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RCN Reports Fourth Quarter 2005 Results; Q4 EBITDA Reaches $22 million; 2005 EBITDA Reaches $91M, +18% Year-Over-Year; Q4 Core Residential Revenue +2%, Q4 Commercial Revenue +11% Year-over-Year; Industry Leading Customer Metrics Continue to Rise.

Article Excerpt
HERNDON, Va. -- RCN Corporation (NASDAQ: RCNI), a leading provider of triple play communication services, today announced its results for the fourth quarter and full-year 2005.

"2005 was a milestone year for RCN in which we achieved all of our key objectives," stated James F. Mooney, Chairman of RCN's board of directors. "Our new management team hit the ground running, successfully launching the new RCN as a powerful bundled communications provider to valuable customers in high density markets. We realized additional operating efficiencies and further expanded RCN's industry-leading customer metrics through consistent, strong execution. In addition to our recently announced $25 million expense reduction plan, we have restarted top line growth through a program of selected build-outs and market penetration. We also made significant progress in optimizing RCN's asset portfolio, including the acquisition of Consolidated Edison Communications Holding Company, Inc. ("CEC"), which will stimulate growth in the greater New York metro market, and the recently-announced sale of our Megacable and MCM interests, which significantly enhances our balance sheet and free cash flow position."

Mr. Mooney continued, "Our main priority in 2006 is to sustain the execution-oriented focus of our strategic plan and drive profit margin and cash flow growth through our continued emphasis on cost reduction, target customer penetration, strategic footprint expansion, and strong asset portfolio management. I congratulate the entire team on a great year and believe we are very well positioned to accomplish our objectives in 2006."

Adjusted Results (Including Starpower in 2004). RCN's 2005 reported results of operations are not comparable with its historic results due to (i) its emergence from bankruptcy and subsequent adoption of "fresh start" accounting on December 21, 2004, and (ii) its acquisition of the remaining 50% interest in Starpower it did not previously own, also occurring on December 21, 2004. Results prior to December 21, 2004 reflect Predecessor operations and Starpower ownership at 50%, and results after that date reflect Successor operations and Starpower ownership at 100%.

For ease of comparison, the following discussion regarding adjusted results gives effect to 2004 results as if Starpower had been 100% owned during all 2004 periods. See page 10 for a reconciliation of adjusted information to reported results.

--2005 total revenue of $561 million was flat compared to $562 million in 2004. 2005 core residential revenue, which includes some small business customers, increased 2%, and 2005 commercial revenue increased 9%, compared to 2004.

--Fourth quarter 2005 total revenue of $140 million was flat compared to $140 million in the fourth quarter of 2004 and $139 million in the third quarter of 2005. Fourth quarter core residential revenue increased 2%, and fourth quarter commercial revenue increased 11%, compared to the fourth quarter of 2004.

--RCN ended 2005 with approximately 409,000 subscribers, versus approximately 425,000 at the end of 2004 and approximately 411,000 at the end of the third quarter of 2005.

--2005 average revenue per customer (ARPC) was $102, up 6% from $96 in 2004. Fourth quarter 2005 ARPC was $103, an increase from $97 in the fourth quarter of 2004 and $102 in the third quarter of 2005.

--2005 EBITDA of $91 million increased nearly 18%...

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