Covad announces 36% annual subscriber line count growth; confirms Q4 financial guidance of $101M to 105M revenue and $18M to $23M loss

January 6, 2004

2 Min Read

SAN JOSE, Calif. -- Covad Communications (OTCBB:COVD) announced today that it ended 2003 with over 517,000 subscriber lines in service, representing 36 percent growth since December 31, 2002. Covad expects to meet or exceed the financial guidance provided for the fourth quarter of 2003, including:

  • Broadband subscription billings in the range of $84-88 million;

  • Revenue in the range of $101-105 million;

  • Earnings before interest, taxes, depreciation and amortization (EBITDA) in the range of negative $2 million to positive $2 million;

  • Net loss in the range of $18-23 million; and

  • Net cash usage in range of $20-25 million.

Net line count additions for the fourth quarter of 2003 were 26,000. Line-splitting, which Covad launched in the second half of 2003, made a quick contribution to growth by providing 29% of Covad's Q4 2003 net adds. Line-split lines are shared with a competitive voice service provider with Covad providing the DSL service. The company's ability to meet its fourth quarter of 2003 line count guidance was greatly affected by reduced pricing in the marketplace that resulted in lower than expected orders for stand-alone data services using line sharing, and higher churn rates.

"While we expect to meet all financial guidance for the fourth quarter of 2003, we had lower than expected line count growth in both our wholesale and direct business units due to aggressive pricing strategies in the industry," said Charles Hoffman, Covad president and chief executive officer. "We are actively engaged with our competitive voice carrier partners to provide a voice and data bundled service that we believe should result in less price sensitivity and churn. In addition, we are working with our partners to reduce customer disconnects in the first 60 days of service and we have already begun to see the benefit of this program."

Hoffman added, "It is important to note that we continue to run our business with the financial discipline necessary to achieve our goal of EBITDA profitability."

Covad Communications Inc.

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