SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report December 20, 2000
(Date of earliest event reported) (December 19, 2000)
CTC COMMUNICATIONS GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27505 04-3469590
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
220 Bear Hill Rd., Waltham, Massachusetts 02451
(Address of principal executive offices) (Zip Code)
(781) 466-8080
(Registrant's telephone number including area code)
(Former name or former address if changed since last report)
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Item 5. Other Events
On December 19, 2000, the Registrant issued the following press release:
CTC Communications Announces Fully Funded Local Fiber Build-Out Plan
--High Bandwidth Core Fiber Network to be Extended to
Verizon Local Switching Offices--
Financial Highlights:
- $18 Million Capital Investment
- Monthly Payments on a "Capital Lease" Basis
- Cash Flow positive in CY2001
- $1.5 Million Improvement in CY2001 EBITDA
- Fully Funded Business Plan Further Strengthened
Operating Highlights:
- Connects CTC's Network Points of Presence (POPs) to Verizon Local Exchange
Offices with Fully Redundant, High Capacity Fiber
- 65% of Existing On-Net Customers will Transition to CTC's Local fiber "
- 50% improvement in On-Net Provisioning Intervals
- 70% reduction in Complex Broadband Access Orders
- Reduces Dependency on Verizon facilities to Migrate Customers On-Net
- Enables Bandwidth Additions on a Near Real-Time Basis
WALTHAM, Mass-December 19, 2000-- CTC Communications Group Inc. (NASDAQ:
CPTL)--today announced it will invest $18 Million to purchase and "light up"
local fiber in selected geographical areas of eastern Massachusetts, southern
New Hampshire, southern Maine and Rhode Island. CTC currently owns and
operates the long haul fiber that interconnects its ATM+IP PowerPath(sm)
Network Points of Presence (POPs) and switching nodes. Today's announcement
is the Company's first purchase of local fiber, typically referred to as
metropolitan fiber, and this purchase will extend CTC's existing high
bandwidth fiber network backbone to Verizon local switching offices.
The implementation of local fiber and its integration with CTC's long haul
fiber will reduce operating costs, reduce on-net provisioning intervals and
eliminate the need to lease inter-office facilities from Verizon to connect
customers from these offices to CTC's PowerPath(sm) Network. The local fiber
will be activated on a progressive basis with the first phase completing in
March 2001 and the final phase completing in September 2001. 65% of the
Company's existing on-net customers will utilize this fiber.
CTC will purchase dark fiber in these areas pursuant to 20-year Indefeasible
Right of Use (IRU) contracts with a number of dark fiber suppliers. The
Company will "light-up" the fiber using Cisco optronics. CTC will own and
operate these fiber routes which will "loop through" Verizon local switching
offices in specific geographic areas, connecting these local offices directly
to CTC's PowerPath(sm) switches. New customer additions to the PowerPath(sm)
Network will only involve leasing the local loop from Verizon and connecting
it directly to CTC's network right at the Verizon local switching office.
The eastern Massachusetts, southern New Hampshire, southern Maine and Rhode
Island local fiber loops will connect 28 Verizon local switching offices
directly with CTC's Network. The Company will fund this local fiber build-out
internally and its business plan remains fully funded.
Russ Oliver, CTC's Vice President Network Operations, stated, "Today, CTC
leases T3 and T1 broadband facilities from Verizon to connect customers to
its PowerPath(sm) Network. These leased facilities have a local loop and an
inter-office component. The local loop connects the customer location to the
Verizon local switching office. The inter-office portion then connects that
local loop from the Verizon local switching office to CTC's network. The
local loop is typically available, low cost, is relatively short in length
and is stable since it is dedicated to one customer. The inter-office
facility portion typically traverses a number of Verizon facility routes, is
expensive and passes through numerous Verizon offices before reaching CTC's
Network."
Oliver continued, " The inter-office portion is typically a shared facility
common to all carriers, subject to availability problems and can be miles in
length, resulting in long and complex provisioning intervals due to the
number of "links" in the chain. Extending our own fiber to the Verizon local
switching offices will eliminate the need for leased inter-office Verizon
facilities, substantially improve our on-net ordering and provisioning
intervals as well as our speed to market with new products and applications.
Although CTC has been exploring local fiber for some time now, as late as 12
months ago it was not a viable alternative to Verizon. Since that time a
number of new suppliers have entered the market, prices have been reduced and
a broader number of Verizon local switching offices are now connected by
fiber loops which represents a significant opportunity for CTC on many
levels."
As the local fiber loops are completed, CTC will move existing PowerPath(sm)
customers to its owned fiber at the Verizon local switching office. The
Company will then disconnect all associated Verizon T3 and T1 inter-office
facilities associated with these existing customers and eliminate the
associated operating expense. In a parallel effort the CTC sales force is
executing a targeted marketing plan to acquire new on-net customers located
in those same Verizon local switching office areas. Leased inter-office
facilities will not be required to put these new customers on-net, which will
result in reduced operating expense per new on-net customer added.
"Leased inter-office facility expense for on-net customers can be
significant", stated John Pittenger, CTC's EVP and Chief Financial Officer.
"For example, with the phased completion of these fiber loops between March
and September of 2001, the T3 and T1 facilities that will be disconnected
represent an estimated quarterly on-net operating expense savings of over
$1.8 million. The combination of this immediate reduction in operating
expense for existing on-net customers, the reduced operating expense for new
on-net customer migrations and the improvements in ordering and provisioning
discussed earlier, will result in a rapid payback for this local fiber
initiative. It is cash flow positive in CY2001, improves our CY2001 EBITDA
performance by $1.5 Million and generates substantial EBITDA benefits in 2002
and beyond. In addition, it significantly reduces our dependency on Verizon
inter-office facility availability to grow our on-net base out into the
future. This is an $18 Million investment, however the "capital lease" type
of payment schedule allows us to readily fund this internally and realize
significant cash flow benefits that strengthen our fully funded business
plan. This is a very attractive initiative from a financial, technological
and operating perspective".
Bob Fabbricatore, CTC's Chairman and CEO stated, "Moving the power of our
broadband PowerPath(sm) Network and readily available high level bandwidth
progressively closer and closer to the customer's location is a cornerstone
to new applications delivery and speed to market. It also provides CTC with
the tools to effectively manage network costs while keeping pace with the
escalating demand for bandwidth. This is especially true given our current
implementation of local voice services on the network this month and our data
center enabled new products and applications next summer. Owning and
operating the underlying fiber in our network is a strategic imperative that
will enable us to cost effectively and quickly move customers on-net as well
as meet and exceed customer bandwidth and networking needs. This local fiber
initiative is an all around winner. The Company's fully funded business plan
is strengthened and the Company's focus on profitability is enhanced".
About CTC Communications
CTC is a rapidly growing Competitive Local Exchange Carrier (CLEC) utilizing
a next generation communications network that allows it to converge voice,
data, Internet and video services. Today, the Company serves medium and
larger business customers from Virginia to Maine, which includes the most
robust telecommunications region in the world-the Washington D.C. to Boston
corridor. CTC was managing more than 407,000 access lines as of September 30,
2000.
The Company's Cisco Powered IP+ATM packet network and its 450 member sales
and service teams, provide contiguous marketing and technology coverage
throughout the Northeast and Mid-Atlantic States. The Company, through its
dedicated commitment to exceptional customer service has achieved an
industry-leading market share and an industry-leading line retention rate in
excess of 99 percent. CTC can be found on the worldwide web at
www.ctcnet.com.
The statements in this press release that relate to future plans, events or
performance are forward-looking statements that involve risk and
uncertainties that could cause actual results to differ materially from those
reflected in the forward-looking statements including the ability of the
Company to provide local voice services on its packet-based PowerPath(sm)
Network. Readers are, accordingly, cautioned not to place undue reliance on
these forward-looking statements. Additional information about these risks
and uncertainties is set forth in the Company's most recent report on Forms
10-K and 10Q. CTC undertakes no obligation to release publicly the results of
any revisions to these forward-looking statements that may be made to reflect
results, events or circumstances after the date hereof.
Contact: John Dinsmore John Pittenger
Feldman Communications Inc. CTC Communications
410-571-8900 (t) 781-466-1302 (t)
[email protected] (e) [email protected]
www.FeldmanCommunications.com www.ctcnet.com
* * *
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CTC COMMUNICATIONS GROUP, INC.
By: /s/ John D. Pittenger
John D. Pittenger,
Executive Vice President, Finance and Administration
Dated: December 20, 2000
