Company highlight opportunites and strategies for 2004, including plans to layoff 3,000 to 4,000 in Q4

December 9, 2003

3 Min Read

NEW YORK -- SBC Communications Inc. (NYSE: SBC) today discussed the company's opportunities, priorities and strategies for growth in 2004.

Speaking at the Lehman Brothers Fifth Annual Telecom, Trends & Technology Conference here, SBC Chief Financial Officer Randall Stephenson also underscored SBC's commitment to returning value to shareholders and highlighted five key priorities:

1. Broaden the Bundle
SBC believes much of its growth potential will come from expanding its ability to bundle various communications products and services, Stephenson said. Bundling reduces churn and increases average revenue per user (ARPU), he said. In the Southwest and West, where the company has sold long distance for several quarters, ARPU is about $6 higher per month than in the Midwest, where the company received approval to sell long distance only this fall.

2. Ramp Up Growth Products
In support of SBC's bundling strategy, the company has accelerated subscriber penetration in key growth products. SBC already has the strongest DSL growth in the industry, Stephenson said, and this year it has greatly accelerated growth in long distance, adding 5.4 million lines in just nine months.

3. Move Cingular Wireless to a Strong Growth Track
In the last three quarters, Cingular Wireless - of which SBC owns 60 percent - has:

  • Increased high-quality subscriber growth each quarter and in the third quarter alone increased sequential revenue growth more than 4 percent.

  • Moved ahead of schedule in its conversion to GSM network technology.

  • Took several steps to enhance Cingular's network coverage, including a pending spectrum acquisition from NextWave Telecom and the signing of new roaming agreements.

  • Created an industry-leading wireline/wireless integration product called FastForwardTM that combines the mobility of wireless with the security and reliability of wireline.

    4. Expand in Large-Business Markets
    The large-business market is a natural opportunity for SBC, Stephenson said, since nearly half the Fortune 500 companies are headquartered in areas where SBC has long-standing local service relationships. SBC's current share of this market is small, but now that it has approvals to offer long distance in all of its 13 states, the company plans to move forward aggressively in the large-business sector, Stephenson said.

    5. Deliver Value to Shareowners
    Over the past two years, SBC has used cash to reduce net debt from $25 billion to $13 billion. This year, SBC has focused on returning value to shareowners through a regular dividend increase of 5 cents, plus three additional dividends totaling 25 cents. Later this week, SBC's board is expected to evaluate the company's policy of returning value to shareowners, including both SBC's dividend and share repurchase program.

    SBC also is investing in technology and resources that will both enhance customer service and reduce costs, Stephenson said. Productivity improvements that are now under way are expected to save $1.3 billion annually in expense and capital costs by 2006.

    As part of an ongoing staff reduction program, SBC plans to reduce its force by 3,000 to 4,000 in the fourth quarter, both through attrition and an enhanced retirement program. As a result, SBC expects to take a one-time, pre-tax cash charge of up to $150 million, or as much as 3 cents per diluted share, in the fourth quarter.

    SBC Communications Inc.

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