San Antonio, Texas-based SBC also announced it would buy back as many as $1bn worth of its shares in the current quarter, with more buybacks planned for next year.
Profit of $1.2bn, or 38 cents a share, versus $2.09bn, or 63 cents a share, during the same quarter last year, when it sold a chunk of its directory businesses.
Highlights of the quarter were gains in DSL and Cingular Wireless’ results, which trended better than projected, said SBC chief executive Edward Whitacre, in a statement.
Without Cingular Wireless’ merger- and hurricane-related costs, which totaled $637m and $96m respectively, SBC would have earned $1.5bn, or 47 cents a share. Atlanta-based Cingular Wireless, a joint venture of SBC and BellSouth, is the largest mobile carrier in the US. SBC owns 60% of Cingular Wireless.
SBC saw its best-ever quarterly increase in DSL lines, adding 528,000, or 31% more lines from a year ago. DSL/Internet revenue grew 22.8% in the quarter from last year.
SBC’s strategy to offset growing competition from cable companies for its traditional telephony business by expanding into new businesses, which includes its planned $16bn purchase of AT&T Corp, as well as by growing Cingular Wireless.
SBC saw a 5.1% year-over-year drop in its traditional phone lines, ending the quarter with 50.2 million lines.
The company is working to build a high-speed fiber-optic network to offer customers IP-based TV and video services, slated to launch early next year.
SBC also is waiting for regulatory approval in three states for its proposed AT&T merger, having already cleared regulatory hurdles in 33 states and the District of Columbia. Federal and international reviews also are under way and SBC said it expects the deal to close later this year.
