GTE reports 11 percent earnings per share growth in the third quarter driven by record-high operating income and continued excellent growth in network usage

Business Wire, Oct 17, 1995

today reported that earnings per share increased 11 percent in the third quarter. Consolidated net income for the quarter was $684 million, or 71 cents per share, compared with $609 million, or 64 cents per share, in the third quarter last year before gains on sales of non-strategic telephone properties in both periods.

"We continue to benefit from strong demand in both our wireline and wireless businesses, which drove this excellent third-quarter performance," said GTE Chairman and Chief Executive Officer Charles R. Lee. "These results demonstrate the strength of our markets, the continued improvement in the quality of our services as well as the savings we have begun to realize through process re-engineering. Our confidence in the future is based on these strong results and the momentum building within GTE to capitalize on the exciting opportunities emerging both domestically and internationally."

"Network usage increased a strong 10 percent and access lines grew by 6 percent, while cellular customers continued to grow at an explosive pace, increasing by 41 percent," said Lee. "During the third quarter, we also continued our strong growth in new and non-traditional network service revenues. We're bundling products into competitive packages that are generating new revenue and earning customer loyalty. As we move forward, the convergence of wireline and wireless business offerings will continue to provide GTE with opportunities to offer customers new value-added services and products," Lee noted.

Operating Income Increases 9% to Record High

Consolidated revenues and sales increased 4 percent to $5.12 billion in the quarter, compared to $4.93 billion in the year-ago quarter, excluding $66 million of revenues attributable to non- strategic telephone properties and the satellite-communications business, which were sold in 1994. Substantial increases in cellular customers and increased network volumes more than offset lower, more competitive pricing.

Consolidated operating income in the third quarter increased 9 percent to a record- high $1.33 billion, compared with $1.22 billion reported in the year-ago quarter, excluding $5 million of operating income from the operations sold. This improvement was due to the increased revenues and favorable effects of ongoing cost reductions from process re-engineering activities. Consolidated operating cash flows, representing operating income plus depreciation and amortization, reached $2.26 billion in the third quarter, a 10 percent improvement over the year-ago quarter.

Nine-Month Results

For the first nine months of 1995, consolidated revenues and sales increased 4 percent to $14.93 billion, while operating income increased 9 percent to $3.73 billion, excluding the results from the operations sold.

Net income was $1.81 billion, or $1.87 per share, for the first nine months of 1995, an increase in earnings per share of 9 percent compared with $1.63 billion, or $1.71 per share, last year, excluding the gains from telephone properties sold in both periods.

Domestic Network Services Post Strong Quarter with Minutes of Use Up 10%, Access Lines Up 6% and Cellular Customers Up 41%

Revenues from Domestic Network Services, which include GTE's wireline and wireless network operations, increased 5 percent to $3.28 billion for the third quarter, compared with $3.13 billion a year ago, excluding the impact of the non-strategic telephone properties sold.

Strong increases in wireline unit volumes were partially offset by lower, more competitive pricing. Minutes of use of GTE's domestic network for long-distance calling grew at an annual rate of 9.9 percent, while total access lines increased 5.7 percent over last year.

Cellular-service revenues in the third quarter totaled $530 million, a 31 percent increase over the same period last year, as customer growth continued at a strong pace. GTE added 141,000 new domestic customers in the quarter, bringing total U.S. customers served to 2,854,000 -- an increase of 41 percent over a year ago and more than double the number of customers just two years ago. For the third quarter, service revenues per customer averaged $63 per month compared with $69 per month in the year-ago quarter.

During the quarter, the rollout of new and non-traditional telecommunications services continued at a strong pace, resulting in additional revenues of approximately $50 million. GTE began offering InContact(SM) service, whereby customers have a single phone number that can be routed automatically to their homes, offices, cars or pagers. InContact(SM) is the first of many products and services to be introduced via GTE's Advanced Intelligent Network. The Advanced Intelligent Network facilitates the deployment of new products and services to multiple locations from a central site.

The company also moved forward with international initiatives during the quarter. Working with Deutsche Telekom MobilNet (DeTeMobil), GTE began offering its GlobalRoam(SM) service, the world's first two-way international wireless roaming system, to wireless providers and subscribers in North America, Europe, Asia, Australia and Africa. In Hungary, GTE Directories announced a joint venture to produce Yellow Pages directories.