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To: Erik H. East who wrote (2346)	4/9/1998 6:04:00 PM
From: William Cooper	Read Replies (1) \| Respond to of 11568

U.S. Telecoms' Q1 Earnings To Mirror Recent Trends By Jessica Hall NEW YORK (Reuters) - First quarter earnings for U.S. telecommunications companies should mirror the trends seen in recent quarters as integrated companies such as WorldCom show the strongest growth, analysts said. The Baby Bells are also expected to continue to benefit from demand for additional phone lines and data services. Revenues from secondary services such as Caller ID and call waiting will offset the Baby Bell's decelerating cellular growth, analysts said. Baby Bells' cellular revenues and subscriber growth may be lower than in previous quarters as companies see pressure from new entrants such as personal communications services, or PCS, providers, analysts said. The Baby Bells' average first quarter recurring earnings per share are expected to increase 9.6 percent, up from the year-over-year rise of 7.9 percent seen for the fourth quarter, Dan Reingold, an analyst with Merrill Lynch, said in a research report. SBC Communications and BellSouth are expected to lead the pack with 13 percent and 11.5 percent earnings growth respectively, he said. GTE earnings are seen softening due to investments in data and out-of-region operations. Excluding these investments, GTE's earnings from core operations will likely increase about 10 percent over last year, analysts said. Access line growth will likely hold steady at about 4.4 percent to 4.5 percent, and revenue growth for the group should accelerate slightly over rates seen in the fourth quarter, analysts said. In the long distance sector, the major companies are facing increasing pressure from resellers and new entrants. But cost- cutting efforts may offset investments in new businesses, such as local telephone service and data, analysts said. WorldCom should show the strongest growth, as the company benefits from its broad package of services -- including voice, data and Internet service, and international operations. WorldCom results will also reflect cost savings and benefits from its recent acquisitions, such as Brooks Fiber Properties Inc., analysts said. Sprint's earnings are expected to be hurt by its wireless investments and losses from its GlobalOne alliance. AT&T's consumer and business revenues trends should improve from the fourth quarter, when the company saw a slight decline in revenues. AT&T's ongoing cost controls also will be more evident, said Kevin Moore, a telecommunications analyst with BT Alex. Brown. MCI Communications' results may be affected by its discussions with the Securities and Exchange Commission on charges it took during the fourth quarter. Depending on the outcome of those talks, MCI may have to spread a portion of those charges into 1998 quarters, which may cut into first quarter results, analysts said.