AT&T Wireless Profit Plunged in 1999 as Network Spending Soared
--From AOL News-- Cooters
New York, Jan. 7 (Bloomberg) -- AT&T Corp.'s wireless unit, in which the largest U.S. telephone company plans to sell tracking shares, saw profit tumble 82 percent in the first nine months of last year as surging demand sparked higher spending.
The wireless unit's net income fell to $44 million in the nine months ended Sept. 30, from $246 million in the year-earlier period. AT&T disclosed the decline, the first time it has broken out profit figures for the unit, in a filing with the U.S. Securities and Exchange Commission as it prepares for what may be the largest share sale ever by a U.S. company.
Network and other costs of service climbed 65 percent, to $2.74 billion from $1.66 billion, as AT&T boosted spending to accommodate burgeoning cellular phone usage. Soaring subscriber growth and higher-than-forecast phone usage has frustrated subscribers in some markets with busy signals, and forced the company to buy more switches, radios and other network equipment.
AT&T, with about 12 million wireless customers in the U.S. as of September, said last month said it will sell up to 19 percent of its wireless operations to the public in the first half of this year. Analysts have said the offering could raise up to $10 billion.
Tracking stocks have grown popular as phone companies move into emerging businesses such as wireless and cable television, which are valued on cash flow, or earnings before interest, taxes, depreciation and amortization.
The high expenses associated with building wireless networks, which can weight on profit, makes it more attractive for telephone companies to separate cellular businesses.
Net income at AT&T Wireless in the first nine months of 1999 included one-time gains from equity investments and the sale of assets. Without these items, the unit's loss would have narrowed to $3 million in 1999 from $177 million the previous year, the filing said.
Sales at AT&T Wireless for the nine months ended in September 1999 surged 41 percent to $5.49 billion from $3.90 billion.
The New York-based company's shares fell 5/16 to 48 13/16 in New York Stock Exchange trading.
Jan/07/2000 17:14 |
