Tuesday, January 24, 2006

BellSouth Cites DSL Growth and Hurricane Katrina Damage

BellSouth reported Q4 2005 revenue of $8.7 billion, up nearly 2 percent sequentially driven by DSL growth and Cingular customer growth. Normalized net income of $965 million grew $27 million compared to the third quarter of 2005.

During the fourth quarter of 2005, revenue was reduced by $48 million due to Katrina-related billing credits and the Company estimates approximately 60,000 access lines were disconnected in the affected area. The Company incurred $244 million of incremental expense and $189 million of incremental capital during the fourth quarter.

For the full year, revenue credits totaled $111 million across all three business segments. BellSouth estimates approximately 100,000 access lines have been disconnected as a result of the hurricane. For the year, incremental expenses for wireline network restoration and capital are approximately $500 million.

In September 2005, BellSouth made an initial estimate of the future cost for network restoration, including capital and expense, of $400 million to $600 million. Based on current assessments to complete the restoration effort, the company now expects this amount to total $700 million to $900 million. A portion of the cost associated with the Hurricane Katrina recovery effort are expected to be covered by insurance.

Some operational highlights for Q4:

  • added 204,000 net DSL customers, giving the company a total of 2.9 million DSL customers at year's end.

  • network data revenue was $1.25 billion, up 7.7 percent from the same period of the prior year. Retail data revenue grew 15.9 percent from the same period last year driven by a 32.5 percent increase in retail DSL revenue and 4.4 percent growth in revenue from other retail data services. Wholesale data declined 2.8 percent as growth in wholesale services to wireless carriers partially offset declines in traditional wholesale data transport services. For the year, network data revenue grew 5.1 percent totaling more than $4.7 billion.

  • BellSouth now serves almost 7.2 million long distance customers, a 57.7 percent penetration of its mass-market customer base, and a total of 523,000 customers have included DIRECTV services in their communications packages at year-end.

  • While access lines were down 6.2 percent for the year, revenues grew as a result of higher penetration of broadband and long distance services. As of Dec. 31, 2005, total access lines were 20.0 million, down 409,000 compared to Sept. 30, 2005. Other than the 60,000 estimated disconnects associated with Hurricane Katrina, access line loss continues to be primarily driven by wireless substitution and, to a lesser extent, by competition from cable telephony providers. Retail residential access lines were down 189,000. Retail business access lines increased 12,000 driven by Small Business gains. As expected, Commercial Agreement/UNE-P (Unbundled Network Elements-Platform) access lines resold by BellSouth competitors were down compared to Sept. 30, 2005.

See also