Rural Cellular Corp. Posts Record Revenue, EBITDA for Q1

Alexandria, MN-based Rural Cellular Corp. (RCC) reported record consolidated revenues and earnings before interest, taxes, depreciation and amortization (EBITDA) and net cellular customers for the first quarter ended March 31, 2000.

Consolidated Financial Highlights

• RCC Cellular net customer additions increased 53% to approximately 9,200 in the first quarter of 2000, compared to net additions of 6,000 in the first quarter of the prior year, resulting in penetration increasing to 9.8%.
  
• EBITDA rose 15% to $15.5 million, from $13.4 million in the first quarter of 1999.
  
• Total revenues increased 29% to a first quarter record $41.6 million, from $32.2 million in the first quarter of the prior year.
  
• Net income for the quarter ended March 31, 2000 was $867,000 as compared to a net loss of $1.6 million for the quarter ended March 31, 1999.

Increases in roaming minutes continue to offset planned decreases in roaming yield. The average yield per roaming minute, including toll, for the first quarter of 2000 was $0.59, compared to $0.74 in the first quarter of 1999 while roaming minutes increased 90% during the first quarter of 2000 over the first quarter of 1999. The average yield per roaming minute for all of 1999 was $0.68.

Cellular customer increases of 9,200 were significantly higher than expected, reflecting the success of marketing initiatives offered by all regions during the first quarter. These initiatives focus on providing digital services in our service areas in addition to offering higher minute plans and larger local footprints.

At the end of Q1 2000, RCC's total wireless customers, including paging and prepaid customers, totaled approximately 269,000, up 20% from approximately 223,000 at the end of Q1 1999. Of this total, RCC Cellular had nearly 237,000 customers at the end of the first quarter of 2000, up 18% from 200,000 at the end of Q1 1999. As a result, cellular penetration increased to 9.8% at March 31, 2000, compared to 8.3% at March 31, 1999. Cellular average monthly revenue per customer for the quarter ended March 31, 2000 increased to $50, compared to $47 at the end of Q1 1999.

As part of its marketing strategy, RCC migrated approximately 8,500 analog customers to digital plans. Approximately $1.4 million in equipment costs relating to the migration of existing customers was included as part of the cost to acquire new customers.

Reflecting the costs of customer migration and digital equipment subsidies, RCC's consolidated EBITDA margin declined to 37%, compared to 42% in the first quarter of the prior year. It is expected, however, that EBITDA margins will improve in the remaining quarters of 2000 as a result of the strong performance from the newly acquired south and northwest regions combined with the expected seasonal increase in wireless usage during the 2nd and 3rd quarters of the year.

Edited by Ellen Jensen