BellSouth reports 11 percent jump in 2Q profit

HARRY R. WEBER

Posted July 24, 2006

AP Business Wrier

ATLANTA - BellSouth Corp., the dominant local telephone provider in nine Southeastern states, reported Monday a more than 11 percent jump in second-quarter profit on a slight increase in sales.

The results, announced before the market opened, beat Wall Street expectations.

The Atlanta-based company said it earned $887 million, or 49 cents a share, for the three months ending June 30, compared to a profit of $795 million, or 43 cents a share, for the same period a year ago.

Excluding special items, BellSouth said its earnings from continuing operations was $1.08 billion, or 60 cents a share. On that basis, analysts surveyed by Thomson Financial were expecting earnings of 57 cents a share.

Revenue in the quarter rose 1.2 percent to $5.21 billion, compared to $5.14 billion recorded in the same period a year ago.

The company said revenue growth in its broadband data and long distance segments helped to offset declines in its traditional local phone service business.

It added 128,000 new DSL customers and 120,000 long distance customers during the second quarter.

Total access lines, however, were down 460,000 in the three-month period to 19.3 million. BellSouth cited seasonal issues, more people using cell phones to make calls and competition from cable providers.

For the first six months of the year, BellSouth said it earned $1.67 billion, or 92 cents a share, compared to a profit of $1.86 billion, or $1.01 a share, for the same period a year ago. Six-month revenue rose 1.4 percent to $10.38 billion, compared to $10.23 billion recorded a year ago.

BellSouth said it has incurred roughly $910 million in Hurricane Katrina-related expenses since the third quarter of 2005.

On Friday, BellSouth shareholders approved the sale of the company to AT&T Inc. for $67 billion in stock. AT&T shareholders later voted to issue new stock in the combined company. The deal, still subject to state and federal regulatory approval, is expected to close by the end of the year and expand the reach of the nation's largest telecommunications company. It would also put Cingular Wireless LLC, currently a joint venture of BellSouth and San Antonio-based AT&T, under one roof.