SBC reports big DSL adds, revenue shrinkage

Driven once again by growth in DSL, long-distance and contributions from Cingular, SBC Communications today reported third-quarter revenues of $10.2 billion, down three percent from the $10.6 it reported in the third quarter of 2002.

For the three months that ended Sept. 30, 2003, the RBOC reported earnings per diluted share of 37 cents, down from the 51 cents in the third quarter of 2002. Operating expenses totaled $8.6 billion for the third quarter, compared with $8.5 billion in the year-earlier period.

From an operational perspective, the company added 365,000 net new DSL lines during the quarter. That’s up 20 percent from net adds in the prior quarter and gives the company a total of 3.1 million DSL subscribers. Additionally, average revenue per user has held steady at around $40 per month and has helped the company slow the impact of its access line decline, said Randall Stephenson, chief financial officer for SBC.

"No one has sustained the upper trajectory growth [in broadband] that SBC has," he said during the company’s quarterly earnings call. "DSL is a highly retentive product."

Moving forward, SBC expects to be able to reach 80% of its subscriber base with DSL by early next year. However, Stephenson also used the call as a warning to those anticipating a big fiber buildout based on the combined RBOCs FTTP RFP.

"The costs right now on a fiber build are pretty significant," he said. "The cost points have to come down a long way before that becomes a broad strategy."