BellSouth EPS jumps

BellSouth today reported net earnings for the second quarter of $951 million, or 51 cents per share. That's three times the 14 cents per share ($263 million) the carrier earned in the second quarter of 2002.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 4.7% from a year ago, to $2.48 billion. However, revenues declined 2.4% year over year, totaling $5.64 billion for Q2 2003, compared to $5.78 billion in the year ago quarter.

The carrier’s Latin America operations showed the largest percentage drop, shrinking 5.7%, to $563 million from $597 million. BellSouth blamed the dip primarily on the impact of currency devaluation, particularly in Venezuela, where the local currency is down more than 50% from early 2002 levels in relation to the U.S. dollar. Those losses were partially offse by an uptick in Latin American wireless operations, where the company reported an increase of 377,000 customers during the quarter.

BellSouth’s domestic revenue showed the steepest dollar decline, dropping $86 million, or 1.9%, to $4.63 billion. BellSouth blamed the decline in its domestic operations on the lingering weak economy, competition and technology substitution. "Core services continued to feel the pressure from econnomic and competitive forces, with a continued trend in line loss," CFO Ron Dykes said.

On a brighter note, the RBOC added 103,000 net DSL customers during the quarter, for a total of 1.2 million. Additionally, the RBOC added 856,000 net long-distance customers in Q2 , and now serves 2.8 million total long-distance customers, which represent about 19% of the carrier’s total residential customers, and about 29% of its mass-market small business customers.

"Second quarter results showed continued success across BellSouth's growth sectors. Long-distance and DSL continued the momentum gained from the first quarter," Dykes said.

Another particularly bright spot during the quarter concerned the BellSouth Answers bundle that combines local, long-distance, Internet and wireless on a single bill. Dykes said the package experienced "strong net adds" during the quarter that pushed total customers to 2.1 million at quarter's end.

Cingular, which is 40% owned by BellSouth, performed well during the quarter, posting 540,000 net added customers compared to 189,000 net adds in the year ago quarter. BellSouth's share of Cingular revenue was $1.5 billion, an increase of $14 million compared to the same quarter last year. Churn during the quarter was reduced to 2.5%. BellSouth reported that Cingular's GSM/GPRS network covered about 2/3 of its potential customers; the company said it was on target to achieve better than 90% coverage by the end of the year.

BellSouth decreased its capital expenditures year over year by 28.7%, spending $729 million, compared to the $1.02 billion spend in Q2 2002. The carrier's workforce also decreased year over year. At the end of the quarter BellSouth had 75,779 employees, a 10.4% reduction from the same period last year.