SBC Highlights Strong LD, DSL Line Growth

In reporting second quarter results, SBC Communications Inc. said it was the best quarter ever reported by a Bell company for net adds in both long distance and DSL service. Ed Whitacre, chairman and CEO, says this adds further support to SBC’s strategy of bundling.

"Superior execution, aggressive product bundling and excellent customer service highlighted our second-quarter results," says Whitacre. "We changed the competitive landscape on April 1 by introducing highly attractive rates and innovative product bundles that have delivered outstanding results in terms of new sales, customer retention and improved stability in our core business.

"We had a tremendous quarter in long distance and DSL — the best our industry has seen. We also saw solid, sustainable progress at Cingular," says Whitacre. "We maintained good cost discipline — despite increased marketing spending and postretirement benefit cost pressures — while generating strong free cash flow and returning value directly to shareowners.

"And in just the past week, we have taken decisive actions to move us closer to achieving two of our long-term strategic objectives," says Whitacre. "We will soon be the first telecom company with an integrated satellite TV offering, and long distance freedom in all 13 states looks to be only a few months away. We are pleased with the results that our new marketing and bundling initiatives are delivering in states where we have long distance relief, and we eagerly anticipate launching long distance service in our remaining five states this year."

During the quarter, SBC added added 2.3 million long distance lines, bringing its total to 9.8 million, up 77 percent from the end of the second quarter of 2002. In July, SBC passed the 10 million mark for long distance lines in service.

At the same time the company added 304,000 DSL Internet subscribers, bringing its total to 2.8 million, up 60 percent from year-ago levels. This is the sixth consecutive quarter of sequential DSL subscriber growth for SBC, the nation's leading DSL provider.

For the three months ended June 30, 2003, SBC reported earnings per diluted share of $0.42, compared with $0.53 in the year-ago quarter. Second-quarter revenues totaled $10.2 billion, compared with $10.8 billion in the year-ago period. These revenue figures do not include proportionate results from Cingular Wireless, the nationwide wireless company that is 60 percent owned by SBC. Cingular's revenues for the quarter were $3.8 billion, up 1.0 percent from the prior-year period and up 5.5 percent from the first quarter of this year. SBC's second-quarter operating expenses totaled $8.5 billion, compared with $8.7 billion in the year-ago period. These expense figures do not include proportionate results from Cingular. Cingular's expenses for the quarter were $3.0 billion, up 0.1 percent from the prior-year period.

Year-over-year comparisons were affected by competition, increased costs related to pension and postretirement benefits, and by accounting changes implemented at the beginning of this year.

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