NEW YORK, Jan 18 (Reuters) - U.S. telecommunications companies will meet or slightly exceed Wall Street estimates, benefiting from customers' increasing demand for extra phone lines, Internet access and services such as Caller ID and call waiting, analysts said.
The U.S. phone companies, especially the Baby Bell companies, typically report consistent, ''almost boring utility-like earnings. Data and vertical services are where an extra boost or surprise may come from,'' said one industry analyst who declined to be named.
The Baby Bells have managed to offset competition from new carriers by promoting services such as data, Internet access and special features like Caller ID and call waiting, analysts said.
The Baby Bells' earnings are expected to grow an average of 11.8 percent in the fourth quarter, down from 12.1 percent in the third quarter, but much stronger than the 7.9 percent growth seen a year ago, according to a Merrill Lynch research report.
SBC Communications Inc. (NYSE:SBC - news) and BellSouth Corp. (NYSE:BLS - news) are expected to lead the group with mid- to high-teens earnings growth, while U S West Inc.'s (NYSE:USW - news) earnings will increase only about 5.8 percent since it continues to see dilution from its investments in its wireless PCS business, the report said.
The Baby Bells are expected to show average line growth of about 4 percent as consumers clamor for extra lines for fax machines, Internet access and teen phone lines, analysts said.
Line growth may ease somewhat starting this year as customers look at cable modems as an option for Internet access and choose wireless phones as a substitute for second phone lines, some analysts said.
''Investors will be watching line growth this year to see if there are any signs of erosion,'' said Robert Wilkes, a telecommunications analyst with Brown Brothers Harriman.
In the long distance market, MCI WorldCom Inc.'s (Nasdaq:WCOM - news) earnings will benefit from the company's strong position in the fastest-growing segments of the industry, such as data, Internet and international, analysts said.
These growth areas will more than offset slowdowns in MCI WorldCom's voice long distance business, Sanford Bernstein analyst Tod Jacobs said in a research report.
Results for the newly combined MCI WorldCom will also reflect cost-cutting and integration efforts, including an announcement in December to cut about 2,000 workers or almost 3 percent of its workforce, analysts said.
MCI WorldCom's traffic growth is again expected to exceed that of its peers significantly, analysts said.
AT&T Corp. (NYSE:T - news), the No. 1 U.S. long distance company, should meet Wall Street expectations as it continues to cut costs and to register gains in its wireless and local telephone businesses, analysts said.
AT&T said in October it expects its fourth quarter operational earnings to be in the range of $0.95 to $1.00 a share. Separately, in a filing with the Securities and Exchange Commission, the company said it may take a restructuring charge related to its joint venture with British Telecommunications Plc (quote from Yahoo! UK & Ireland: BT.L).
AT&T will continue to show lackluster revenue growth as declines in the consumer long distance market offset strength in the business long distance and wireless units, analysts said.
Sprint Corp. (NYSE:FON - news), meanwhile, should see strong long distance revenue growth of more than 9 percent, analysts said.
Sprint's international joint venture, Global One, will continue to weigh on its quarterly results and the local service side may see some weakness, analysts said.
Company..............Q4 Forecast*..Year Ago..Reporting Date
Ameritech Corp. (NYSE:AIT - news).. $0.61....$0.55....Jan 21. AT&T Corp. (NYSE:T - news)..........$1.00....$0.69....week Jan. 25 Bell Atlantic Corp. (NYSE:BEL - news).$0.69..$0.61....Jan. 27 BellSouth Corp. (NYSE:BLS - news)...$0.41....$0.36....Jan. 25 GTE Corp. (NYSE:GTE - news).........$0.88....$0.73....Jan. 28 Lucent Technologies Inc. (NYSE:LU - news)
* Q1 $1.00...$0.86....Jan. 21 MCI WorldCom Inc. (Nasdaq:WCOM - news) $0.22...$0.10....week Feb. 8 SBC Communications (NYSE:SBC - news) $0.54...$0.46....Jan 21. Sprint Corp. (NYSE:FON - news).......$0.87...$0.35....Feb. 2 U S West Inc. (NYSE:USW - news)......$0.73...$0.60....Jan. 22 Qwest Communications International Inc. (Nasdaq:QWST - news)
......$0.02...$0.07....week Feb. 2.
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