BellSouth posts Q1 results

BellSouth today reported a 30% boost in first-quarter profits off of the sale of its Latin America holdings, but despite gains in long-distance, DSL and wireless, saw declining revenues year of year due to continued access loss.

BellSouth posted earnings of $1.6 billion, or 87 cents a share, for the first three months of 2004, up 30% from the $1.23 billion in profits it recorded in Q1 of 2003. However, half of that profit came from special items, namely the sale of its Latin American operations in 10 countries to Telefonica and charges related to workforce reductions. Adjusted earnings for the first quarter thus equaled $888 million. Revenues for the quarter also fell slightly from $5.01 billion in Q1 of 2003 to $4.98 billion last quarter.

BellSouth added 636,000 long-distance customers in the first three months of the year, bringing its total to 4.6 million, and it added 156,000 net DSL subscribers to give it 1.6 million broadband customers total at the end of March. Its average monthly revenue per access line also increased, growing from $53.20 at the end of December to $53.68 by the end of March. Overall ARPU jumped 7.5% year over year. The improved numbers, however, were not enough to stem lost revenues from line losses. BellSouth reported that it lost 176,000 lines, or 3.9% of its install base, in the first quarter.

Chief financial officer Ron Dykes said that the first quarter’s extreme line loss numbers are due to a sudden surge of new competitors in BellSouth’s region since December. As AT&T, MCI and Sprint push their local service initiatives across the country, many states and markets that weren’t getting attention from the big IXCs have found themselves with other local service options for the first time. Dykes said that the initial marketing pushes did produce larger churn rates than usual, but once those carriers become established, the numbers should even out again.

"There is usually a surge of activity in new markets as opposed to more mature markets where we’ve faced competition for several years," Dykes said.

The biggest growth area for BellSouth by far was in its 40% stake in Cingular. Cingular added 554,000 customers in the quarter and brought in $224 million in revenues.