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Strong growth in DSL broadband subscriber numbers coupled with the solid performance of its Cingular mobile joint venture offset a continuing decline in traditional phone lines and helped SBC Communications, the second-largest US telecommunications company, report better than expected third-quarter results on Thursday.
SBC added 528,000 DSL lines in the period, its largest quarterly increase, and DSL revenues grew 23 per cent as growing numbers of dial-up customers switched to broadband service. The gains reflected the success of the company’s aggressive DSL pricing strategy. The group cut prices for new customers to $14.95 per month this year.
SBC is building an advanced fibre-optic network that will enable it to offer its customers TV and video services in competition with the cable companies. SBC’s IPTV (Internet Protocol TV) service is scheduled to launch early next year.
The effect of the switch from dial-up to broadband internet access was also evident on Thursday in results from Atlanta-based EarthLink, the fourth-largest US internet-access provider, which said third-quarter profit fell 3.2 per cent to $36.2m or 27 cents a share because it lost dial-up customers.
EarthLink’s overall revenue fell 7.8 per cent to $317m with dial-up revenues plunging 16.6 per cent and high-speed revenues increasing by a relatively modest 4.2 per cent.
At SBC, broadband gains helped offset the continuing erosion of its traditional local phone line base. The company ended the quarter with 50.2m access lines, a
5.1 per cent decrease from a year earlier, driven in part by a loss of 643,000 wholesale lines.
Net income fell to $1.25bn, or 38 cents per share, compared with $2.09bn, or 63 cents a share, a year earlier when it sold some directory businesses. Excluding one-off items in both years, SBC earned $1.5bn, or 47 cents per share, compared with $1.2bn, or 38 cents a share, a year earlier.
Including its 60 per cent share of revenue from the Cingular Wireless joint venture with BellSouth, SBC’s revenues totalled $15.57bn, an increase of 21 per cent over the year-earlier period.
Operating profit margins improved to 19 per cent from 16.5 per cent reflecting cost cuts. SBC has cut 8,200 jobs this year and said its plans to cut jobs were ahead of schedule. It now expects to reduce it workforce by about 10,000 this year.
SBC said it would buy back up to $1bn of its shares in the fourth quarter, with more share repurchases set for 2006.