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Costs associated with hurricanes and the expansion of its Cingular Wireless joint venture with AT&T held back first-quarter net income at BellSouth, the third-largest US telecommunications group, but underlying profits beat Wall Street expectations.
Net income at BellSouth, which agreed to be acquired by AT&T for $68bn last month, dropped 26 per cent to $784m, or 43 cents a share, down from $1.06bn, or 58 cents, a year earlier.
BellSouth said it expected the merger with AT&T to be completed by the end of this year, ahead of the early 2007 target previously mentioned.
The net income figures do not include the contribution from the company’s 40 per cent stake in Cingular but reflect the impact of $135m in restoration expenses for Hurricane Katrina and $31m from Hurricane Wilma during the quarter.
Revenues at the group grew modestly by 1.6 per cent to $5.17bn as growth in areas such as broadband internet access offset declines in others, such as local phone access lines. Including its proportion of Cingular revenues, BellSouth’s total revenues increased 4.5 per cent to $8.68bn.
Duane Ackerman, BellSouth’s chief executive, is credited with offsetting the decline in the group’s traditional phone business with investments in growth areas including the Cingular joint venture, broadband and business services.