AT&T Canada Reports Record Fourth Quarter 1999 Financial and Operating Results - Company Financial Information

Cambridge Telcom Report, Feb 21, 2000

AT&T Canada Inc. (NASDAQ: ATTC; TSE: TEL.B), Canada's largest facilities-based competitive provider of local and long distance, voice, data and Internet communications services, Tuesday reported its financial and operating results for the fourth quarter and year ended December 31, 1999.

Revenues were $347.1 million and $866.7 million respectively, for the three months and twelve months ended December 31, 1999. The company's twelve months ended December 31, 1999 results include those of MetroNet Communications for the entire period as well as those of AT&T Canada Long Distance Services beginning June 1, 1999. In accordance with generally accepted accounting principles, the results of AT&T Canada Long Distance Services have been included beginning from the June 1, 1999 merger closing.

The company's EBITDA (earnings before interest, taxes, depreciation, amortization and nonrecurring items) for the fourth quarter totaled $20.1 million. For the twelve months ended December 31, 1999, EBITDA totaled $26.3 million. EBITDA results were, and will continue to be, impacted by start-up losses from the company's extensive competitive local exchange carrier (CLEC) network deployments.

"During the fourth quarter, we concluded many of the key network and people related merger integration activities," said Craig Young, Vice Chairman and President of AT&T Canada. "We roll into 2000 with momentum and focus, and as a fully integrated end-to-end communications provider with national scope."

Local access lines in service at December 31, 1999 were 299,084, a sequential increase of 29,825, or more than 11 percent, over third quarter 1999. At December 31, 1999, the company also had an additional 32,125 local access lines which had been sold, but not yet installed. The number of on-net local access lines in service increased by 23 percent sequentially to 108,279 versus third quarter 1999. Long distance minutes of use for the fourth quarter grew to 1.74 billion, a sequential increase of nearly 6 percent from third quarter 1999.

Highlights of AT&T Canada's fourth quarter 1999 include:

Strategic Initiatives * Successfully employed a disciplined LMCS auction strategy to obtain 400Mhz of broadband fixed wireless spectrum in the valuable 24GHz range in 21 targeted mid-size markets to expand the reach of our facilities-based local networks. These markets are all either on the outskirts of existing AT&T Canada facilities-based market clusters or represent additional markets passed by the company's broadband long haul fibre network route where the economics of building local fibre networks are prohibitive.

* Consolidated and integrated all of the Internet, web hosting and E-business assets of the recently merged companies into a single business unit now called AT&T Canada Internet and E-Business Services. This unit operates relatively autonomously in the rapidly expanding Internet space, while fully leveraging the company's extensive sales force and local and long haul network assets.

* Announced a partnership with Microsoft to deploy a Canadian Internet portal giving AT&T Canada Internet customers direct access to a powerful, content-rich, and customizable Internet on-ramp. AT&T Canada gains direct access to Microsoft's personalization technology, E-Commerce platforms, messenger tools and industry leading content relationships, while revenues generated from advertising and transactions initiated from this website will be shared by AT&T Canada and Microsoft.

* Entered into an agreement to purchase TigerTel, a Canadian telecom services provider, which will strengthen the company's presence in managed network services and telecom management outsourcing.

Sales and Marketing * Grew the installed base of local telephone access lines in service by 29,825 from September 30, 1999. As of December 31, 1999, AT&T Canada had sold 331,209 cumulative access lines in markets across Canada, of which 299,084 are in service and 32,125 are in backlog.

* Grew the number of high speed data ports in service to 19,598, a sequential increase of 9.8 percent from third quarter 1999.

* Launched a business Internet access ADSL (asymmetric digital subscriber line) service bundle, the first in a planned rollout of DSL-enabled services. This bundle gives businesses fully managed high-speed access to connect their local area networks to the Internet, and includes domain name service coupled with 20 e-mail boxes at the customer's domain, a router and the DSL termination unit.

* Launched web-based reporting for data services, providing customers with the ability to monitor network performance over the Internet in near real-time.

* Launched the BusinessONE offer in December to small business and SOHO markets. This package is a mix-and-match bundle of business lines, Internet access, and long distance services.

* Grew the number of unbundled loop lines which AT&T Canada was providing local service to, coupled with its own switches and fibre, to approximately 31,880 access lines - more than a 37 percent sequential increase from September 30, 1999.