172 52,919 61,351
--------- --------- --------- --------- ---------
EBITDA $ 47,577 $ 43,172 $ 54,574 $ 57,589 $ 37,354
========= ========= ========= ========= =========
EBITDA Margin 53.76% 51.68% 55.27% 52.11% 37.84%
Pops 4,889,000 4,889,000 4,889,000 4,889,000 4,889,000
Post-paid
Gross Adds 54,000 44,700 47,500 49,800 67,500
Net Adds 33,300 24,100 26,300 25,600 40,400
Subscribers 431,200 455,300 481,600 507,200 547,600
Churn 1.70% 1.60% 1.55% 1.63% 1.71%
Average Service
Revenue per
Subscriber $ 39 $ 36 $ 38 $ 40 $ 38
Average Service
and Roaming
Revenue per
Subscriber $ 68 $ 60 $ 67 $ 71 $ 59
Pre-paid
Net Adds 1,000 2,800 600 400 (500)
Subscribers 3,500 6,300 6,900 7,300 6,800
Total
Net Adds 34,300 26,900 26,900 26,000 39,900
Subscribers 434,700 461,600 488,500 514,500 554,400
Penetration 8.89% 9.44% 9.99% 10.52% 11.34%
Table 6
Dobson Operating Company LLC
Pro Forma Financial Information for cellular operations applicable
to Dobson Communications 12.25% Senior Exchangeable Preferred Stock
(Includes DOC LLC on a pro forma basis as if all acquisitions had
occurred at the beginning of the periods. Excludes Dobson/Sygnet
and American Cellular)
For the Quarter Ended
12/31/99 3/31/00 6/30/00 9/30/00 12/31/00
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue:
Service revenue $ 39,183 $ 40,646 $ 43,549 $ 46,047 $ 45,714
Roaming revenue 35,830 39,388 48,940 55,510 51,707
Equipment &
other revenue 3,730 3,726 4,069 4,731 5,091
--------- --------- --------- --------- ---------
Total 78,743 83,760 96,558 106,288 102,512
Operating Expenses
(excluding
depreciation &
amortization):
Cost of service 21,241 21,032 23,544 28,392 30,680
Cost of equipment 6,289 6,891 7,097 7,896 8,597
Marketing & selling 10,893 11,119 12,008 12,189 16,160
General &
administrative 13,044 12,747 12,988 12,320 13,859
--------- --------- --------- --------- ---------
Total 51,467 51,789 55,637 60,797 69,296
--------- --------- --------- --------- ---------
EBITDA (1) $ 27,276 $ 31,971 $ 40,921 $ 45,491 $ 33,216
========= ========= ========= ========= =========
EBITDA Margin 34.64% 38.17% 42.38% 42.80% 32.40%
Pops 4,708,000 4,708,000 4,708,000 4,708,000 4,708,000
Post-paid
Gross Adds 36,200 35,500 34,800 38,400 46,600
Net Adds 15,400 16,000 14,500 12,800 22,100
Subscribers 313,500 329,900 344,400 357,100 380,500
Churn 2.27% 2.02% 2.01% 2.43% 2.22%
Average Service
Revenue per
Subscriber $ 42 $ 42 $ 43 $ 43 $ 41
Average Service
and Roaming
Revenue per
Subscriber $ 81 $ 83 $ 91 $ 96 $ 88
Pre-paid
Net Adds 200 1,500 1,900 3,300 4,100
Subscribers 3,500 5,000 6,900 10,200 14,300
Total
Net Adds 15,600 17,500 16,400 16,100 26,200
Subscribers 317,000 334,900 351,300 367,300 394,800
Penetration 6.73% 7.11% 7.46% 7.80% 8.39%
(1) Includes $1.5 million, $1.7 million, $1.9 million, $2.1 million
and $2.1 million of EBITDA for the quarters ended December 31,
1999, March 31, 2000, June 30, 2000, September 30, 2000 and
December 31, 2000, respectively, related to minority interests.
Table 7
Dobson/Sygnet Communications Company
Financial Information for cellular operations applicable to
Dobson/Sygnet 12.25% Senior Notes
(Excludes DOC LLC and American Cellular)
For the Quarter Ended
12/31/99 3/31/00 6/30/00 9/30/00 12/31/00
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue:
Service revenue $ 24,706 $ 25,191 $ 28,568 $ 30,995 $ 30,590
Roaming revenue 8,484 8,589 9,751 11,824 10,345
Equipment &
other revenue 1,937 2,110 2,657 2,028 2,058
--------- --------- --------- --------- ---------
Total 35,127 35,890 40,976 44,847 42,993
Operating Expenses
(excluding
depreciation &
amortization):
Cost of service 6,975 6,285 8,408 9,903 8,597
Cost of equipment 5,171 5,379 4,899 4,075 8,538
Marketing & selling 6,568 7,007 6,008 5,804 7,189
General &
administrative 4,484 5,743 6,053 6,501 6,240
--------- --------- --------- --------- ---------
Total 23,198 24,414 25,368 26,283 30,564
--------- --------- --------- --------- ---------
EBITDA $ 11,929 $ 11,476 $15,608 $18,564 $12,429
========= ========= ========= ========= =========
EBITDA Margin 33.96% 31.98% 38.09% 41.39% 28.91%
Pops (1) 2,362,000 2,362,000 2,362,000 2,362,000 2,362,000
Post-paid
Gross Adds 26,300 25,400 17,700 17,900 29,400
Net Adds 13,700 14,800 5,500 500 14,300
Subscribers 223,800 238,400 243,900 244,400 258,700
Churn 1.93% 1.52% 1.68% 2.37% 2.01%
Average Service
Revenue per
Subscriber $ 38 $ 36 $ 39 $ 42 $ 41
Average Service
and Roaming
Revenue per
Subscriber $ 51 $ 49 $ 53 $ 58 $ 54
Pre-paid
Net Adds - - - 200 300
Subscribers - - - 200 500
Total
Net Adds 13,700 14,800 5,500 700 14,600
Subscribers 223,800 238,400 243,900 244,600 259,200
Penetration 9.48% 10.09% 10.33% 10.36% 10.97%
-0- CONTACT: Dobson Communications Corp., Oklahoma City J. Warren Henry Vice President, Investor Relations (405) 529-8820