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Ma Bell Loves Mobile

Boosted by strong performance in its wireless unit, the reconstituted AT&T Inc. (NYSE: T) reported a 74 percent increase in earnings this morning, beating Wall Street estimates and indicating that the combination of SBC, Cingular Wireless , and the once-dominant telephone company in the world will be a strong one.

Third-quarter earnings rose to $2.17 billion, the company said, an increase of $1.8 billion over the same period in 2005, which came before SBC acquired the remnants of the original Ma Bell and changed its name to AT&T. A joint venture between AT&T and BellSouth Corp. (NYSE: BLS), which AT&T is in the process of acquiring, Cingular reported last week that it added 1.4 million subscribers in the third quarter and that net income more than tripled, to $847 million. (See Cingular's Subs-stantial Quarter.)

AT&T announced in March that it will acquire BellSouth, giving it full control over the nation's No. 1 wireless operator.

AT&T's revenue jumped 52 percent, to $15.64 billion from $10.3 billion. Because Cingular is still a joint venture, the wireless carrier's revenue is not technically included in AT&T's company-wide results.

"We had a great third quarter," said CEO Edward E. Whitacre Jr. in a conference call announcing the results. "Wireless delivered impressive margin expansion along with strong subscriber and revenue growth. Enterprise demand and revenue trends continue to be promising."

Conventional wired service, once the backbone of the largest telecommunications company in the world, continued to decline. Wireline revenues fell 4.9 percent from a year ago, with most of the decline coming in the former AT&T Corp. national mass market division.

The company's risky foray into next-generation residential services, known as "U-verse," which will offer high-definition television and high-speed Internet service, notched 3000 subscribers in its initial launch, which started rolling out in San Antonio, AT&T's home market, last June.

— Richard Martin, Senior Editor, Unstrung

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