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RCN Corp / Turnaround

Winner

Company: RCN Corporation
Entered by: Communicreate
Company Description: RCN Corporation (
www.rcn.com),headquartered in Herndon, VA, is a leading provider of bundled cable, high-speed internet and phone services to residential and business customers in Boston, New York, Eastern PA, Washington, D.C., and Chicago. Its separately-managed subsidiary, RCN Business Solutions provides bulk video, high-capacity data and voice services to business customers.
Nomination Category: Company, Office & Product Awards Categories
Nomination Sub Category: Best Business Turnaround

Nomination Title: RCN Corporation

1. Tell the story about what this nominated company achieved in the past year (up to 500 words). Focus on specific accomplishments, and relate these accomplishments to past performance or industry norms. Be sure to mention obstacles overcome, innovations or discoveries made, and outcomes:

RCN Corporation is the first triple play (bundled cable, high-speed internet
and telephone) provider to compete with the incumbent telephone and cable
companies. In late 2004 RCN went bankrupt, restructured, and re-emerged out of
bankruptcy in March 2005 with a new, highly accomplished executive team and
board of directors. 

The company quickly re-listed on NASDAQ, reestablished financial stability, and
acquired 100% ownership of Starpower Communications in D.C.
But RCN faced new competitive threats by telecom/cable giants who decided to
offer similar bundled triple play services. These companies heavily lobbied
Congress to update the Telecom Act of 1996 and the Federal Communication
Commission to change the rules to create competitive disadvantages to smaller
companies like RCN. The financial community doubted RCN could survive, never
mind come back. And competitors were using the bankruptcy to disparage RCN.
Overcoming these challenges, the company has successfully transformed itself
into a solid performer and industry leader while maintaining superior service
performance. In 2006, revenue grew 10% after several years of flat/declining
comparisons; EBITDA grew a remarkable 45% with EBITDA margin expanding 500
basis points; and free cash flow turned positive for first time in company
history. RCN also increased institutional ownership of its stock from 74% to
93% and more than tripled sell-side analyst coverage from 3 to 10. RCN won a
2006 Thoth Award and an Award of Excellence from the National Capital Chapter
of the Public Relations Society of America for the company’s investor relations
and integrated IR/PR programs.

RCN divested non-core high-value assets through three significant deals: the
$350 million sale of RCN’s minority stake in a Mexican cable company; the $40
million purchase of Con Edison’s telecom business in NY; and the $45 million
sale of RCN’s San Francisco assets.

RCN’s capital structure was transformed through application of these asset sale
proceeds, reducing debt by 60% and receiving a multi-notch credit rating
upgrade. All outstanding debt was refinanced/amended to reduce interest expense
by $4 million annually and significantly increase financial flexibility and
reinforce RCN’s positive relationship with lenders.

Leveraging RCN’s key strengths, triple-play pioneer status and a superior fiber-
optic network, RCN repositioned and retooled customer offerings, transforming
the products, services and customer care that RCN provides. RCN launched new
value-based packaged pricing initiatives, and boosted customer choice in its
services, e.g. a new Hispanic themed ala carte cable TV offering (the first of
its kind), & launching first industry wireless quadruple play.

In addition to expanding profitability through dramatic cost cuts and increased
process efficiencies, RCN used its legislative and regulatory groups as both a
sword and a shield, e.g. securing valuable programming protections in the FCC’s
Adelphia/ Comcast/Time Warner Merger. RCN’s access to regional sports in the PA
market was grandfathered – the only company to receive such protection. RCN
negotiated regulatory settlements to reduce potential $4.1M of liability to
$205K; and generate revenues and cost savings of $9.8 million. RCN reviewed
active franchises to reduce performance and construction bond obligations that
resulted in over a million dollars savings annually.

2. List hyperlinks to any online news stories, press releases, or other documents that support the claims made in the section above. IMPORTANT: Begin each link with http://, and enclose each link in square brackets; for example, [http://www.youraddress.com]:

http://investor.rcn.com/downloads/American_Executive.pdf
http://www.parsintl.com/pdf/11632.pdf
http://investor.rcn.com/downloads/WST_0206.pdf
http://investor.rcn.com/downloads/041805_Spotlight_Fresh_Start.pdf
http://www.boston.com/globe/search/stories/reprints/backfrom032005.html
http://investor.rcn.com/downloads/WST_interview0905.pdf
http://investor.rcn.com/index.cfm
http://investor.rcn.com/releases_home.cfm

3. Provide a brief (up to 100 words) biography about the leader of this nominated company:

Peter Aquino is President and Chief Executive Officer of RCN Corporation. He
also serves as a Director on RCN Corporation's Board of Directors. Mr. Aquino
previously served as a Senior Managing Director of Capital & Technology
Advisors LLC ("CTA"), a telecom restructuring firm, from 2001 through 2004.
From January, 1995 to February 2002, Mr. Aquino served as Chief Operating
Officer for Veninfotel, LLC during which time he helped design, build, and
operate a "triple play" integrated broadband company in Venezuela. Prior to
1995, Mr. Aquino spent thirteen years with Bell Atlantic (now Verizon) in
various positions, including finance, regulatory, and corporate development.
Mr. Aquino earned his MBA at George Washington University in D.C. Mr Aquino was
elected to the COMPTEL Board of Directors in October 2005.