BellSouth Profit Rises on Cingular Growth, Meets Expectations
NEW YORK – BellSouth Corp. (BLS), the No. 3 U.S. regional telephone company, on Wednesday reported a 34 percent rise in quarterly profit as growth at its Cingular Wireless joint venture helped offset declines in its wireline business.
As many consumers forsake second and sometimes even primary home phone lines for mobile phones and high-speed Internet connections, local phone operators like BellSouth are depending on wireless and broadband for growth.
BellSouth, which owns Cingular Wireless with AT&T Inc. (T), said fourth-quarter profit rose to $965 million, or 53 cents a share, from $720 million, or 39 cents a share, a year earlier.
Revenue rose to $8.6 billion from $7.9 billion, roughly in line with analysts' estimates.
Cingular said on Tuesday it added 1.8 million customers in the quarter. BellSouth owns 40 percent of Cingular.
BellSouth said its home and business phone lines declined 6.2 percent from a year earlier but it was boosted by growth in its broadband Internet business, which added 204,000 net new customers in the quarter.
Lehman Brothers analyst Blake Bath had expected 182,000 new broadband customers and said that Cingular's growth was also better than he expected.
"The wireless results we knew yesterday from Cingular were quite stronger relative to our expectations. That is the main growth driver for the company," Bath said.
Shares of BellSouth, the dominant local phone operator in the Southeast, rose 20 cents to $27.12 at the opening of trading on the New York Stock Exchange.
The shares have risen almost 6 percent in the last three months, compared with an increase of more than 2 percent for a Standard & Poor's index of telecommunications providers .
The shares have recently outperformed the shares of peers such as AT&T and Verizon Communications, which are integrating big acquisitions and upgrading their networks.