SBC Communications is seeking to renegotiate its agreement with EchoStar Communications under which the Texas-based telecoms group resells Echo-Star's Dish satellite TV service.
Rick Lindner, SBC's chief financial officer, confirmed on Thursday during a conference call with analysts to discuss SBC's second-quarter results the two companies had held talks about “how to evolve the relationship”.
SBC is understood to be seeking to reduce the “acquisition costs” the wholesale price it pays EchoStar for the Dish service, but Mr Lindner said nothing had been decided.
He said in spite of speculation on Wall Street, the relationship between the two partners remained strong. “We are looking at changes that will be of benefit to both companies.”
Mr Lindner's comments came in response to questions about a sharp decline in the number of new Dish subscribers SBC signed up in the latest quarter. SBC added only 10,000 net new Dish subscribers in the second quarter, well below the previous quarter's 70,000.
The SBC finance chief said the numbers reflected a shift in marketing strategy as SBC geared up to begin selling its “Project LightSpeed” fibre optic-based advanced video service next year. As part of that shift he said SBC planned to focus its marketing of the Dish service in those areas where it does not plan to roll out its own IPTV service and where cable TV competition is fiercest.
SBC's second-quarter earnings fell by 14 per cent partly due to SBC's share of merger costs at its Cingular Wireless joint venture. There was a charge to cover the costs of terminating a contract with WilTel Communications. Net income fell to $1bn, or 30 cents a share, from $1.17bn, or 35 cents, a year earlier. Excluding the Cingular merger and contract termination costs, net income would have been $1.4bn or 43 cents a share.
Sales rose by a modest 1.3 per cent to $10.3bn, bolstered by strong sales to business customers and strong broadband DSL subscriber growth offsetting a continued decline in residential consumer access lines.