SBC Communications, the No 2 US telecommunications company, reported lower first-quarter earnings on Monday due to higher costs from the purchase of AT&T Wireless by its Cingular Wireless joint venture and a large gain a year earlier. SBC said it earned $885 million, or 27 cents per share, compared with $1.9 billion, or 58 cents per diluted share, in the same period a year earlier. Excluding $242 million in merger costs, SBC earned $1.1 billion, or 34 cents a share.
Revenues, including its 60 percent share of Cingular, rose 21.5 percent to $15.2 billion. Analysts on average had forecast earnings before items of 33 cents per share on revenues of $15.2 billion, according to Reuters Estimates.
Like other large local telephone companies, SBC has been attempting to shift more of its business to high-growth areas, such as wireless and high-speed Internet access, and rely less on traditional voice services.
Revenues in its wireline division totalled $9.3 billion, up 2.8 percent. SBC said it added 504,000 high-speed Internet subscribers, its largest quarterly increase, and 1.1 million long distance lines.
While its total access lines fell 1 percent during the quarter to 51.9 million, SBC said it added 16,000 primary residential phone lines, its first increase in five years.
SBC said it added 71,000 subscriptions to Echostar Corp's. DISH satellite television service during the quarter. The company has pushed satellite TV subscriptions as a way to combat competition from cable companies, and is testing its own video services.
Cash generated by SBC's operations fell to $1.3 billion from $2 billion a year earlier, due to a $1.1 billion increase in taxes and a $232 million contribution to employee benefit plans. SBC also said it received a $596 million cash payment from Cingular.
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