Wholesale circuit-switched voice revenue will grow at a compound annual growth rate of 3.8%, reaching $12.8 billion by 2008, a study by Atlantic-ACM projected. “Most of the resurrected growth in this sector is being driven by aggressive and successful retail long distance service rollouts by the RBOCs,” said Atlantic-ACM Vp Taher Bouzayen: “As a result, wholesalers of traditional voice will experience channel growth.” For example, Bouzayen estimated AT&T’s wholesale voice revenue would grow at 12.6% annually, reaching $4.2 billion by 2008. WilTel, he said, is also “positioned for strong growth” in its wholesale voice business with revenue predicted to grow at 13.7% annually to $1.6 billion by 2008. “Major contracts -- with SBC in the case of WilTel and big wireless deals in the case of AT&T -- are at the center of each of these firms’ growth prospects,” Bouzayen said -- www.atlantic-acm.com/reports/.
Vivendi’s drawn-out effort to sell its U.S. film and TV assets surged forward Tues. with the announcement that it had signed an agreement with GE to enter into exclusive negotiations to merge those assets with GE’s NBC. The deal would create the world’s 6th-largest media company.
Long distance private line and data revenue will grow at 6% annually over the next 5 years, a study by Atlantic-ACM said. It predicted growth in data and fixed revenue in bundles would stem the 3.8% rate of revenue contraction for traditional voice services as the market began to stabilize in 2004. Overall, it said, the long distance voice and data market is expected to decline at a compound annual growth rate of 0.4% in 2002-2008. The report said the long distance industry contracted 14% to $81.4 billion in 2002. It said price depreciation and bundles were the major factors contributing to high near-term revenue shrinkage. “Although there was an increase in the total number of minutes in 2002, price depreciation drove a revenue decline,” said Atlantic- ACM Vp Taher Bouzayen: “The early stages of migration from stand-alone long distance products to bundles contributed to overall shrinkage.” The report also projected the market share of AT&T, MCI and Sprint, which together held 67.5% of the market in 2002, would decrease to 53.7% by 2008. “While small carriers will account for some of this displacement, the lion’s share will be captured by the RBOCs,” the report said.
Nextel reported 2nd-quarter net income of $309 million, more than double its $123 million a year ago, and said revenue jumped 19% to $2.6 billion. It said it added 591,000 subscribers in the quarter for a total of 11.7 million and its customer churn improved to 1.6%, “the best since 1998.” Nextel said its average revenue per user jumped $2 from the first quarter to $69, and total min. of use on the Nextel National Network grew 34% to 24.5 billion. Nextel CFO Paul Saleh said the company was “ahead of [its] expectations” and had revised its financial guidance for the full year. It said it expected to have a free cash flow of $600 million or more, up from $500 million, and operating income before depreciation and amortization of $3.9 billion or more, up from $3.8 billion. It also predicted it would add 1.9 million or more net subscribers, up from 1.7 million.
News Corp. Chmn. Rupert Murdoch in a conference call with analysts Tues. revealed some of his specific plans for DirecTV, pending approval of his company’s acquisition of parent Hughes Electronics: “With the addition of DirecTV, we will have built the world’s first truly global television platform, a platform that will immediately serve more than 25 million subscribers across the globe.” Murdoch said that he welcomed “stiff competition… from the larger and dominant cable companies” in the U.S. and that the transaction would “energize” the multichannel market.
SBC’s persistent difficulties in meeting wholesale service performance standards prompted Ill. and Mich. regulators to review the carrier’s performance plans. SBC was assessed $3.8 million in penalties by the former Ameritech states for wholesale service performance shortfalls in January, up 62.7% from the $2.34 million paid for Dec. The Mich. PSC adopted a staff recommendation to modify SBC’s performance plan to “increase the incentives” for compliance. Mich. assessed SBC $702,003 for Jan. performance shortfalls, up from $420,972 in Dec., for a total of $8.6 million. Mich. CLECs had complained of inaccurate data in SBC’s compliance reports and urged the PSC to verify the accuracy of the data and to modify the performance plan. The PSC changed the plan to eliminate certain “K-table” factors that amounted to an SBC nonperformance allowance. Those same factors already have been eliminated in Ill., Ind. and Wis. The PSC said the net effect would be to increase the penalties for noncompliance. The agency also ordered SBC to publicize the fines it paid to the state and the credits it gave to CLECs. In Ill., the Commerce Commission staff said it would be reviewing the latest SBC wholesale penalty payments to determine whether the current penalties were providing an adequate incentive for compliance. In Ill., SBC for Jan. must issue $1.9 million in CLEC credits and pay a $743,200 fine to the state. That $2.7 million total is well above the Dec. penalty of $1.6 million, for a total of $46.54 million since July 2000 when the performance enforcement program was implemented in the former Ameritech region. In the other Great Lakes states, Ohio fined SBC $233,245, up from $201,412 in Dec., for a total of $13.8 million. In Ind., SBC was penalized $84,820, up from the Dec. figure of $61,645, for a total of $471,213. SBC also was assessed $92,485 in Wis., up from $23,688 in Dec., for a total of $4.2 million. The Wis. penalties have been stayed pending the final outcome of SBC litigation over the performance plan.
Legislation introduced Thurs. in the Senate would prevent the FCC from holding auctions for Multichannel Video Distribution & Data Service (MVDDS). The proposed Emergency Communications & Competition Act (ECCA) (S-564), introduced by Sen. Landrieu (D-La.), is designed to speed deployment of MVDDS, which she said would reduce cable rates and create more broadband access. Northpoint probably would be the biggest benefactor of such legislation, sources said.
AT&T said it had repurchased $3.8 billion of debt for cash, reducing its $22.6 billion debt 1/6. It said it bought back $1.16 billion of 6.4% notes due March 2004 and $2.59 billion of its 6.5% notes due March 2013. Fitch Ratings said Fri. it cut AT&T’s rating outlook to negative from stable, following similar action by Standard & Poor’s earlier in week (CD Jan 28 p7). Fitch affirmed AT&T’s senior unsecured debt rating at BBB+ and its F2 short-term rating. It said AT&T Business Service revenue was affected by pricing pressures in its long distance voice segment and slowing growth in enterprise data businesses. Fitch said decreased IT spending and increased competition would “impact AT&T Business Service’s ability to return to a revenue growth environment in the near term.” However, it said its rating reflected company’s strong capital structure, strong liquidity position, free cash flow generation capabilities, expectation of further debt reduction. Fitch said AT&T’s liquidity position was supported by $8 billion cash at end of 2002 and $5 billion of available bank and accounts receivable securitization facilities. It said scheduled maturities consisted of $2.4 billion in 2003, including $1 billion short-term debt, and $2.4 billion in 2004. However, it said, after considering completion of AT&T’s debt repurchase offer, 2004 maturities would stand at $1.2 billion.
Overall ad spending rose 3.8% in 3rd quarter, including gains in most types of media, Nielsen Media Research reported. Network TV was up 8% in quarter, trailing only local newspapers (9.5%), and network radio ad revenue increased 7%, Nielsen said.
News Corp. said first-quarter profit increased to $162 million from $73 million last year, with revenue increasing 12% to $3.8 billion and operating income 51% to $548 million. Growth was driven primarily by substantial increases in TV and cable network programming segments, it said. TV segment had operating income of $188 million, up $136 million from year ago. Fox TV stations’ operating income grew $93 million, benefiting from stronger ad market, it said. Cable unit, including Fox News Channel and Fox News Network, reported operating income of $118 million, up $86 million, reflecting strong growth across all of company’s cable TV channels, it said. Fox News operating income rose $29 million on increases both in affiliate and ad revenue, company said, with affiliate revenue being driven by 10% increase in subscribers. Fox Sports operating profit improved 87% primarily due to strong results at Regional Sports Networks and FX channel, it said.