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BellSouth, the US regional telecommunications group hardest hit by Hurricane Katrina, estimated that it would cost $400m-$600m to restore its network.

The figure is the first estimate the Atlanta-based group has given for the cost of the devastating hurricane. BellSouth cautioned, however, that the final cost could change as it gained more access to the most heavily affected areas.

“It is too early to project the total magnitude of destruction caused by Hurricane Katrina, but based on the information available today and without the opportunity to survey and physically assess the entire area, BellSouth’s initial estimate is a cost of $400m-$600m, including both capital and expense for network restoration,” the company said.

Local and federal authorities involved in the rescue effort after the hurricane have cited the widespread damage to both fixed and mobile communications links as one factor that delayed and hampered the recovery.

“BellSouth is engaged in active dialogue with its customers and is working to re-establish and re-route communications capabilities according to their needs,” said Bill Smith, BellSouth’s chief technology officer.

Based on data from the company’s field survey teams, BellSouth said an estimated 810,000 lines remained affected in the hardest-hit areas along the Gulf Coast in Louisiana, Mississippi and Alabama.

Out of 131 exchanges in that area, BellSouth said all but 19 were operating. Mr Smith said most customers should have their service restored within 30 days. Some analysts have warned that the disruption caused by the hurricane could accelerate the shift by consumers to mobile phones.

“The risk here is that a significant catalyst has just materialised, and has put hundreds of thousands of lines at risk of being replaced by alternative sources for voice services, whether these sources are VoIP or all-wireless,” said Goldman Sachs’ telecoms team in a note to investors.

On Tuesday Cingular Wireless, a joint venture between SBC Communications and BellSouth, said mobile phone coverage continues to greatly improve in areas hit hard by the hurricane.

Cingular, the largest US mobile carrier, said service in Mobile, Alabama and Jackson, Mississippi had been fully restored and the majority of coverage capacity has been re-established in and around the Biloxi area.

The company added that service crews were on the ground in New Orleans where services were working at reduced levels.

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