UBS Conference Notebook...

RCN expects to reach an agreement on the sale of operations in L.A. within the next 1-2 months and also has put its business in San Francisco on the block, CFO Michael Sicoli said. The 2 markets combined account for about 20,000 of the competitive local exchange carrier’s (CLEC) 400,000 subscribers, with most of those in San Francisco, he said. RCN will weigh its options for the Chicago market, where it has 77,000 customers, as it sharpens focus on its core market in the northeast U.S., company officials said. The sell-off of some businesses comes as RCN moves to deliver on plans for generating $25 million in savings in 2006, partly through a 5-10% reduction in its workforce of 2,000 employees, Sicoli said. Combining some operations, RCN is closing its former Princeton, N.J., hq, which has 120 employees, in 2006, and shifting operations to a Herndon, Va., facility. That move is expected to trim 30-40 jobs, Sicoli said. Other savings will come from renegotiations of RCN’s retransmission agreements with programmers, 150 of which have been completed year-to-date including those with major networks, CEO Peter Aquino said. At the same time, RCN this week announced plans to buy Consolidated Edison’s communications subsidiary for $32 million cash. The acquisition give RCN access to 560 fiber miles in the N.Y. area and 10 river crossings, allowing the CLEC to extend its reach into northern N.J., White Plains, N.Y., and Stamford, Conn., Aquino said. The N.Y.-based Consolidated Edison operation, which has 75 employees, generates about $40 million in annual revenue and had a negative $7.8 million in earnings before interest, taxes, depreciation and amortization (EBITDA) the first 9 months of this year, company officials said. Among the Con Ed unit’s major customers are 2-3 investment banking firms that use its fiber network for trading, Aquino said. RCN also is weighing its options for a 48% stake it owns in Mexico’s Megacable, which has about 600,000 subscribers and passes 2.1 million homes. RCN has owned a stake in Megacable about 10 years, but only took a hard look at it after emerging from bankruptcy protection in Dec. 2004, Chmn. James Mooney said. Megacable has annual revenues of about $200 million, he said. “We're looking at all our options from exiting to partnering to make sure we're maximizing shareholder value from it,” Mooney said. In generating high per-user revenue, RCN has focused on selling triple play packages of video, telephony and broadband. About 67% of its customers are triple subscribers, up from 62% a year ago. The average revenue generating unit per customer rose to 2.13 units in the 3rd quarter from 2.04 a year earlier.