BellSouth boosts Q3 profit, revenue

Cingular wireless, mass-market broadband fuel growth.

BellSouth, buoyed by growth in both its wireless and wireline businesses, this week posted a 27.5% hike in third quarter earnings on a 5.4% rise in revenue.

For the period ended Sept. 30, BellSouth recorded $1.2 billion in earnings and $9 billion in revenue, which includes the carrier's 40% share of Cingular Wireless' revenues and expenses.

In wireless, Cingular added 1.4 million customers, totaling 58.7 million customers at the end of September. Cingular’s third quarter revenue totaled $9.6 billion, an increase of 9.2% over the comparable quarter a year ago and up 3.6% sequentially. Service revenues, which exclude sales of handsets and accessories, were $8.7 billion -- up 12.2% year-over-year and 4.4% sequentially.

Cingular's average revenue per user for the quarter edged higher to $49.76 from $49.65 in the third quarter last year.

BellSouth’s Communication Group posted revenue of $4.7 billion in the quarter, a 2.4% increase over the third quarter of 2005. Revenue growth in mass-market broadband and long distance services and growth in emerging data services offset revenue declines from traditional access line services, BellSouth says.

Network data revenues exceeded $1.3 billion, a 12.8% increase over the third quarter of 2005, due to improvements in both retail and wholesale data services. Retail data revenues grew 19.5% year-over-year driven in part by DSL sales.

Wholesale data revenues rose 3.3% as growth in wireless transport more than offset declines in general transport services, the carrier says.

During the third quarter, BellSouth added 176,000 DSL customers, reaching a total of more than 3.4 million broadband DSL customers. The majority of new customers chose BellSouth's higher speed 3Mbps and 6Mbps offerings, the carrier says.

BellSouth also added 118,000 long distance subscribers in the quarter. At the end of the third quarter, BellSouth served 7.6 million long distance customers representing approximately 63% of its mass-market customer base.

Total access lines numbered 19 million, down 6.9% from the third quarter of 2005. For the quarter, total access lines declined 301,000. Retail residential access lines declined 135,000 reflecting losses to wireless substitution and cable telephony service. Retail small business access line gains were 20,000, offset by a decline in retail large business access lines of 13,000 lines.

Wholesale lines declined 174,000 from the second quarter.

Capital expenditures for the quarter were $730 million, a decline compared to the first and second quarters of 2006. Year-to-date capital expenditures were $2.8 billion and included $265 million in expenditures for Hurricane Katrina restoration efforts.

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Copyright © 2006 IDG Communications, Inc.

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