BellSouth 1Q Profit Sinks on Debt Costs

ATLANTA – Phone service provider BellSouth Corp. cited hefty wireless merger integration expenses and debt costs as it reported that its profit fell more than 33 percent in the first quarter despite a slight rise in revenue.

The results, announced before the market opened Thursday, beat Wall Street expectations.

The Atlanta-based telecommunications company said it earned $1.06 billion, or 58 cents per share, for the three months ending March 31, compared to a profit of $1.6 billion, or 87 cents a share, a year earlier.

Excluding one-time items, BellSouth said it earned $718 million, or 39 cents a share. On that basis, analysts surveyed by Thomson Financial were expecting earnings of 38 cents a share.

Revenue rose to $5.09 billion, up 2.3 percent from $4.98 billion in 2004.

BellSouth is the dominant local service provider in nine Southeastern states. BellSouth and SBC Communications Inc. of San Antonio are the parent companies of Atlanta-based Cingular Wireless LLC, the nation’s largest cell phone company. Cingular bought AT&T Wireless for $41 billion last year, and there have been hefty integration costs in the months since.

The company said its year-ago profit numbers were spiked by the sale of its Denmark operations that quarter, without which BellSouth said it would have earned 39 cents a share.

BellSouth reported adding 253,000 DSL customers in the first quarter, and 1.4 million new Cingular Wireless customers. Cingular now has 50.4 million customers.