AT&T earnings rise

AT&T Inc on Monday posted a better-than-expected rise in third-quarter profit, helped by growth in Internet and mobile phone services, as well as merger-related cost cuts.
The biggest US telephone company said profit excluding merger-related costs rose 58.2 percent to $2.4 billion, or 63 cents per diluted share, compared to $1.5 billion, or 47 cents a share, in the same quarter a year earlier. Analysts polled by Reuters Estimates, on average, expected earnings of 58 cents a share before the special items. AT&T shares were up nearly 1 percent in premarket trade at $34.70, compared to its close on the New York Stock Exchange on Friday at $34.44. Like most telecommunications companies, AT&T relies heavily on its wireless venture, Cingular, for growth amid a fall in traditional landline subscribers. Todd Rethemeier, an analyst at Surterre Research, said cost-cutting had also helped the results, contributing more than he had expected to earnings.
AT&T's consolidated revenue, which does not include sales from its 60 percent stake in Cingular, totalled $15.6 billion for the quarter ended September 30, up from a pre-merger $10.3 billion in the third quarter of 2005. Cingular, which AT&T co-owns with BellSouth Corp, said last Thursday its third-quarter profit nearly quadrupled on stronger-than-expected subscriber growth and savings from its integration of AT&T Wireless.
AT&T said net income was $2.2 billion, up 73.8 percent from the year-ago quarter, or 56 cents per share. That included costs related to SBC Communications Inc's acquisition of AT&T Corp last November, and costs from Cingular Wireless' acquisition of AT&T Wireless in the fourth quarter of 2004. AT&T is preparing to merge with BellSouth, a move that would reinforce its position as the nation's biggest telecommunications service provider.
The Federal Communications Commission has scheduled a meeting to vote on the AT&T-Bellsouth merger on November 3. AT&T said Internet subscriptions also helped to bolster sales amid a fall in landline connections. High-speed Internet subscribers, including those for DSL and AT&T's U-verse fibre-optic system, increased 25.5 percent from a year earlier to 8.2 million.
Primary consumer lines, in contrast, fell by 242,000 in the third quarter, compared to a fall of 114,000 in the third quarter of 2005. AT&T's third-quarter operating income margin was 19.5 percent before merger-related costs. That compared with a pre-merger margin in the year-earlier quarter of 19.0 percent.