BellSouth, SBC post Q3 earnings

FRAMINGHAM (10/22/2003) - Two RBOCs recorded third quarter results that are heading in opposite directions, while the wireless assets they co-own added a significant number of new subscribers.

BellSouth Corp. posted earnings per share of US$0.51 in the third quarter of 2003, compared to $0.34 in the third quarter of 2002. Third quarter revenue increased 5.4 percent to $5.7 billion from $5.4 billion in the third quarter of 2002. Capital expenditure in the third quarter of 2003 was $764 million and the year-to-date figure is $2.1 billion, representing a reduction of 25.8 percent compared to $2.9 billion in the first nine months of 2002.

BellSouth added 654,000 long distance customers in the third quarter. The company now serves 3.4 million long distance customers, including approximately 24 percent of its residence and 34 percent of its mass-market small business accounts.

Driven by DSL, data revenues of $1.1 billion in the third quarter of 2003 grew 5.5 percent compared to the same quarter of 2002. BellSouth added 111,000 net DSL customers during the quarter, for a total of 1.3 million.

Total access lines of 23.9 million declined 4 percent compared to a year earlier, impacted by the economy, competition and technology substitution, the carrier said. Residence and business access lines served by BellSouth competitors under UNE-P increased by 188,000 in the third quarter, the smallest increase since the fourth quarter of 2001, according to the company.

BellSouth's share of Cingular Wireless LLC's revenue was $1.6 billion, a gain of 4.7 percent compared to the same quarter a year ago. Cingular's revenue for the quarter was $4 billion, up 4.6 percent from the prior-year period. BellSouth owns 40 percent of Cingular while SBC owns the remaining 60 percent.

BellSouth's share of Cingular operating income was $195 million compared to $246 million in the third quarter last year.

SBC Communications Inc. posted third quarter earnings of $0.37 per share, compared with $0.51 in the third quarter of 2002. Third-quarter revenues totaled $10.2 billion, compared with $10.6 billion in the year-ago period.

SBC's revenue decline was due to access-line losses, which were partly offset by subscriber growth in long distance and DSL.

SBC added 365,000 net new DSL lines during the third quarter -- up 20 percent from net adds in the prior quarter -- bringing total high-speed Internet lines to 3.1 million. SBC added 1.7 million long distance lines in the third quarter, bringing its total to 11.5 million, nearly double year-ago levels and up 17 percent from the second quarter.

SBC began marketing long distance in Michigan on Sept. 26 and received U.S. Federal Communications Commission approval last week to begin offering long distance in Illinois, Indiana, Ohio and Wisconsin on Oct. 24. These five states represent almost 20 million access lines, or more than one-third of the company's total.

SBC believes long distance freedom in the Midwest will help reduce access-line losses and enhance customer win-back and retention.

In its long distance states, consumer retail access lines lost in the third quarter of 2003 were 34 percent lower than in the second quarter and 40 percent lower than in the third quarter a year ago. Across all its long distance states, the company added 48,000 wholesale lines (resale and UNE-P) in the third quarter, down 55 percent from its increase in the second quarter of this year and down 82 percent from its increase in the third quarter last year.

In the Midwest, the net increase in wholesale lines was 275,000, up 3 percent from the second quarter of this year but down 22 percent from the third quarter of 2002. The Midwest accounted for more than 85 percent of SBC's companywide increase in wholesale lines during the third quarter of 2003.

The number of customers who buy an SBC service bundle that includes long distance, DSL or wireless increased to 36 percent in the third quarter, compared with 19 percent at the end of 2002, the carrier said.

Cingular, meanwhile, added 745,000 net total cellular and PCS customers in the third quarter, exceeding total net customer additions for the first half of 2003. It was the highest number of new customers in 10 quarters, according to BellSouth.

Cingular ended the quarter with 23.4 million total customers. The company's GSM/GPRS network buildout now covers 92 percent of its potential customers, ahead of its target for year-end 2003.

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