2006-02-27 Power PointAlameda's
Telecommunications Services
...SHARED VALUES.
Agenda
• Historic Overview
• Current Services and Subscriptions
• Financial Detail
-Past Performance
- Fiscal Year 2006
- Going Forward
• Next Steps
...SHARED VALUES.
Historic Overview
October 1996 The Bureau of Electricity installs a fiber -optic
backbone for command and control of its electric
system. Telecommunications business uses are
anticipated.
July 1997
December 1997
The Public Utilities Board forwards a
Telecommunications Business Plan to the City
Council.
The Public Utilities Board requests that the City
Council place revisions to the City Charter before
the electorate.
3
...SHARED VALUES.
November 1998
June 1999
August 1999
Historic Overview
Alameda's electorate approves Charter change
allowing the Bureau of Electricity to offer
telecommunications services and products.
The Public Utilities Board authorizes execution of a
contract with SIGCORP Communications Services
(later Vectren) to assume a "turn -key" role in
constructing and initially operating the City's
telecommunications system.
Alameda Power & Telecom becomes the corporate
identification for the City's electric and
telecommunications enterprises.
4
...SHARED VALUES.
September 1999
November 1999
January 2000
December 2000
Historic Overview
City Council awards a cable communications
services franchise to Alameda Power & Telecom.
The Public Utilities Board recommends a financing
package to the City Council. Terms include a $10
million equity investment to be used first before
any external financing and an authorization of
financing up to $20.5 million.
City Council authorizes a telecommunications
financing.
$16 million in Series 2000 B Certificates of
Participation are issued.
5
...SHARED VALUES.
Historic Overview
July 2001 The first retail cable television subscription.
January 2002 The City Council and Public Utilities Board
authorize a revised agreement with Vectren that
includes a $6.3 million issuance of Series 2002 A
Certificates of Participation and allows Alameda
Power & Telecom to assume full oversight for
completion of the telecommunications
infrastructure.
February 2002 AlamedaNET services are launched formally.
July 2002 Alameda Power & Telecom attains 5,000
telecommunications subscribers.
6
...SHARED VALUES.
September 2003
November 2003
December 2003
Historic Overview
A contract is awarded for completion of
construction of the telecommunications plant.
City Council and Public Utilities Board meet to
discuss the need for an additional $7 million bond
to fund the labor costs to complete Network
construction and start -up.
City Council includes a $2.2 million advance to
Alameda Power & Telecom as part of an
authorization to issue Revenue Bond Anticipation
Notes (BANs).
7
...SHARED VALUES.
Historic Overview
March 2004 Total subscriptions reach 10,000.
April 2004 $33 million in BANs are issued, incorporating a
refinancing of the $16 million Series 2000 B COPs,
$4.8 million construction fund, $11 million in
capitalized interest, and $1.2 million in cost -of-
issuance fees.
Second Quarter 2004 Appointment of new General Manager and new
management team organization.
8
...SHARED VALUES.
Historic Overview
June 2005 Network construction is certified complete.
October 2005 Total subscriptions reach 15,000.
December 2005 Federal legislation passes ending analog television
transmission in 2009.
9
...SHARED VALUES.
Households
12,000
10,000
8,000
6,000
4,000
2,000
0
Market Position
Household Market Share
Alameda Power &
Telecom
Comcast *
DBS *
* Competitor Market Share is estimated
Off-Air *
Ability to serve 28,431 of 30,226 households (94 %) with
10,163 households (36 %) subscribing to video (9,539)
and Internet services (5,794) as of January 2006.
10
...SHARED VALUES.
Subscriber Acquisition
FY 2004
11
11
11
11
11
FY 2005 FY 2006
FY 2007
FY 2008
2003 B/P Internet 2003 B/P Video •2003 B/P Total
oActual/Plan Internet - - •Actual/Plan Video - - •Actua1/Plan Total
11
FY 2009
,..SHARED VALUES.
Subscriber Acquisition Plan
— Continue as market share leader (achieved Fiscal Year 2005).
— Began door -to -door sales initiative.
— Obtain access agreements from Multiple Dwelling Unit (MDU)
property owners /managers.
— Market to residents without subscription services.
— Implemented "save desk."
12
...SHARED VALUES.
Subscriber Acquisition Plan
Continued
Video Customers Video Customers
w ithout Internet w ith Internet
4,495 5,044
— Internet growth is occurring at projected rates.
Growth potential in video subscribers without Internet.
— Internet system improvements allow expansion.
— New product tiers established to entice subscribers.
13
...SHARED VALUES.
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
($5,000,000)
($10,000,000)
($15,000,000)
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
($5,000,000)
($10,000,000)
($15,000,000)
Flow of Funds
2003 Projection
FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
2006 Projection
11
S15,295,000
111
$8_300
$10,000,000
000
11,600,000
$3
$5,090,000
130.000
5104,854 $840,000
53&620- $7,20-040-° $7,744,331
58,135,706
58,334,737
($1,400,000) (5200,000)
51,400,000
$2,800,000 $4,795,000
($4,209,000)
($6,140,000)
($4,400,000)
($7120.000)
18,624
FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
2006 Projection
FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
■ Operating Revenue ■ Net Income wlo Depreciation
$6
53&620- $7,20-040-° $7,744,331
58,135,706
58,334,737
53,128,650
$4,573
277
$IU4,854 $844,862
18,624
19,010
($2,008,864) ($2,886,977) ($2,533,345)
($4,207,995)
($6,142,730)
-
($3,101,44I)
x$7,053,115)
FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
■ Operating Revenue ■ Net Income wlo Depreciation
Loan Amount
15,000,000
13,000,000
11,000,000
9,000,000
7,000,000
5,000,000
3,000,000
1,000,000
(1,000,000)
Sources of Funding
Telecom lnterfund Summary
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
t Budgeted Inter- Division Advance
9,207,459
14,031,137
3,636,265
7,537,309
11,014,523
7,022,731
4,359,443
2,656,761
(42,247)
(45,069)
—0—Actual Inter- Division Advance
3,095,519
10,088,855
3,296,928
6,484,138
11,396,475
4,724,328
As stated in the CA FR, as of June 30, 2005 the Electric Fund had advanced
$39.086,243 to the Telecommunications Fund
—+— Budgeted Inter- Division Advance
15
— Actual Inter- Division Advance J
...SHARED VALUES.
Telecommunications
Capital Assets
$45,000,000
—
��
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
—
$15,000,000
$10,000,000
~
$5,000,000
-- AUK
�
-4
$0
FY
FY 2000
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY 2007
F
6,598,462
11,997,160
10,013,900
9,941,470
12,745,649
10,762,233
2,444,472
1,080,393
969,354
883,918
tBudgeted Capital Asset Addition
fActualC
1,271,049
12,501,368
4,019,496
3,456,004
8,778,267
13,750,959
spite 1As set Addition
..wilii■Gro s s CaptialAssets
1,271,049
13,772,417
17,791,913
21,247,917
30,026,184
43,777,143
46,221,615
47,302,008
48,271,362
49,155,280
As stated in the CAFR as of June 30, 2005 the total
Telecommunications Capital Assets were $43,777,143
—�— Budgeted Capital Asset Addition —•-- Actual Capital Asset Addition —lir—Gross Captial Assets
16
...SHARED VALUES.
Cash - Neutral Schedule
Telecommunications Revenues / Operating Expenses
$10,000,000
$8,000,000
--
$6,000,000
$4,000,000
$2,000,000
$0
FY2000
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
104,854
844,862
3,128,650
4,573,277
6,538,620
8,285,000
7,744,331
8,135,706
8,334,737
•••"10.0Reve nue s
- - - Operat ing Expenses Excl. Depre
2,409,965
4,158,500
6,726,192
9,994,745
7,510,302
7,481,384
10,299,971
9,395,699
7,174,105
7,405,750
*Operating expenses does not include debt services or capital expenditures
17
...SHARED VALUES.
$2,000,000
$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
Disbursements
Fiscal Year 2006
$1,791,625
$845,484
$816,706
$716,550
$668,520
$575,047
—
552,127
$447,947
-r
T
T
—T
July
August September October November December January February March April May June
Note 1 : $1,590,000 Accounts Payable from FY 2005
recorded in July 2006
Note 2 : This chart does not include salaries or Admin
costs
18
...SHARED VALUES.
Benefits to
Our Community
— Alameda P &T is lower priced than Comcast.
— Due to our competitive pressure, Comcast in Alameda is lower
priced than surrounding communities.
— Increased value in services and products.
— Local control is responsive to resident directives.
— Telecommunications Facilities Rental: Appx. $168,000 /year.
— Franchise Fee: Appx. $250,000 /year.
— Utility Users Tax: Appx. $360,000 /year.
19
...SHARED VALUES.
Council Partnership
— Legislative support:
• A -Ia -carte programming
• Telephone company as local "franchise"
• Continued local control.
Long -term arrangements for head -end facility.
— Support "BUY ALAMEDA" via strongly promoting Alameda P &T's
services.
20
...SHARED VALUES.
Next Steps
— Fiscal Year 2007 Budget:
• Consolidation of customer service center functions
• Transition from construction to maintenance model
• Elimination of contract personnel and temporary personnel
• Reduce expense and capital project spending.
— Preparation for refinancing of bond debt:
• Meet with underwriters to review bond models
• Independent valuation of the telecom system
• Independent evaluation of revenue, expense, and customer
acquisition forecasts.
21
...SHARED VALUES.