RealTime IT News

BellSouth Realignment Continues

BellSouth's second-quarter profits rose as the company continued to shift its focus from residential landline service to wireless and broadband offerings.

The regional carrier earned $939 million, or 51 cents per share, which is a 4 percent bump over the same period last year. Revenue of $5.1 billion was flat.

BellSouth added 120,000 DSL customers during the three-month period, pushing its total to 1.7 million -- on track to meet its goal of 2 million by year's end.

To battle Comcast and Time Warner Cable, the company is adding satellite service from DirecTV to its bundled service. BellSouth Answers, the residential line/TV package, has launched on BellSouth's Web site and aims to lure new customers and retain existing ones.

"It's very early," Ron Dykes, BellSouth's CFO, said in a conference call with analysts. "[The offer] will be in all channels in August, so by the end of the third quarter we'll have a better idea of the impact on the bundle or other products."

Wireless is another focus area. BellSouth owns 40 percent of Cingular, which is acquiring AT&T Wireless. That merger, which will significantly expand Cingular's network, should close in the fourth quarter.

BellSouth's share of Cingular's revenue was $1.7 billion in the second quarter, a gain of 7.3 percent compared to the same quarter a year ago thanks to new users and increased data revenues from messaging and other applications.

Meanwhile, the company continues to make investments in new technologies, such as fiber-to-the-premises . For now, FTTP will only be considered for new housing developments where it's easier to lay fiber. In addition, a network-hosted VoIP offering for businesses and consumers entered trials last month.

The focus on new technologies is essential for the company's growth because it offsets losses in its traditional phone service. At quarter's end, BellSouth had 21.8 million business and consumer access lines, down 3.7 percent compared to a year earlier.

Dykes said it's unclear whether AT&T's decision to stop marketing long-distance service to new customers will help bring new customers to BellSouth.

"If there is a de-emphasis of [AT&T's] marketing effort, we'll see that quickly," said Dykes, who noted that there are a number of other carriers that would compete for that business.

Another uncertainty is the company's labor situation. BellSouth is also currently in negotiations with the Communications Workers of America. Dykes declined to comment on the status of discussion.

BellSouth's results could bode well for Verizon Communicatoins , which announces its results tomorrow.