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AT&T, Verizon Get Sales Boost From Wireless Subscribers

January 27, 2006|From Bloomberg News

AT&T Inc. and Verizon Communications Inc., the two biggest U.S. telephone companies, posted fourth-quarter sales Thursday that beat analysts' estimates, buoyed by gains in wireless subscribers.

AT&T, in its first results since the company was created by the combination of SBC Communications Inc. and AT&T Corp., said revenue increased 25% to $21.6 billion, including its wireless unit. Net income more than doubled.

Verizon's revenue rose 5.8% to $19.3 billion. Profit dropped 45%.

Verizon and AT&T leaned on their wireless units to generate growth while waiting to reap the benefits of their long-distance acquisitions. Verizon bought MCI Inc. this month and AT&T's $16.5-billion combination closed in November. Mobile-phone and high-speed Internet customer gains countered losses in the local-phone divisions.

Shares of AT&T rose 30 cents to $25.51. New York-based Verizon rose 30 cents to $31.68 and have added 5.2% this year.

AT&T's net income climbed to $1.66 billion, or 46 cents a share, from $688 million, or 21 cents, a year earlier. Sales rose to $13 billion from $10.3 billion, excluding the mobile-phone joint venture Cingular Wireless.

Profit excluding one-time items was 48 cents, beating average analyst estimates of 45 cents, according to Thomson Financial. Cingular added a record 1.82 million subscribers.

Chief Executive Edward Whitacre is trying to bolster the company to battle competitors such as cable television companies.

Line losses accelerated to 5.6%, the fastest pace in at least eight quarters. The company added 425,000 customers for its digital-subscriber line, or DSL, service.

Verizon's net income fell to $1.66 billion, or 59 cents, from $3.04 billion, or $1.08, a year earlier, when the company had a gain. Wireless added a record 2 million customers.

Verizon is spending an estimated $22 billion to build a fiber-optic network to add new products it can sell at higher prices.

CEO Ivan Seidenberg is putting the company's focus on selling Internet, television and wireless products to overcome defections by traditional phone customers.

Profit, excluding some costs, was 64 cents a share. That met the average estimate of analysts in a Thomson Financial survey.

Verizon lost 886,000 access lines in the quarter but gained 613,000 Internet customers who use DSL or the company's fiber service, giving it 5.1 million total at the end of the fourth quarter.

The company added 209,000 long-distance customers, giving it 18.4 million.

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