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BellSouth profit up; Customers continue to migrate to cellular

Tue, 07/25/2006 - 7:31am

Copyright 2006 Toronto Star Newspapers, Ltd.
The Toronto Star

BellSouth Corp. said second-quarter profit rose 15 percent, buoyed by strong growth in cell phone and high-speed Internet services, which offset a fall in traditional phone subscribers.

BellSouth, which is being acquired by AT&T, is the first of the big U.S. regional phone companies to report quarterly results. Like most of its peers, it is relying on expansion in Internet and wireless communications for growth.

Profit, including BellSouth's 40 percent share of Cingular Wireless, rose to $1.08 billion (U.S.), or 60 cents a share, from $940 million, or 51 cents a share, a year earlier.

Analysts had expected 57 cents per share.

Excluding Cingular, BellSouth reported a profit of 49 cents a share, up from 43 cents a year earlier.

BellSouth said total access lines were 19.3 million at the end of June, down 460,000 from the end of March, as customers shifted to wireless and cable providers' telephone services.

The company added 128,000 new high-speed Internet customers during the second quarter, bringing its total number of broadband customers to 3.3 million.

Cingular, a joint venture between BellSouth and AT&T, said last Thursday that its second-quarter net income and revenue rose as it added new subscribers at a faster-than-expected pace.

BellSouth has also bundled service with satellite TV to compete against cable firms' packages of video, Internet and phone services.

BellSouth said it added 63,000 customers through its partnership with DirecTV Group Inc. It said the operating margin for its wireline business rose to 24.9 percent in the second quarter from 23.6 percent in both the first quarter and the year-earlier second quarter.

It said job cuts, as well as a fall in hurricane-related restoration costs, helped to lift the margin.

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