Citing a difficult environment marked by a struggling economy, a tough competitive market and an uneven regulatory landscape, SBC Communications reported Q4 revenues of $13.3 billion (including its Cingular Wireless share), down 5.3% from $14.0 billion in the year-ago period but up from the $12.8 billion in revenue reported for Q3 2002. For the fourth quarter ended Dec. 31, 2002, SBC’s reported earnings totaled $2.4 billion, or $0.71 per diluted share, compared with $1.2 billion, or $0.35 per diluted share, in the fourth quarter of 2001. Total operating expenses declined 7.2% to $9.0 billion on a reported basis and 5.7% to $10.2 billion before special items and including proportionate results from Cingular. Some highlights from Q4:
- Added 245,000 DSL Internet subscribers, bringing its total to 2.2 million. DSL penetration is now above 10% for locations passed in California. SBC also noted a 50% decline in both acquisition and recurring costs for DSL since 2000.
- Lost 1.2 million retail access lines, including 810,000 access lines provided to competitors under UNE-p rules. SBC now provides more than 5 million UNE-p lines. More than 90% of the new UNE-p lines were for consumers, and 46% of those were in California. More than 90% of the new UNE-p lines were for AT&T and WorldCom (MCI).
- Wireline voice revenues for Q4 totaled $5.948 billion, down 9.0% from the year earlierOverall, data revenues (including e-services, integration and CPE sales) for Q4 totaled $2.382, down 3.4% from the year earlier. Data transport revenues grew 1.6% year-over-year and 1.7% sequentially.
- Achieved 2.5% consumer retail line penetration within 19 business days after launching long-distance service in California. SBC ended the year with 6.1 million long-distance lines, a 25% increase from the end of 2001.
- Cingular Wireless lost 121,000 subscribers in Q4, leaving it with a total of 21.9 million subscribers. Average revenue per user increased.
- Reduced capital expenditures to $1.8 billion, down 42% from $3.1 billion in Q4 2001. For the full year, SBC reduced capital expenditures to $6.8 billion, a 39% decline from $11.2 billion in 2001
- Reduced total debt, net of cash, by $4.7 billion during the quarter.
For its 2003 outlook, SBC noted the following trends and expectations:
- Continued negative access line trends, with long-distance entry in additional states and expansion of SBC’s recently announced company-wide bundling initiative helping to slow the rate of decline as the year progresses.
- Consistent long-distance growth, with entry in all remaining states
- Solid DSL growth, with company-wide penetration of locations passed reaching 10% by the end of the year.
- Modest growth in data transport revenues, limited by the weak economy and continued network cutbacks by wholesale customers
- Capital expenditures of $5 billion – $6 billion, or 12 -14%, excluding Cingular Wireless. SBC said its CAPEX budget reflects “weak demand and the fact that current UNE-P prices do not allow a positive return on investment.”
- In addition, SBC has started to expense stock options.
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