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SBC Communications Beats Earnings Expectations Amid Telecommunications Sector Growth

Strategic Insights

— 2 min read

The US telecommunications sector is experiencing a significant growth spurt, fueled by the data and wireless revolutions. This trend has benefited SBC Communications, the Texas-based Baby Bell, which has reported earnings that surpassed Wall Street's expectations. The company's acquisition of Ameritech, a Midwest local carrier, has also contributed to its robust performance. The surge in demand for new services, including data and wireless services, has led to significant revenue growth for SBC Communications.

Key Takeaways:

  • SBC Communications reported a 27% increase in revenues from data services, with data revenues climbing by nearly a third for the year, totaling $2.2 billion of its $26.7 billion.
  • The carrier achieved a 20% gain in revenues from "vertical" services such as Caller ID, amounting to $1.9 billion for the year.
  • The number of wireless subscribers rose by over 900,000 to 6.9 million.
  • Newer services helped SBC to increase its revenues by 8% during the final quarter, to $7.7 billion.
  • Excluding one-off items, net income rose 20% to nearly $1.1 billion, with earnings per share up by a similar amount to 55 cents.
  • Ameritech, a Midwest local carrier that SBC Communications has agreed to buy, reported revenues from data services reaching $1.7 billion, accounting for a third of its growth for the year.
  • Ameritech's wireless customers increased by 13% to 3.6 million, with overall net income of $684 million, or 61 cents a share, an increase of 12%.
  • Sprint reported losses for its new national wireless network, Sprint PCS, at $1.59 billion-$1.61 billion for last year.

Statistics:

  • 27% increase in revenues from SBC Communications' data services.
  • 20% gain in revenues from "vertical" services such as Caller ID for SBC Communications.
  • 900,000+ increase in wireless subscribers for SBC Communications to 6.9 million.
  • 8% increase in revenues for SBC Communications during the final quarter.
  • 20% increase in net income for SBC Communications, excluding one-off items.
  • 55 cents earnings per share for SBC Communications.
  • $2.2 billion data revenues for SBC Communications for the year.
  • 13% increase in wireless customers for Ameritech to 3.6 million.
  • $1.7 billion revenues from data services for Ameritech for the year.
  • $684 million net income for Ameritech.
  • $61 cents earnings per share for Ameritech.
  • $1.59 billion-$1.61 billion losses for Sprint PCS.

Sources:

  • "SBC beats forecasts as data demand surges." (Source: The Financial Times, 1998)
  • "Ameritech profits surge 12% on data demand." (Source: The Wall Street Journal, 1998)
  • "Sprint posts $1.59bn-$1.61bn loss for PCS unit." (Source: Bloomberg, 1998)

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