RCN Corp. / RCNI

About RCN Corp.

196 Van Buren St., Herndon, Va. 20170
www.rcn.com | 703-434-8200 | Founded: 1996

Industry: Telecommunications | Category: Public Companies

RCN is a newcomer to The Post 200 list, having moved its headquarters in January to Herndon from Princeton, N.J. The company was launched in 1997 and spent about $3 billion to set up a state-of-the-art, fiber-optic network in nine states. Such high costs partly explain the company's May 2004 filing for Chapter 11 bankruptcy protection. The company emerged from bankruptcy in December of that year with new management and $1.2 million less in debts.
The same day it emerged from bankruptcy, RCN paid $29 million to utility Pepco to buy the 50 percent of Starpower, a Washington area cable provider, that it didn't already own.
The company was relisted on Nasdaq in March 2005.
As RCN continues to compete against the longtime cable and telephone giants such as Verizon, Comcast and Cox, the company is trying to increase its revenue by focusing on higher-margin customers and promoting its "triple play" bundled services of cable television, telephone and the Internet. At the same time, it has identified $25 million in expenses that it plans to trim, including reduced staffing through attrition and reduced spending on consultants, advisers and contractors.
Its fastest area of growth is high-speed data; the company says it controls 30 percent of the market for fiber-optic services in Chicago, Los Angeles, San Francisco and along the Northeast Corridor.
In December 2005, RCN agreed to acquire Con Edison Communications for $32 million in cash and another $7 million in working capital and capital expenditure adjustments. The purchase, which was completed in March, will double RCN's fiber-optic network in New York, Connecticut and northern New Jersey, giving the company 560 route miles of fiber optics throughout Manhattan, 10 river crossings and a disaster-recovery network that bypasses Manhattan. It is also expected to add more than $60 million in revenue.
In March, the company announced it would sell its 49 percent interest in Megacable, one of the largest cable companies in Mexico, to a Mexican entity for $300 million in cash after taxes. RCN said it will use the proceeds to repay debt, as required under various debt agreements, resulting in nearly $30 million in annualized interest savings.
For 2005, RCN's revenue was about $561 million, flat compared with the previous year if the results of Starpower, then a separate company, are included. Subscribers numbered 409,000 at the end of 2005, down from 425,000 the year earlier, however the average revenue per customer was $102 a month, up from $96 in 2004. The company lost about $136 million for the year.

2005 Financial Data

Revenues: $560,964,000 | Net Income: $-136,112,000
Asssets: $1,253,940,000 | Earnings Per Share: $-3.78
Total employees: 2,016 | Local employees: 255