<PAGE> 1
[NTL: GRAPHIC]
NTL ANNOUNCES FINANCIAL RESULTS FOR THIRD QUARTER 2000
OVER 8,000,000 TOTAL CUSTOMERS
ANNUALIZED REVENUE EXCEEDS $3.3 BILLION
19TH CONSECUTIVE QUARTER OF INCREASED MARKET SHARE
New York, New York (November 9, 2000) - NTL Incorporated (NYSE: NLI; Easdaq:
NTLI) announced today its financial results for the three and nine months ended
September 30, 2000.
<TABLE>
<CAPTION>
Change
MAJORITY OWNED SYSTEMS Q3-2000 Q3-1999 over 1999
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue Pound Sterling 559.6m Pound Sterling 259.6m +116%
EBITDA Pound Sterling 62.2m Pound Sterling 40.5m +54%
------------------------------------------------------------------------------------------------------------------
Highlights - Residential
Revenue Pound Sterling 380.4m Pound Sterling 138.3m +175%
EBITDA Pound Sterling 108.7m Pound Sterling 43.6m +149%
Telephone Subscribers 2,445,400 1,167,400 +109%
- Off-Net Customers 454,000 - NA
Cable TV Subscribers 4,173,700 1,417,400 +194%
- Digital Customers 325,000 - NA
Internet subscribers 1,691,100 535,000 + 216%
- Cable Modem Customers 22,400 - NA
------------------------------------------------------------------------------------------------------------------
Highlights - National Telecoms
Revenue Pound Sterling 142.2m Pound Sterling 86.9m +64%
EBITDA Pound Sterling 53.5m Pound Sterling 32.0m +67%
Customers 74,800 42,100 +78%
------------------------------------------------------------------------------------------------------------------
Highlights - Broadcast
Revenue Pound Sterling 37.0m Pound Sterling 34.4m +8%
EBITDA Pound Sterling 19.7m Pound Sterling 17.7m +11%
------------------------------------------------------------------------------------------------------------------
AFFILIATED SYSTEMS
Cable TV Subscribers 2,024,000 - NA
Broadband Internet Subscribers 57,000 - NA
------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
NTL INCORPORATED
November 9, 2000
Page 2
Commenting on the Company's performance, Barclay Knapp, President and Chief
Executive Officer said:
"We are very proud of this quarter's financial results in light of our
tremendous integration efforts. Overall our annual run rate revenues have
improved to Pound Sterling 2.2 billion ($3.3 billion), and although our EBITDA
reflected significant integration related expenses and costs associated with new
product introductions, consolidated quarterly EBITDA rose to a historic high of
Pound Sterling 6 2.2 million. NTL now serves over 4.7 million on-net residential
cable, telephony and Internet customers and approximately 1.3 million off-net
Internet and telephony customers. Our European affiliates in Germany, France and
Sweden serve an additional 2.0 million broadband customers, resulting in total
customers served by NTL and our affiliates of over 8 million.
"Our quarterly organic customer growth of 73,900 customers was extremely strong.
This resulted in increased customer penetration in the "Original NTL" franchises
for the 19th consecutive quarter and increased penetration in the "1998
Acquisitions" franchises of 1.1% this quarter, resulting in a 5.4% increase in
the last twelve months to 41.3%.
"Our bundled Internet service, ntlworld, and our digital cable television
service continued to produce very strong results in the third quarter. We added
over 235,000 subscribers to our ntlworld service this quarter and we are now
serving over 380,000 customers. We eliminated the queue for the ntlworld service
in the third quarter and improved the customer experience. We were recently
voted the best consumer ISP in the UK at the Future UK 2000 Internet Awards in
October. Proforma for the acquisition of VirginNet, we are now the third largest
ISP in the UK following FreeServe and AOL and are unique among these leaders in
our ability to offer our customers broadband access to the Internet.
"Our installed base of digital subscribers grew from approximately 230,000 at
the end of the second quarter, to 325,000 at the end of the third quarter. We
remain on track to achieve our goal of 500,000 digital subscribers by the end of
the year. Our rollout of digital will be further enhanced by our selection of
Liberate software and the DOCSIS cable modem standard as the core of a single
digital television platform for all of our new UK broadband homes. Because each
digital set top box will have a DOCSIS cable modem inside, the majority of NTL
digital customers already have a cable modem installed in their home,
significantly increasing our ability to convert a high proportion of our
customers to broadband Internet access. This selection represents one of the
many ways that we have successfully begun the integration of NTL and CWC
ConsumerCo ("ConsumerCo").
"This quarter represented our first full reporting period following the
acquisition of ConsumerCo. During the quarter we focused on integrating
ConsumerCo while improving the quality of the ConsumerCo customer experience.
These efforts have already proven effective. In only four months since our
acquisition of ConsumerCo, we have reversed the trend of quarterly customer
decline and reported net quarterly customer growth at ConsumerCo for the first
time in 2000. In addition, we have reduced monthly churn from 2.5% at the time
of the acquisition to 1.9% at the end of the third quarter.
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NTL INCORPORATED
November 9, 2000
Page 3
"The acquisition of ConsumerCo has allowed us to review the way we conduct our
business, including how we transact with our key suppliers. For example, in
September we announced a five-year contract with BSkyB whereby NTL will carry
Sky's main channels under a new wholesale pricing structure. We expect that the
new agreement will result in significant savings for NTL over the life of the
contract. In addition, we have recently concluded a comprehensive cost analysis
that will result in significant annual cost savings starting in the second half
of 2001 as a result of organizational changes relating to the integration of the
eleven acquisitions that we have closed during the last 18 months.
"Over the last several years we have also built one of the UK's largest and most
successful business telecommunications solutions providers. Through both organic
growth and the amalgamation of nearly a dozen separate service organizations, we
have achieved over $825 million of run rate revenue. We provide innovative
solutions to customers ranging from the smallest local business to the largest
global carrier. Over 50% of our Business/Carrier revenues are already derived
from data and bandwidth services.
"NTL meets the specific needs of the different segments that comprise the Pound
Sterling 16.5 billion UK/Ireland business communications market by providing
uniquely broadband local access as well as access to the UK and Ireland's most
extensive national/international fiber optic infrastructure. Adding ConsumerCo's
networks in London, Manchester and Leeds gives NTL additional local access fiber
in the UK's first, second and fourth largest business telecoms markets.
"The broadcast division continues to show strong and consistent results. Our
book of contracted future revenue of approximately $2.8 billion continues to
underpin our overall business. Growth prospects for the division continue to be
outstanding with the demand for third generation wireless infrastructure, the
transition of television and radio networks from analog to digital and
international privatization opportunities providing significant future growth
potential. During the quarter we significantly expanded our portfolio of
products for the broadcast and wireless services community and signed a number
of contracts with new and existing customers. Plans to issue a tracking stock
for the broadcast division are proceeding.
"Finally, we took the first step in an overall listing strategy for NTL when we
completed our listing on the New York Stock Exchange on October 27th. We are
also in the process of preparing our secondary listing application with the
London Stock Exchange and are still investigating primary listing alternatives
in Europe as well."
<PAGE> 4
NTL INCORPORATED
November 9, 2000
Page 4
INTRODUCTION
Summary Revenue and EBITDA information for all of our business units is
presented in tabular form following the section entitled "Shared Costs". The
following sections refer to information from those tables.
CONSUMER SERVICES
Residential Telecoms and Television Services - United Kingdom and Ireland
The following table shows the cable television and telephony customer statistics
for NTL in the United Kingdom and Ireland:
<TABLE>
<CAPTION>
============================================================================================================================
CABLE TELEVISION AND TELEPHONY CUSTOMERS AS OF SEPTEMBER 30, 2000
----------------------------------------------------------------------------------------------------------------------------
"Original" 1998 Cablelink and UK and Ireland
NTL(1) Acquisitions (2) ConsumerCo (3) BT Cable (4) Consolidated
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Homes in Franchise (5) 2,090,000 3,037,600 6,049,600 640,500 11,817,700
----------------------------------------------------------------------------------------------------------------------------
Homes passed 1,423,500 2,427,500 4,308,200 605,500 8,764,700
----------------------------------------------------------------------------------------------------------------------------
Homes marketed (Tel.) 1,230,500 2,101,600 4,058,400 1,000 7,391,500
----------------------------------------------------------------------------------------------------------------------------
Homes marketed (CATV) 1,230,500 2,161,900 4,058,400 560,600 8,011,400
----------------------------------------------------------------------------------------------------------------------------
Total customers (6) 615,000 893,500 1,177,400 432,000 3,117,900
----------------------------------------------------------------------------------------------------------------------------
Dual 566,800 518,600 812,600 200 1,898,200
----------------------------------------------------------------------------------------------------------------------------
Telephone-only (6) 24,300 288,500 234,400 0 547,200
----------------------------------------------------------------------------------------------------------------------------
Cable-only 23,900 86,400 130,400 431,800 672,500
----------------------------------------------------------------------------------------------------------------------------
Total RGUs(7) 1,181,800 1,412,100 1,990,000 432,200 5,016,100
----------------------------------------------------------------------------------------------------------------------------
Net Adds (Customers) (8) 18,800 32,300 3,600 7,900 62,600
----------------------------------------------------------------------------------------------------------------------------
Net Adds (RGUs) (8) 35,200 79,000 16,300 8,100 138,600
----------------------------------------------------------------------------------------------------------------------------
Customer penetration 50.0% 41.3% 29.0% 77.1% 38.9%
----------------------------------------------------------------------------------------------------------------------------
RGU penetration 96.0% 65.3% 49.0% 77.1% 62.6%
----------------------------------------------------------------------------------------------------------------------------
Telephone penetration 48.0% 38.4% 25.8% 20.0% 33.1%
----------------------------------------------------------------------------------------------------------------------------
Cable penetration 48.0% 28.0% 23.2% 77.1% 32.1%
============================================================================================================================
</TABLE>
(1) Data for franchises which NTL has been developing since 1993
(2) Data for the following franchises: Triangle, ComTel and Diamond Cable.
(3) Data for Cable & Wireless ConsumerCo franchises acquired in May 2000.
(4) Data for Cablelink (Ireland) and BT Cable (Westminster / Milton Keynes).
(5) Franchise home information from The Media Map Datafile 2000.
(6) Excludes approximately 454,000 off-net telephony customers and over 1.5
million Internet customers.
(7) An RGU is one cable television account or one telephone account; a dual
customer generates two RGUs.
(8) Total additional customers and RGUs, respectively, as compared to June
30, 2000.
Monthly churn was approximately 1.0% at the end of the third quarter in NTL's UK
and Ireland franchises, except ConsumerCo, where churn for the month of
September (our most recent data measurement) was 1.9%, compared to 2.5% at the
end of the second quarter.
<PAGE> 5
NTL INCORPORATED
November 9, 2000
Page 5
The following table shows the cable television and telephony customer statistics
for Triangle (Comcast UK), ComTel and Diamond Cable, acquired in late 1998 to
early 1999:
<TABLE>
<CAPTION>
===================================================================================================================
CATV AND TELEPHONY CUSTOMERS FOR TRIANGLE, COMTEL & DIAMOND
-------------------------------------------------------------------------------------------------------------------
9/30/2000 6/30/2000 3/31/2000 12/31/1999 9/30/1999
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total customers 893,500 861,200 826,200 799,700 762,000
-------------------------------------------------------------------------------------------------------------------
Incremental customers (1) 32,300 35,000 26,500 37,700 22,300
-------------------------------------------------------------------------------------------------------------------
Customer penetration 41.3% 40.2% 38.5% 37.4% 35.9%
-------------------------------------------------------------------------------------------------------------------
RGU penetration 65.3% 62.2% 59.1% 57.2% 54.2%
-------------------------------------------------------------------------------------------------------------------
% Dual (2) 58.0% 54.8% 53.7% 53.1% 51.1%
===================================================================================================================
</TABLE>
(1) Total additional customers as compared to each respective prior quarter.
(2) A dual customer generates two RGUs. An RGU is one cable television
account or one telephone account.
Our views of how quickly we can integrate ConsumerCo and BT Cable are shaped by
our successes at both the "Original NTL" franchises and franchises we acquired
from Comcast UK, ComTel and Diamond. In the past we have been able to increase
penetration at approximately 5% per year, and would expect that trend to
continue or accelerate. We now have one major franchise, Teesside, which is
already 65% penetrated, so our five-year target for penetration is now above 60%
for the Company as a whole.
Our UK on-net results, which include BT Cable and three months of ConsumerCo
data for the first time, represent a 124% increase in revenues and a 130%
increase in EBITDA over the previous year. We increased EBITDA margins even
though we are currently spending additional amounts in the short-term to rapidly
integrate ConsumerCo.
In addition, as we noted last quarter, these results are also reflective of the
initial costs of launching the digital cable television service. Digital cable
raises ARPU and reduces churn. However, as we aggressively rollout the service,
we have higher short-term customer service costs as a result of the service's
increased complexity.
We expect these short-term higher integration and digital rollout expenses to
continue through the second quarter of 2001.
Cablelink (Ireland) EBITDA declined sequentially as it began to rollout
telephony, high-speed Internet and digital television services. In the near
term, Cablelink will experience increased expenses associated with the network
upgrade, increased sales and marketing expenses and customer support costs.
However, in the longer term as penetration for new services increases, we expect
incremental revenues to quickly catch up with and exceed spending. The current
quarter results for Cablelink were also adversely affected by the weakness of
the Irish Punt.
Residential off-net became profitable this quarter due to the addition of
ConsumerCo's indirect telephony subscribers for three months. With an ARPU of
approximately Pound Sterling 15 per month and
<PAGE> 6
NTL INCORPORATED
November 9, 2000
Page 6
over 450,000 subscribers, our off-net business has achieved significant scale,
and represents an attractive base of customers to whom we can upsell Internet
and other services.
ntlworld, Digital, Broadband and Interactive Services
ntlworld, our free Internet service, continues to be very successful. As of
September 30th we served over 380,000 ntlworld subscribers, doubling our
customer base in only two months. We also serve an additional 285,100 ConsumerCo
and other customers directly, which we plan to convert to the ntlworld service
over time. We have become the dominant ISP in our regions, with 69% of our
customers who use the Internet using ntlworld.
The following table shows the Internet statistics for operations wholly-owned by
NTL:
<TABLE>
<CAPTION>
=================================================================================================================================
INTERNET CUSTOMERS
---------------------------------------------------------------------------------------------------------------------------------
NTLWORLD &
NTL DIRECT UK WHOLESALE SWITZERLAND TOTAL NTL
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Customers at 6/30/2000 375,900 768,900 160,900 1,305,700
---------------------------------------------------------------------------------------------------------------------------------
Customers at 9/30/2000 665,100 853,500 172,500 1,691,100
=================================================================================================================================
</TABLE>
Our digital television rollout has also been very successful. As of September
30th, we had approximately 325,000 digital customers and approximately 80% of
our combined networks were digital ready. We remain on track to have over
500,000 digital customers by the end of 2000. Early spending patterns of digital
customers have been encouraging, with digital customers paying more overall than
analog customers in our former ConsumerCo franchises. We are currently rolling
out interactive services on the platform, providing customers with content
repurposed for the television and email. The digital platform allows for
additional new revenue opportunities as well. For example, we are currently
conducting a commercial trial of open web access over the ConsumerCo digital TV
platform. Content development for ntlworld and digital interactive is continuing
and e-commerce revenues should begin to develop shortly as our combined 'portal'
customer base grows. In addition, we will be offering true video on demand (VOD)
services over the digital platform in 2001.
We are accelerating cable modem deployment in our digital systems with some
exciting new developments. Standalone cable modems can be deployed virtually
anywhere in the "original" NTL systems today, and cable modems are already
embedded in the digital set-top box being deployed in the ConsumerCo systems. By
standardizing recently on a DOCSIS/Liberate architecture, we will be able to
offer both standalone cable modems in ConsumerCo systems and set-top box
embedded cable modems in the "original" NTL systems from mid 2001.
As a result, by the end of 2001 virtually every NTL digital customer will have a
cable modem pre-installed and ready for operation in their home, available for
use either on the PC or the television, at no incremental cost over and above
that for a traditional digital set-top box.
<PAGE> 7
NTL INCORPORATED
November 9, 2000
Page 7
ntlworld, cable modems, digital television with full web interactivity and VOD
are the quartet of unique services that will drive NTL's consumer business for
the next several quarters.
Television Content and Programming
Our investments in television programming are designed to facilitate increased
residential penetration and ARPU, and to level the playing field in negotiations
with program suppliers.
Our recently signed five-year content agreement with BSkyB, which is subject to
regulatory approval, will reduce our content costs with immediate effect, upon
that approval. The agreement will also provide us with an economic incentive to
sell Sky premium content to our subscriber base, which is expected to result in
an increase in average revenue per customer over time. This will be achieved
through the migration of our pay-to-basic ratio from its current level of less
than 1.0 pay unit per basic subscriber toward the level Sky achieves in its DTH
subscriber base of greater than 2.75 pay units per basic subscriber.
In addition to the contract with BSkyB, we are enhancing our programming package
with the addition of two channels that we are developing with partners. We
recently announced the creation of the UK's first basic movie channel, "The
Studio", with Universal Studios, as well as a partnership with ITN to form the
UK's first Internet-centric 24-hour television news channel.
In October, we announced that our negotiations with the Premier League for the
UK pay-per-view football rights package had ceased. Our agreement with BSkyB
will not be affected by the failure of these negotiations and we will continue
to show Premier League games to our customers through existing distribution
agreements. Separately, our position with regard to football Internet rights is
now one of the most attractive in the UK. With the recently announced joint
venture with the Football League, we will have access to the Internet rights for
teams with approximately 9 million fans, or over 60% of the total adult UK
football fan base.
Integration of ConsumerCo
We have made significant progress towards the integration of ConsumerCo during
our first full quarter of ownership. We successfully stemmed the tide of
customer losses in the former ConsumerCo franchises in the third quarter by
dramatically reducing churn. We have taken over 500 former ConsumerCo telesales
associates through our training program and are in the process of rebranding all
former ConsumerCo operations with the NTL brand. We have hired and trained 150
network engineers and installation team leaders, upgraded over 5,000 ConsumerCo
network cabinets and accelerated the much-needed capacity and resiliency
improvements of the London network. As a result of these and numerous additional
steps, digital monthly fault rates have steadily declined from 31% to 20% and
analogue fault rates have similarly declined from 4.8% to 3.7%.
<PAGE> 8
NTL INCORPORATED
November 9, 2000
Page 8
Residential Telecoms and Television Services - Continental Europe
NTL's objective to expand to Continental Europe is to leverage the experience
gained in the United Kingdom and replicate it across Europe's major financial
and cultural centers. Initially we plan to expand services offered by each
broadband franchise to include telephony and high-speed Internet in addition to
digital cable television. Next we plan to build metropolitan and local loop
fiber networks to directly connect both residential and business customers.
Lastly, we will link the local networks to our pan-European fiber backbone in
order to realize all of the synergies associated with a fully integrated
network.
NTL has established a significant Continental European presence with the
acquisitions of the "1G Networks" (France), Cablecom (Switzerland), a 25%
ownership interest in Bredbandsbolaget (Sweden), a 32.5% ownership interest in
eKabel (Germany), and 27% interest in Noos (France), which is expected to close
within the next few months. NTL Europe and its affiliates' networks pass nearly
6.6 million homes and serve over 3.6 million cable television and Internet
customers proforma for the closing of Noos. With these acquisitions, NTL has
gained access to some of the most prominent cities in the UK, Ireland and
Continental Europe, including London, Paris, Frankfurt, Dublin, Zurich,
Stockholm, Manchester, Glasgow, Belfast and Geneva.
The following table illustrates NTL's broadband position in Western Europe
outside of the UK and Ireland:
<TABLE>
<CAPTION>
==================================================================================================================================
CABLE TELEVISION AND INTERNET CUSTOMERS AS OF SEPTEMBER 30, 2000 (IN 000S)
----------------------------------------------------------------------------------------------------------------------------------
(Switzerland) (France) (France) (Germany) (Sweden) NTL Europe
Cablecom(1) 1G(2) Noos(3) eKabel(4) B2(5) Gross (6)
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<S> <C> <C> <C> <C> <C> <C>
Ownership Interest 100% (1) 100% 27% 32.5% 25%
----------------------------------------------------------------------------------------------------------------------------------
Homes in Franchise (7) 1,875 287 3,179 2,800 247 8,388
----------------------------------------------------------------------------------------------------------------------------------
Homes passed 1,875 265 2,563 1,828 45 6,576
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Homes marketed (CATV) 1,706 212 2,563 1,828 0 6,309
----------------------------------------------------------------------------------------------------------------------------------
Customers (CATV) 1,555 48 730 1,294 0 3,627
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Penetration (CATV) 91% 23% 28% 71% n/a 57%
----------------------------------------------------------------------------------------------------------------------------------
Internet - Dial-Up 154 0 0 0 0 154
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Internet - Cable/Ethernet 19 0 49 0 8 76
==================================================================================================================================
</TABLE>
(1) Cablecom (Switzerland) is 100% owned by NTL, however, Cablecom retains
various ownership interests in several smaller Swiss cable systems.
Historically, Cablecom has reported customer data reflecting the equity
interest applicable to each system and as of September 30, 2000 was as
follows: 1,690,500 franchise homes, 1,690,500 homes passed, 1,547,900
CATV homes marketed and 1,404,300 CATV customers (includes an ongoing
audit adjustment at Cablecom of an additional 95,900 equity homes passed
and 92,100 equity homes marketed). During the third quarter Cablecom
acquired 15,100 equity cable subscribers and 6,700 equity Internet
customers via the acquisition of several cable systems. Data in the above
table consolidates all of the systems in which Cablecom has an ownership
interest.
(2) The "1G Networks" (France) were acquired by NTL in 1999.
(3) Proforma for the closing of Noos (France). NTL recently agreed to acquire
a 27% interest in Noos.
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NTL INCORPORATED
November 9, 2000
Page 9
(4) NTL acquired a 32.5% interest in eKabel (Germany) in September 2000.
(5) NTL acquired a 25% equity interest in Bredbandsbolaget (B2)(Sweden) in
March 2000.
(6) Gross subscriber information assumes NTL owns 100% of B2, Noos, eKabel
and each of the cable systems in which Cablecom retains an ownership
interest.
(7) Franchise home information is from Company records.
Mobile
We continue to negotiate to secure a agreement with one or more suppliers in
order to enhance our consumer services bundle with a mobile offering. We
continue to make progress and expect to sign an agreement by the end of 2000,
which would allow us to offer mobile services to our customers in the UK by the
end of Q2 2001.
BUSINESS SERVICES
Our Business Services division is competing to capture an increasing share of
the Pound Sterling 16.5 billion UK/Ireland business telecoms market (as
estimated by the Gartner Group, OFTEL, BT and NTL). This sector is anticipated
to grow to approximately Pound Sterling 24 billion in 2005. This market is
comprised of five sectors, Small Business (Pound Sterling 1.7 billion market),
Medium Business (Pound Sterling 3.6 billion market), Large Business (Pound
Sterling 4.9 billion market), Public Sector (Pound Sterling 3.0 billion) and
Carrier Services (Pound Sterling 3.3 billion). Currently our market share
overall in these markets is approximately 3% and it is our goal to obtain a 15%
market share in five years.
In the small business group, we enhanced our competitive position by launching
'NTL Business Essentials' in early October. We have become the first company to
bundle together telephony, e-commerce and data into one package for small
businesses.
In our medium and large sized business groups, we had a successful quarter
obtaining new customers as well as offering incremental services to existing
customers. For example, last quarter we reported winning a Pound Sterling 2.5
million contract with the Bonnier Swedish Media Group for web hosting and
telecommuting services over IP. During the third quarter we signed a three-year,
Pound Sterling 1 million contract to install an advanced IP solution for three
of the Bonnier Group's sites in Scotland.
In our large-business group, we signed a number of significant contracts
including a seven-year contract with EDS to provide a "complete communications"
solution including Voice over IP (VoIP), managed voice, intelligent networking,
LAN and WAN services, Internet connectivity and in-building GSM coverage. The
integration of the people and skills of Workplace Technologies has enhanced our
ability to win business of this type and has allowed us to serve customers more
effectively in the financial, retail and public sectors.
<PAGE> 10
NTL INCORPORATED
November 9, 2000
Page 10
In our public sector group (which includes our Radcomms business), we continue
to expand the scope of the business we conduct with local government
organizations throughout our franchises and the emergency services community
nationwide. This business not only provides NTL with a valuable secure revenue
stream, but also enhances our position in each local community we serve and
represents a validation of our ability to meet the most complex and mission
critical needs. We continued our work with the education sector where we are
piloting community Intranets, which will allow teachers, pupils and parents to
work together on projects via the TV or the PC. This service brings together the
entire NTL product portfolio, from digital television to PC Internet.
All of our units are profiting from our recently launched, dedicated web-hosting
product. The hosting service offers 24-7 reliability, rapid Internet
connectivity, cost competitiveness and complete service level agreements, and
will be a cornerstone of all of our future offerings.
We had a successful quarter in our carrier services group, which serves the
large telecoms carrier market. In the third quarter, NTL won a Pound Sterling 50
million contract to provide UK and Ireland managed fiber capacity for one of the
largest competitive carriers in Europe. During the third quarter we also
initiated the implementation of a new fiber backbone network for Orange, as part
of the Pound Sterling 150 million contract we announced last quarter. We
continue to work with all mobile carriers in cooperation with our Broadcast
division in order to provide a portfolio solution to their future network needs,
especially for 3G UMTS deployment.
In Ireland, we are developing Europe's first end-to-end IP network to service an
entire country with integrated, cost effective voice, data and Internet
services. This project not only extends NTL's lead in the European IP network
field, but also firmly establishes the Irish Republic as one of the forerunners
in the development of new generation communications services. This network will
allow NTL to deliver a suite of innovative value-added IP services to the Irish
market over a single network infrastructure and protocol.
BROADCAST
The Broadcast division continues to be in a period of immense opportunity as a
result of the privatization of national broadcast networks, digitalization of
analog television and radio signals and the increased demand for tower
infrastructure from wireless service operators. Growth in this business comes
mainly through winning major new contracts and from acquisitions.
Key awards and acquisitions in the broadcast division in the third quarter
include:
- The acquisition of 46 urban and suburban radio sites in Scotland
to compliment our well-established rural portfolio;
<PAGE> 11
NTL INCORPORATED
November 9, 2000
Page 11
- The award of a contract to build telecommunication towers on all
of the 24 Welcome Break motorway service areas;
- The award of a contract to equip 11 shopping malls and other
public access buildings with radio distribution systems for mobile
phone operators;
- The award of a 12-year Total Broadcast contract for 20 local radio
stations within the GWR Group;
- The acquisition of Scanners, an outside broadcast facilities
company, which will strengthen our position as the leading
broadcast and media solutions provider in the UK; and
- The agreement to build a carrier-grade telecommunications network
on the east coast of Australia in partnership with WIN Television
and Southern Cross Broadcasting, including contracts from our
partners to provide video distribution solutions for a 10-year
period.
SHARED COSTS
Branding
A key component in the integration of ConsumerCo has been the re-branding of its
franchise areas to NTL. We began this process at the end of September and plan
to move forward aggressively with a combined national campaign. We will also
focus on extending the NTL brand to the business community as well. This is a
sizable opportunity as the ConsumerCo franchises contain a greater number of
businesses than the NTL franchise areas.
Other Shared Costs
These costs are attributable to our human resources, finance, facilities, IT and
administrative services departments and towards the management of our UK
network. As these costs are central to the UK operation, it is not possible to
allocate them directly to the separate reporting groups and as such they are
reported separately.
<PAGE> 12
NTL INCORPORATED
November 9, 2000
Page 12
REVENUE SUMMARY
The following table is a summary of revenues by various business segments.
<TABLE>
<CAPTION>
==============================================================================================================
REVENUES
--------------------------------------------------------------------------------------------------------------
Q3-2000 Q2-2000 Q1-2000
(IN POUND STERLING 000S) (IN POUND STERLING 000S) (IN POUND STERLING 000S)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
NTL CONSUMER
--------------------------------------------------------------------------------------------------------------
UK On-Net 283,926 191,376 143,293
--------------------------------------------------------------------------------------------------------------
UK Off-Net 20,579 7,741 407
--------------------------------------------------------------------------------------------------------------
Cablelink 9,668 9,280 10,085
--------------------------------------------------------------------------------------------------------------
Cablecom / 1G Networks 63,446 62,686 2,160
--------------------------------------------------------------------------------------------------------------
Interactive 798 377 388
--------------------------------------------------------------------------------------------------------------
Programming 1,968 2,073 1,519
--------------------------------------------------------------------------------------------------------------
Total Consumer 380,385 273,533 157,852
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
NTL BUSINESS
--------------------------------------------------------------------------------------------------------------
Business/Carrier 113,903 98,044 86,018
--------------------------------------------------------------------------------------------------------------
Radcomms/Satellites 28,288 27,214 26,888
--------------------------------------------------------------------------------------------------------------
Total Business 142,191 125,258 112,906
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
NTL BROADCAST 36,985 35,410 34,785
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
TOTAL REVENUES 559,561 434,201 305,543
==============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
========================================================================================
REVENUES
----------------------------------------------------------------------------------------
Q4-1999 Q3-1999
(IN POUND STERLING 000S) (IN POUND STERLING 000S)
----------------------------------------------------------------------------------------
<S> <C> <C>
----------------------------------------------------------------------------------------
NTL CONSUMER
----------------------------------------------------------------------------------------
UK On-Net 138,236 126,709
----------------------------------------------------------------------------------------
UK Off-Net - -
----------------------------------------------------------------------------------------
Cablelink 10,075 9,315
----------------------------------------------------------------------------------------
Cablecom / 1G Networks 1,745 1,154
----------------------------------------------------------------------------------------
Interactive 416 509
----------------------------------------------------------------------------------------
Programming 2,142 597
----------------------------------------------------------------------------------------
Total Consumer 152,614 138,284
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
NTL BUSINESS
----------------------------------------------------------------------------------------
Business/Carrier 91,328 65,766
----------------------------------------------------------------------------------------
Radcomms/Satellites 24,640 21,167
----------------------------------------------------------------------------------------
Total Business 115,968 86,933
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
NTL BROADCAST 35,056 34,355
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
TOTAL REVENUES 303,637 259,572
========================================================================================
</TABLE>
<PAGE> 13
NTL INCORPORATED
November 9, 2000
Page 13
EBITDA SUMMARY
The following table is a summary of EBITDA by various business segments.
<TABLE>
<CAPTION>
===================================================================================================================
EBITDA
-------------------------------------------------------------------------------------------------------------------
Q3-2000 Q2-2000 Q1-2000
QUARTERLY SUMMARY (IN POUND STERLING 000S) (IN POUND STERLING 000S) (IN POUND STERLING 000S)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
NTL CONSUMER
-------------------------------------------------------------------------------------------------------------------
UK On-Net 103,259 70,359 51,027
-------------------------------------------------------------------------------------------------------------------
UK Off-Net 2,816 (784) (661)
-------------------------------------------------------------------------------------------------------------------
Cablelink 950 1,855 3,608
-------------------------------------------------------------------------------------------------------------------
Cablecom / 1G Networks 20,506 20,497 (990)
-------------------------------------------------------------------------------------------------------------------
Interactive (6,160) (4,420) (2,953)
-------------------------------------------------------------------------------------------------------------------
Programming (12,645) (8,719) (4,897)
-------------------------------------------------------------------------------------------------------------------
Total 108,726 78,788 45,134
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
NTL BUSINESS
-------------------------------------------------------------------------------------------------------------------
Business/Carrier 45,244 34,576 24,586
-------------------------------------------------------------------------------------------------------------------
Radcomms/Satellites 8,272 8,697 8,768
-------------------------------------------------------------------------------------------------------------------
Total 53,516 43,273 33,354
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
NTL BROADCAST 19,666 18,683 18,360
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
CORPORATE / OTHER
-------------------------------------------------------------------------------------------------------------------
Branding (9,071) (8,743) (4,533)
-------------------------------------------------------------------------------------------------------------------
Integration Costs (14,945) (4,819) (904)
-------------------------------------------------------------------------------------------------------------------
Network Operations &
Shared Corporate Support (95,649) (68,009) (48,626)
-------------------------------------------------------------------------------------------------------------------
Total (119,665) (81,571) (54,063)
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
TOTAL EBITDA 62,243 59,173 42,785
===================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
========================================================================================
EBITDA
----------------------------------------------------------------------------------------
Q4-1999 Q3-1999
QUARTERLY SUMMARY (IN POUND STERLING 000S) (IN POUND STERLING 000S)
----------------------------------------------------------------------------------------
<S> <C> <C>
----------------------------------------------------------------------------------------
NTL CONSUMER
----------------------------------------------------------------------------------------
UK On-Net 47,219 44,986
----------------------------------------------------------------------------------------
UK Off-Net - -
----------------------------------------------------------------------------------------
Cablelink 2,378 2,162
----------------------------------------------------------------------------------------
Cablecom / 1G Networks (443) (284)
----------------------------------------------------------------------------------------
Interactive (962) 212
----------------------------------------------------------------------------------------
Programming (2,811) (3,433)
----------------------------------------------------------------------------------------
Total 45,381 43,643
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
NTL BUSINESS
----------------------------------------------------------------------------------------
Business/Carrier 25,659 25,286
----------------------------------------------------------------------------------------
Radcomms/Satellites 8,870 6,753
----------------------------------------------------------------------------------------
Total 34,529 32,039
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
NTL BROADCAST 18,608 17,728
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
CORPORATE / OTHER
----------------------------------------------------------------------------------------
Branding (9,437) (4,946)
----------------------------------------------------------------------------------------
Integration Costs (886) (305)
----------------------------------------------------------------------------------------
Network Operations &
Shared Corporate Support (41,662) (47,654)
----------------------------------------------------------------------------------------
Total (51,985) (52,905)
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
TOTAL EBITDA 46,533 40,505
========================================================================================
</TABLE>
<PAGE> 14
NTL INCORPORATED
November 9, 2000
Page 14
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------------------------
2000 1999
--------------------------------------------
(in millions, except per share data)
<S> <C> <C>
REVENUES
Residential telecommunications and television $566.0 $220.3
National and international telecommunications 210.4 141.6
Broadcast transmission and other 54.3 55.2
--------------------------------------------
830.7 417.1
COSTS AND EXPENSES
Operating expenses 394.1 206.8
Selling, general and administrative expenses 344.7 144.9
--------------------------------------------
738.8 351.7
--------------------------------------------
EBITDA 91.9 65.4
Franchise fees - 7.7
Non-cash compensation 2.2 -
Other charges 6.0 -
Corporate expenses 9.5 7.4
Depreciation and amortization 600.0 201.9
--------------------------------------------
Operating (loss) (525.8) (151.6)
OTHER INCOME (EXPENSE)
Interest income and other, net (1.2) 13.4
Interest expense (280.9) (186.6)
Foreign currency transaction gains 23.1 46.7
--------------------------------------------
(Loss) before income tax benefit (784.8) (278.1)
Income tax benefit 14.5 -
--------------------------------------------
Net (loss) (770.3) (278.1)
Preferred stock dividends (63.3) (20.6)
--------------------------------------------
Net (loss) available to common shareholders $(833.6) $(298.7)
============================================
Basic and diluted net (loss) per common share $ (3.08) $ (2.31)
============================================
Weighted average shares 270.8 129.4
============================================
</TABLE>
<PAGE> 15
NTL INCORPORATED
November 9, 2000
Page 15
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------------------------------
2000 1999
-----------------------------------------------
(in millions, except per share data)
<S> <C> <C>
REVENUES
Residential telecommunications and television $1,238.8 $585.6
National and international telecommunications 584.2 360.2
Broadcast transmission and other 164.9 144.9
-----------------------------------------------
1,987.9 1,090.7
COSTS AND EXPENSES
Operating expenses 967.8 536.2
Selling, general and administrative expenses 769.3 419.2
-----------------------------------------------
1,737.1 955.4
-----------------------------------------------
EBITDA 250.8 135.3
Franchise fees - 22.3
Non-cash compensation 2.2 -
Other charges 19.7 -
Corporate expenses 30.7 21.1
Depreciation and amortization 1,245.5 533.6
-----------------------------------------------
Operating (loss) (1,047.3) (441.7)
OTHER INCOME (EXPENSE)
Interest income and other, net 48.1 34.1
Interest expense (729.1) (485.2)
Foreign currency transaction gains (losses) (89.3) 35.8
-----------------------------------------------
(Loss) before income tax benefit (1,817.6) (857.0)
Income tax benefit 33.1 -
-----------------------------------------------
Net (loss) (1,784.5) (857.0)
Preferred stock dividends (129.5) (49.0)
-----------------------------------------------
Net (loss) available to common shareholders $(1,914.0) $(906.0)
===============================================
Basic and diluted net (loss) per common share $ (9.63) $ (7.86)
===============================================
Weighted average shares 198.8 115.2
===============================================
</TABLE>
<PAGE> 16
NTL INCORPORATED
November 9, 2000
Page 16
DISCUSSION OF THIRD QUARTER RESULTS
As a result of the completion of the acquisitions of Diamond Cable
Communications Limited in March 1999, the Australian National Transmission
Network ("NTL Australia") in April 1999, Cablelink Limited in July 1999, the "1G
Networks" of France Telecom in August and December 1999, NTL Business Limited
(formerly Workplace Technologies plc) in September 1999, the cable assets of the
Cablecom Group in March 2000 and ConsumerCo in May 2000, the Company
consolidated the results of operations of these businesses from the dates of
acquisition.
A significant component of the results since May 2000 is associated with the
acquisition of ConsumerCo. Prior to the acquisition, ConsumerCo had been losing
customers on a quarterly basis. In the first full quarter after the acquisition,
ConsumerCo added 3,600 dual customers and 16,300 RGUs, as well as materially
reduced monthly churn. The Company's immediate focus is on the following
priorities: reducing the fault rate, improving the installation experience,
continuing the digital rollout and improving the value proposition for the
service bundle. These are all factors that will reduce churn and increase
penetration. However, they will increase costs through the second quarter of
2001.
On November 2, 2000, the Company announced the completion of a consolidation
review. Based on a comprehensive review of the combined company following the
acquisition of ConsumerCo and the integration of several other acquired
businesses over the last 18 months, the Company identified significant
efficiency improvements and cost savings. These include the elimination of
duplicate technologies and processes, consolidation of support functions and
reductions in levels of management. Approximately 1,300 roles will become
redundant over the next 15 months as part of the cost savings. The Company
expects to realize the cost savings beginning in the latter half of 2001. The
Company expects to incur a restructuring charge in fiscal 2000 as a result of
this review, although to date the Company is still in the process of finalizing
this charge.
Residential telecommunications and television revenues increased to $566.0
million from $220.3 million as a result of acquisitions and from customer growth
that increased the Company's current revenue stream. The 2000 and 1999 revenue
includes $380.6 million and $53.9 million, respectively, from acquired
companies. The Company expects its customer base to continue to increase, which
will drive further revenue growth as the Company continues to connect customers
to its broadband network. The Company also expects revenue growth from the
continuing roll out of its cable modem and digital cable television services.
National and international telecommunications revenues increased to $210.4
million from $141.6 million as a result of acquisitions and from increases in
business telecommunications revenues, Internet services revenues and carrier
services revenues. The 2000 and 1999 revenue includes $67.0 million and $21.0
million, respectively, from acquired companies. Business telecommunications and
Internet services revenues increased primarily as a result of customer growth.
The Company expects its business telecommunications and Internet services
customer base to continue to increase, which will drive further revenue growth.
The Company continues
<PAGE> 17
NTL INCORPORATED
November 9, 2000
Page 17
to focus specific sales and marketing effort on business customers and for
Internet services in its completed network. Carrier services revenues increased
due to growth in voice, video and data services provided by the Company's
wholesale operation to broadcasters and telephone companies, respectively.
Revenue growth in carrier services is primarily dependent upon the Company's
ability to continue to attract new customers and expand services to existing
customers.
Broadcast transmission and other revenues decreased to $54.3 million from $55.2
million. Included in these amounts are revenues of $13.6 million and $14.9
million from NTL Australia in 2000 and 1999, respectively. These decreases are
entirely due to exchange rate fluctuations since these revenues increased Pound
Sterling 2.4 million and A$0.8 million in the United Kingdom and NTL Australia,
respectively. The United Kingdom increase reflects increases in broadcast
television and FM radio customers and accounts, which exceeded price cap
reductions in the Company's regulated services. The Company expects its digital
broadcasting services to increase in the future.
Operating expenses increased to $394.1 million from $206.8 million primarily as
a result of costs from acquired businesses. The 2000 and 1999 expense includes
$233.4 million and $47.5 million, respectively, from acquired companies.
Selling, general and administrative expenses increased to $344.7 million from
$144.9 million as a result of increases in telecommunications and CATV sales and
marketing costs and increases in additional personnel and overhead to service
the increasing customer base. The 2000 and 1999 expense includes $151.7 million
and $19.0 million, respectively, from acquired companies.
Pursuant to the terms of various United Kingdom licenses, the Company incurred
license fees paid to the Independent Television Commission (ITC) to operate as
the exclusive service provider in certain of its franchise areas. Upon a request
by the Company in 1999, the ITC converted all of the Company's fee bearing
exclusive licenses to non-exclusive licenses at the end of 1999, and the
Company's liability for license payments ceased upon the conversion. Franchise
fees were $7.7 million in 1999.
In September 2000, the Board of Directors approved modifications to certain
stock options granted to employees in November 1999 through May 2000. Options to
purchase an aggregate of approximately 16.5 million shares of the Company's
common stock with a weighted average exercise price of $64.39 per share were
modified such that the exercise price was reduced to $44.50 per share and the
vesting schedule was delayed and/or lengthened. In accordance with APB Opinion
No. 25, "Accounting for Stock Issued to Employees" and related interpretations,
the Company is accounting for these options as a variable plan beginning in
September 2000. The Company will recognize non-cash compensation expense for the
difference between the quoted market price of the Company's common stock and the
exercise price of the vested options while the options remain outstanding. As of
September 30, 2000, the Company recognized non-cash compensation expense of $2.2
million.
<PAGE> 18
NTL INCORPORATED
November 9, 2000
Page 18
One of the Company's major costs has been for the integration of acquired
companies' information technology systems, while simultaneously upgrading them
for digital television, interactive services and video-on-demand. Other charges
of $6.0 million in 2000 were incurred for this integration effort.
Corporate expenses increased to $9.5 million from $7.4 million due to an
increase in various overhead costs.
Depreciation and amortization expense increased to $600.0 million from $201.9
million due to an increase in depreciation of telecommunications and CATV
equipment. The 2000 and 1999 expense includes $438.9 million and $71.3 million,
respectively, from acquired companies, including amortization of acquisition
related intangibles.
Interest income and other, net decreased to expense of $1.2 million from income
of $13.4 million as a result of increases in the net losses of affiliates
accounted for by the equity method and decreases in interest income.
Interest expense increased to $280.9 million from $186.6 million due to the
issuance of additional debt, and the increase in the accretion of original issue
discount on the deferred coupon notes. The 2000 and 1999 expense includes $124.0
million and $40.9 million, respectively, related to acquisitions. Interest of
$171.8 million and $79.9 million was paid in the three months ended September
30, 2000 and 1999, respectively.
Foreign currency transaction gains decreased to $23.1 million from $46.7 million
primarily due to the effect of unfavorable changes in exchange rates. The
Company's results of operations are impacted by changes in foreign currency
exchange rates as follows. NTL Incorporated and certain of its subsidiaries have
cash, cash equivalents and debt denominated in foreign currencies that are
effected by changes in exchange rates. In addition, foreign subsidiaries of the
Company whose functional currency is not the U.S. dollar hold cash, cash
equivalents and debt denominated in U.S. dollars which are effected by changes
in exchange rates.
<PAGE> 19
NTL INCORPORATED
November 9, 2000
Page 19
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements contained herein constitute "forward-looking statements" as
that term is defined under the Private Securities Litigation Reform Act of 1995.
When used herein, the words, "believe," "anticipate," "should," "intend,"
"plan," "will," "expects," "estimates," "projects," "positioned," "strategy,"
and similar expressions identify such forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from those
contemplated, projected, forecasted, estimated or budgeted, whether expressed or
implied, by such forward-looking statements. Such factors include the following:
general economic and business conditions, the Company's ability to continue to
design networks, install facilities, obtain and maintain any required
governmental licenses or approvals and finance construction and development, all
in a timely manner at reasonable costs and on satisfactory terms and conditions,
as well as assumptions about customer acceptance, churn rates, overall market
penetration and competition from providers of alternative services, the impact
of new business opportunities requiring significant up-front investment, and
availability, terms and deployment of capital.
* * * * * * * *
A meeting will be held to discuss these results on Thursday, November 9th at
10:00am EST. Registration begins at 9:45am EST at the Equitable Building, 1290
Avenue of the Americas (6th Avenue between 52nd and 53rd), New York, NY. The
investment community and the media may also participate in the meeting via
teleconference by dialing 1-888-870-4543 in the United States or1-706-679-3497
for international access or via a live audio webcast of the conference call on
the company's website WWW.NTL.COM the slide presentation may be accessed via
www.ntl.com.
A recording of the teleconference call will be available November 9th beginning
approximately 2 hours after the end of the call through Thursday, November 16th
at midnight EST. To access the taped broadcast dial 1-800-642-1687 in the US and
enter reservation number 118796. International participants please dial
1-706-645-9291, reservation number 118796.
FOR MORE INFORMATION PLEASE CONTACT:
IN THE U.S.:
John Gregg, Chief Financial Officer
Richard Lubasch, General Counsel
Bret Richter, Vice President - Corporate Finance and Development
Amy Minnick, Associate Director - Investor Relations, Corporate Finance and
Development
Tel: (212) 906-8440
Or e-mail: [email protected].
IN THE U.K.:
Alison Kirkwood, Public Relations
TEL: +44 1256 752 000
