BellSouth Corp, the No 3 US telecommunications company, on Monday said second-quarter earnings fell 20 percent due to costs from the purchase of AT&T Wireless by its Cingular Wireless joint venture. Results excluding one-time items beat Wall Street forecasts thanks to Cingular's strength, but as with SBC Communications Inc, new sales of high-speed Internet lines came in weaker than some analysts had expected.
BellSouth, the dominant local telephone company in the US Southeast, said it earned $795 million, or 43 cents per share, compared with $996 million, or 54 cents per share, a year earlier.
Excluding merger and other one-time costs, and including its 40 percent share of Cingular, BellSouth earned $849 million, or 46 cents per share. Analysts on average had expected 43 cents per share, according to Reuters Estimates.
Including Cingular, BellSouth said revenue totalled $8.52 billion, up 27 percent. Cingular's $41 billion purchase of AT&T Wireless last year made it the largest US wireless carrier. SBC owns the other 60 percent of Cingular.
The Cingular-AT&T Wireless deal spurred a wave of consolidation in the wireless industry, including the pending merger of Sprint Corp and Nextel Communications Inc.
Several analysts said the BellSouth results were slightly ahead of expectations and the improvement over estimates was due to rapid growth in customers and earnings at Cingular.
BellSouth said it added 124,000 high-speed Internet lines during the second quarter, versus estimates from several analysts of roughly 200,000 new broadband customers. Growth in broadband customers is seen as a key measure for telephone companies as they face increasing competition from cable firms.
Atlanta, Georgia-based BellSouth told analysts in a conference call that digital subscriber line sales fell due to seasonal disconnection's and more emphasis on selling DSL lines with higher data speeds and monthly rates. The company has been less aggressive with price cuts and discounts for its DSL service than SBC.