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Managing Editor

BellSouth, SBC post Q3 earnings

Oct 22, 20034 mins
Financial Services IndustryWi-Fi

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 posted earnings per share of $0.51 in the third quarter of 2003, compared to $0.34 in the third quarter of 2002. Third quarter revenue increased 5.4% 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% 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% of its residence and 34% 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% 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% 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’s revenue was $1.6 billion, a gain of 4.7% compared to the same quarter a year ago. Cingular’s revenue for the quarter was $4 billion, up 4.6% from the prior-year period. BellSouth owns 40% of Cingular while SBC owns the remaining 60%.

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

SBC 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% 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% from the second quarter.

SBC began marketing long distance in Michigan on Sept. 26 and received FCC 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% lower than in the second quarter and 40% 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% from its increase in the second quarter of this year and down 82% from its increase in the third quarter last year.

In the Midwest, the net increase in wholesale lines was 275,000, up 3% from the second quarter of this year but down 22% from the third quarter of 2002. The Midwest accounted for more than 85% 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% in the third quarter, compared with 19% 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% of its potential customers, ahead of its target for year-end 2003.

Managing Editor

Jim Duffy has been covering technology for over 28 years, 23 at Network World. He covers enterprise networking infrastructure, including routers and switches. He also writes The Cisco Connection blog and can be reached on Twitter @Jim_Duffy and at

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