Originally created 11/28/01

Knology reports first profit



Knology Inc.'s multimillion-dollar fiber network investment is starting to pay off. The company reported its first positive earnings in third quarter 2001, proving smaller telecommunications companies can operate successfully without piggybacking on BellSouth's network.

"At first, people may have viewed us as an underdog," said Tony Palermo, vice president of operations for the broadband service provider. "But we're becoming large enough in our markets to matter. Our goal is to become the provider in our markets."

The company's earnings before interest, taxes, depreciation and amortization were $728,000 for third quarter 2001 - more than double the $700,000 loss recorded the previous quarter.

Knology officials Tuesday used the ceremonial opening of its 160-employee regional call center in Augusta to trumpet the company's growth, praise the Augusta market and predict even better returns in the future.

Knology has built networks serving Augusta, Columbus and West Point, Ga., and mid-size markets in South Carolina, Alabama and Florida.

The company has begun construction on a network to serve Knoxville, Tenn., and from there plans to enter the Nashville, Tenn., market.

Because the recession has made expansion capital scarce, Mr. Palermo said the company will concentrate most of its energy on increasing its presence in existing markets.

"Expansion is still a ways off, but we've got people ready to move fast as soon as they are able," he said. "We're still expecting to grow here, and we've got the people to do it."

Mr. Palermo called Knology's Augusta branch "the model" of a successful telecommunications operation. The division started in December 1998 with 50 employees, and in just three years has grown to 270, offering cable TV, local and long-distance telephone and high-speed Internet services primarily marketed as a bundled package.

"At the end of the day, the winner will be the person who provides the best level of convenience and service to the consumer," Mr. Palermo said. "We're confident that, on those grounds, we can compete with anyone."

ABOUT KNOLOGY

Headquarters: West Point, Ga.

Employees: 1,000 total, 270 in Augusta

Ownership: Privately held. Major shareholders include ITC Holding Co. Inc., SCANA Corp., Blackstone Group, J.H. Whitney & Co. and South Atlantic Ventures.

Product: Cable TV, telephone and high-speed Internet services, which are primarily marketed to residential consumers and business customers as a bundled package

Customers: 125,000

Markets: Augusta, Columbus and West Point, Ga.; Montgomery and Huntsville, Ala.; Panama City, Fla.; Charleston, S.C. The company plans to build networks in Nashville and Knoxville, Tenn., and in Louisville, Ky.

Web site: www.knology.com

Reach John Bankston at (706) 823-3352 or john.banks@augustachronicle.com.