AT&T Earnings Soar on Wireless Gains

Yet even as AT&T preens over its wireless developments, it isn’t snubbing its wireline units. Landline revenue did slump from the defection of 1.6 million residential users, but sales climbed in the enterprise, wholesale and U-verse divisions.

For example, AT&T landed plush contracts with oil giant Shell and coffee distributor Starbucks. Those deals contributed to a 22.9 percent increase in enterprise IP data revenue from services including VPN and hosting.

The carrier also predicted that its wholesale unit will stabilize in the second quarter. The division took a loss, but less than in previous quarters. Declines went from 7.3 percent in the first quarter of 2007 to 3.9 percent. Lindner said improvements will show now that consolidation has slowed and government-mandated UNE-P pricing no longer exists – AT&T now charges commercial rates for wholesale access. Lindner further said the wholesale numbers will improve when concessions from the BellSouth merger lift, which, at the earliest, will happen at the end of the year.

Concessions include not filing for forbearance, as Qwest and Verizon keep doing, and not charging companies like Google Inc. extra for carrying their traffic.

Finally, AT&T is plowing ahead with its U-verse project, whose spending and rollout have been revised from original expectations of widespread availability back in 2006. The company added 148,000 U-verse customers in the first quarter and now serves 379,000.

AT&T shares closed higher on Tuesday, up 22 cents at $37.81.

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