SBC Communications reported Q4 growth in its wireline business, driven by a 10.5% rise in data revenues and increased penetration of bundled services such as DSL and long distance. Cingular Wireless, which is 60% owned by SBC, achieved a net subscriber gain of 1.8 million on a pro forma basis, more than double the pro forma net subscribers added in the previous quarter. Highlights of SBC's Q4 report include:
- Q4 2004 earnings from continuing operations were $754 million, or $0.23 per diluted share, including special items., down from Q4 2003 reported earnings from continuing operations of $888 million, or $0.27 per diluted share. Excluding fourth-quarter severance charges and income from disposed equity investments, SBC's fourth-quarter 2003 earnings were $1.0 billion, or $0.30 per diluted share.
- Q4 operating revenues were $10.3 billion, up 3.1% versus the fourth quarter of 2003. Wireline revenues totaled $9.3 billion, up 3.6% from results in the year-earlier fourth quarter, driven by growth in data solutions and bundled services, including DSL and long distance.
- DSL - SBC added 425,000 DSL lines in Q4 and ended the year with 5.1 million DSL lines in service. In 2004, SBC added 1.6 million DSL lines. DSL/Internet revenues were up 27.2% versus the fourth quarter of 2003.
- Long Distance - SBC's total long distance lines increased by 1.1 million in Q4 to end the year with 20.9 million in service, more than triple its in-service total two years earlier.
- Bundles - SBC's penetration of consumer retail lines with at least one key service - long distance, DSL, joint-billed Cingular Wireless or SBC | DISH Network video - increased to 61% at the end of the quarter, up from 44% a year earlier.
- Data Revenues - Wireline data revenues grew 10.5% to $2.9 billion in Q4, SBC's best quarterly data revenue growth in the past three years. For the full year, SBC's data revenues
totaled $11 billion, representing 30% of total wireline revenues. - Large-Business Market - SBC's revenues from enterprise customers were up approximately 5% versus the year-earlier fourth quarter. Retail hi-cap and data integration revenues were up 12.6% , as SBC completed additional large-business contracts that provide advanced data solutions, managed services and voice services, including VoIP.
- Access Lines - SBC's wireline retail consumer line base declined by 192,000 in Q4, an improvement from declines of 259,000 in the preceding quarter and 424,000 in the fourth quarter a year ago. SBC's business retail access line base declined by 74,000 in the fourth quarter. This compares with declines of 168,000 in the preceding quarter and 250,000 in the year-ago fourth quarter. Total switched access lines declined by 580,000 in the quarter. This total includes a 283,000 decline in UNE-P wholesale lines, which compares with a decline of 192,000 in the preceding quarter and an increase of 177,000 in the fourth quarter of 2003. SBC ended 2004 with 45.1 million retail lines and 52.4 million total switched access lines.
- Video, Integrated Services - Total SBC | DISH Network subscribers increased by 97,000 in the quarter to reach 323,000 in service - all added since the company began offering the integrated service in March 2004. In Q1 2005, SBC plans to begin construction of an advanced, IP-based network to deliver next-generation, integrated all-digital TV, super-high-speed broadband and IP voice
services. The company expects the network will reach 18 million households by the end of 2007. - In 2005, SBC expects continued growth in DSL lines at a pace consistent with 2004. SBC expects positive momentum and further expansion in the enterprise and national data market contributing to high single-digit% age growth in total data revenues. Overall, it is forecasting low single-digit% age revenue growth.
- SBC expects 2005 capital expenditures will be $5.4 billion to $5.7 billion, with investments in Project Lightspeed and data growth offset to a significant degree by savings in other areas.
- Cingular Wireless capital expenditures are expected to be $6.8 billion to $7.2 billion, reflecting network expansion initiatives and deployment of its 3G UMTS network with HSDPA (High-Speed Downlink Packet Access).
- 2005 free cash flow after dividends are expected to be approximately $3 billion.
