SBC Communications reported record net adds in both long distance and DSL service for Q2, however overall revenues declined, margins for voice services were down and the overall number of local access lines in service continued to fall. SBC credited service bundling, especially its promotion of unlimited, all-distance calling plans, for a 37% sequential decline in UNE-P line losses to competitors. Q2 revenues totaled $10.2 billion, compared with $10.8 billion in the year-ago period. Reported earnings per diluted share were $0.42, compared with $0.53 in the year-ago quarter (excluding Cingular Wireless). Highlights of the quarter include:
- added 2.3 million long distance lines, up 54% compared to its net gain in Q1. In July, SBC passed the 10 million mark for long distance lines, up 65% since the beginning of the year. More than one million consumers have subscribed to the all-distance, unlimited calling bundle.
Added 304,000 DSL lines, bringing its total to 2.8 million. Q2 was the best quarter to date for DSL subscriber gain. DSL revenues and subscriber totals are up 60% compared to this time last year. SBC's DSL penetration rate nationally for locations passed is 9%. In California, SBC's DSL penetration is 12% of locations passed. About 66% of SBC's access lines are now DSL eligible.
Data revenues in Q2 were up 2.7% compared to Q2 2002 and up 0.5% sequentially. High-cap revenues declined 3.5% year-over-year. Data revenues now represent 27% of SBC's overall wireline revenues.
31% of SBC's residential customers subscribed to a service bundle with more than one key service (local access line, long distance, DSL or wireless).
Reduced total debt, net of cash, by $2.0 billion during the quarter and by $11.9 billion, or 47%, from the end of the second quarter of 2002. Total debt net of cash at the end of the second quarter was $13.4 billion.
SBC's out-of-region ATM backbone expansion was completed in June.
40,000 net adds at Cingular Wireless, nearly triple the first-quarter total.
the new Echostar alliance is expected to deliver significantly greater value to the service bundles, without major investment from SBC.
