19

Bell Atlantic Corp.

P> Total Contracts $288,456,000


Corporate Headquarters: Philadelphia, Pa.

http://www.bell-atl.com/

"What a great time to be in this business," said Raymond Smith, chairman and CEO of Bell Atlantic Corp. With the recent telecommunications reforms, Smith sees a whole spectrum of new markets he can pursue in a less regulated environment.

And Bell Atlantic has wasted no time capitalizing on opportunities - particularly in government markets. At a time when companywide revenues dropped slightly, Bell Atlantic's Federal Systems Division crept into the top 20 prime contractors for the first time. The company was No. 23 for the last two years.

Although the company could not release 1995 revenue or earnings numbers for the division, a spokesman estimated that 1996 revenue projections for Federal Systems is approximately $390 million.

Companywide 1995 revenues were $13.4 billion, down from 1994's $13.7 billion. However, earnings grew 11.2 percent, fueled by strong demand for network and wireless services. In fact, the wireless business generated more than half of the 1995 earnings growth.

The overall company revenue decrease was caused primarily by a drop in revenue from toll service, computer maintenance, and its real estate and leasing businesses. In 1994 and 1995, Bell Atlantic sold several of these non-strategic businesses.

Federal Systems' strong 1995 showing came in part from the government's increased use of integrated services digital network lines. Approximately 16 percent of the nation's ISDN service is provided by Bell Atlantic Federal Systems. As a whole, the company provides more than 160,000 ISDN lines, which is approximately 40 percent of all U.S. ISDN lines.

The number of ISDN lines grew by 48 percent in 1995, and the company wants to add 100,000 more this year. Forty percent are expected to be residential lines.

Historically, residential network growth was caused by the formation of new households. Now, the driving forces are second phone lines and data connectivity, which last year spurred the largest single-year increase in new residential lines since World War II.

"The demand for data connectivity has replaced the demand for processing power as the driving force in communications - a shift that presents major opportunities for network-centric companies like ours," Smith said in a letter to shareholders.

The passage of the Telecommunications Act of 1996 also opens up significant opportunities in the form of the $70 billion long distance market. So far, Bell Atlantic has announced plans to offer long distance services in Illinois, Florida, North Carolina, South Carolina and Texas.

The company will target markets that have favorable regulations, or areas where it has brand equity or an existing wireless presence. Bell Atlantic plans to cut into the long distance arena in these competitive markets and use that experience to launch a deadly strike into long distance in its home region during 1997 and 1998.

Its goal? Capture at least 20 percent of the approximate $10 billion in-region market within five years of entry.

Bell Atlantic also plans to start offering video access in early 1997. This year, plans are in the works to add voice-activated services and Internet access.

New Contracts Won in 1995

-Government Metropolitan Area Network, which gives federal agencies in the Washington, D.C., area access to SONET. The amount will vary depending on use. The contract is in addition to the $250 million WITS contract.

-Voice messaging and processing systems for 61 Air Force hospitals worth $28 million

-Videoconferencing network services to link the Environmental Protection Agency's Washington headquarters with 10 regional headquarters worth $2 million

-Switching contract for EPA's Philadelphia area offices worth $2 million

Local Services Revenues

Dollars in MillionsIncrease

1994 - 1995$90.42.1

1993 - 1994$128.63.1

Toll Service Revenues

Dollars in Millions(Decrease)

1994 - 1995$120.4(7.7)

1993 - 1994$2.5(.2)

Network Access Revenues

Dollars in MillionsIncrease

1994 - 1995$157.14.9

1993 - 1994$166.75.4.

Directory Publishing Revenues

Dollars in MillionsIncrease

1994 - 1995$23.52.2

1993 - 1994$30.82.9


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