With $2.7 billion worth of available cash and capital in hand, RCN Corp. (www.rcn.com) has enough funding to see its current markets through to profitability, says David C. McCourt, the company’s chairman CEO. But, despite its liquidity, the company believes it needs to change the trajectory of its growth plans as a result of the state of today’s financial markets.
“While we have to temporarily rethink our growth strategy, I feel blessed we have the capital to see our business plan to profitability,” McCourt said during a press conference this morning.
RCN is taking a phased approach to its future growth, which includes pre-funding expansion and development of any new markets. The first two phases – which include the existing markets of Boston; Chicago; Los Angeles; Manhattan and Queens, N.Y.; Philadelphia; San Francisco; and Washington, D.C. – has more than $2 billion of capital available. The company will concentrate now on adding more customers and expanding services in its existing markets. The networks pass 1.2 million homes and serve 250,000 customers, according to third quarter reports.
RCN won’t begin the third phase of its development until it can be funded.
RCN will reportedly reduce its capital expenditures by 50 percent in 2001, in comparison with prior analyst estimates. The company says it will also decrease costs not related to revenue generation and customer acquisition by about $600 million than previously forecasted.
According to the company’s new growth plan, RCN is expected to have between 780,000 to 800,000 on-net connections by the end of 2001, with total connections of about 1.3 million. As for financial guidance for year-end 2001, revenues are expected to be in the range of $520 million to $530 million, with EBITDA losses totaling approximately $335 million. End 2001 with about $1 billion worth of liquidity.
In the more near-term, RCN’s fourth quarter 2000 outlook projects on-net connections of 470,000 to 475,000, with total connections of about 1.1 million. Revenues for the fourth quarter are estimated to be $111 million to $114 million, with EBITDA losses of $110 million to $115 million.
