Cincinnati Bell rings for Bengals and Bearcats, Musketeers, and even the Reds. The company provides local phone service to residential and business customers in southwestern Ohio, northern Kentucky, and eastern Indiana. It has been the incumbent local-exchange carrier (ILEC) for greater Cincinnati since the 1870s, and it operates in other areas as a competitive local-exchange carrier (CLEC), providing voice and Internet service over its networks and through agreements with other network operators. Cincinnati Bell also offers data center services for businesses. About 1 million subscribers in Ohio, northern Kentucky, and southeastern Indiana use the company's wireless services.
In addition to its core telephone offerings, the company operates a handful of subsidiaries that together provide customer premises equipment, data center collocation and managed services, and IT consulting. Its other noncore offerings include long-distance services in the greater Cincinnati and Dayton areas (through its Cincinnati Bell Any Distance unit); a surveillance hardware business (operated by its Cincinnati Bell Complete Protection unit); and Internet-based television programming (through its Cincinnati Bell Entertainment subsidiary).
Due to a steady decline in demand for wired local and long distance services as the ranks of wireless and Internet phone suscribers swell, Cincinnati Bell has tried to lower expenses in its wireline division to offset lower sales. Cost cutting efforts have included divisional restructuring to improve efficiency, layoffs, and reductions to certain employee compensation and benefit options. By 2011, wireline revenues were down only 1%. Cincinnati Bell's wireless segment shrank about 6% in 2011. The company attributed the decline to the fact that consumers tend to choose carriers with more extensive selections of smartphones such as the iPhone. Cincinnati Bell's telecom and IT equipment business grew by 18% for the year as business clients spent more due to the improved economy. Higher operating costs for the year contributed to a third year of declining profits in 2011 as Cincinnati Bell invested in the expansion of its data centers. Total revenue was up about 6%.
To diversify its revenue stream, Cincinnati Bell has invested in its data center colocation businesses, and it has made improvements to its network and IT services arm by expanding capacity in core markets through construction of new facilities and acquisitions. The company expanded its data center business in response to the demand for cloud-based data and computing services in 2010 when it bought Texas-based CyrusOne Networks, LLC for $525 million in cash. The deal enabled a push into the southwestern US market where CyrusOne operated seven data centers in Houston, Austin, and Dallas. Data center colocation accounted for 12% of sales in 2011.
Cincinnati Bell spun off its data center operations as CyrusOne Inc. in a $300 million initial public offering (IPO) in 2012. CyrusOne -- which includes facilities in London and Singapore -- is organized as a tax-exempt real estate investment trust (REIT). – less