DJ Long-Distance Cos Continue To Roll With Price Declines
16 Apr 08:15
By Johnathan Burns
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The nation's largest long-distance service providers
continued moving into higher growth markets during the first quarter as
long-distance revenue continued declining.
AT&T Corp. (T), Sprint Corp. (FON) and WorldCom Inc. (WCOM) are beginning to
bear little resemblance to the companies they were just two years ago.
Competition in long-distance is forcing them to more aggressively pursue data
and wireless services, among others, to drive revenue growth.
AT&T, the nation's largest long-distance service provider, is expected to
earn 5 cents a share in the first quarter on revenue of $17.3 billion,
according to a Thomson/Financial First Call survey of analysts.
However, the company is expected to again see a significant decline in
revenue from consumer long-distance customers, according to UBS Warburg
telecommunications services analyst Linda Meltzer.
"For the consumer segment, we anticipate a year-over-year decline of 15% for
the first quarter to $4.088 billion, down from $4.809 billion in the first
quarter of 2000, which has been the hardest hit of AT&T's segments," she noted.
Also, Meltzer doesn't expect the company's well-documented sales declines in
its business services segment to abate, projecting $6.97 billion in revenue for
the unit in the quarter.
However, if AT&T achieves that revenue number, the business services segment
will at least show it is staunching the sales declines that marked the unit
last year. Meltzer's estimate for the unit is only a 1.8% decrease from the
$7.08 billion.
She expects AT&T's broadband unit, which encompasses the country's largest
cable properties, to report revenue of $2.52 billion, up 3.1% from $2.45
billion. Meltzer also expects AT&T to have added 198,000 cable modem
subscribers, 131,000 cable telephony customersand 360,000 new digital cable
consumers during the quarter.
AT&T has been driving its business through its cable properties and wireless
tracking company, AT&T Wireless Group (AWE). The company has plans to split
into four different units.
After drastically cutting guidance last year, many on Wall Street are
expecting WorldCom to meet modest earnings expectations throughout, at least,
the first half of the year.
The company is expected to report earnings per share of 26 cents on revenue
of $9.83 billion. The company is also on the cusp of a restructuring, splitting
into a faster-growing digital services company carrying the WorldCom brand and
a cash-generating consumer long-distance unit bearing the MCI name.
Frank Governali, telecommunications analyst with Goldman Sachs & Co., said in
a recent note that the faster-growing WorldCom portion of the company should be
driven by 20.1% revenue growth from data, 19.9% growth from international and
39.1% from Internet.
However, the company's business services unit will suffer as lower voice
prices continue to work through the customer base.
"We expect (the) business unit's revenues to decline 8.5% year-over-year in
the first quarter," he said.
Sprint is expected to earn 37 cents a share, according to a Thomson Financial
survey of analysts, and revenue is expected to be around $4.4 billion.
Meltzer believes Sprint's revenue will be down slightly from last quarter and
a year ago to about $4.34 billion, impacted mainly by soft long-distance
revenue. Price declines there will be offset by solid growth in Sprint's local
services revenue and modest gains in data and Internet revenue.
Sprint is the only one of the three former long-distance kingpins that does
not have current plans to split into separate companies.
Meanwhile, long-distance and regional Bell hybrid Qwest Communications
International Inc. (Q) is expected to earn 13 cents a share on revenue of $5.07
billion.
Dan Reingold, telecommunications services analyst with Credit Suisse First
Boston Corp., believes the company will post revenue of $5.06 billion, an 11.9%
increase year-over-year led by accelerating revenue growth in the company's
commercial and consumer divisions of 22% and 6%, respectively. Qwest is the
combination of long-distance and data-centric Qwest and former baby Bell U S
West.
Reingold, who has referred to the company as a Bell on steroids, believes the
company will continue to grow revenue by introducing new products like digital
subscriber line service into the former U S West territory, adding
long-distance customers while taking advantage of its position as a data and
hosting service provider.
-By Johnathan Burns, Dow Jones Newswires; 201-938-2020;
johnathan.burns@dowjones.com
(END) DOW JONES NEWS 04-16-01
08:15 AM |
