Local Phone Companies Enjoy Growth

By Morrison, Dan | THE JOURNAL RECORD, July 5, 1995 | Go to article overview
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Local Phone Companies Enjoy Growth


By Dan Morrison

Bloomberg Business News

GTE Corp. and others among the seven regional Bell operating companies will increase second quarter earnings by 5 percent to 13 percent, fueled by their success in signing up cellular customers, analysts said.

GTE, the nation's largest local phone company, is expected to post the biggest earnings growth of 11 percent to 13 percent. Analysts said the growth could be boosted by increased revenue outside its regular phone business.

US West Inc. and Pacific Telesis Group will have the lowest growth, analyst said. US West earnings are expected to be diluted by its U.K. operations. In May, Pacific Telesis said its earnings will drop 10 percent this year as the company faces increased competition in its local toll-call market.

Earnings at the other five Bell companies will be helped by an increase in new phone lines and calls, particularly in the Midwest and the Southeast.

There is "access line growth in the strong regions, like the Midwest and Southeast," said Bette Massick Colombo, analyst at S.G. Warburg Co. "Basically everyone is doing well, except for the coasts."

The number of phone lines should increase 3 percent to 4 percent in the second quarter, analysts said. Bell Atlantic Corp.'s phone lines are expected to grow the most _ 2.9 percent _ and BellSouth Corp.'s the least _ 4.6 percent. Ameritech's new phone lines will rise about 3.9 percent.

The regional Bells have seen phenomenal growth in the number of cellular phone subscribers during the past couple of years. Analysts expect GTE and the Bells to post a 40 percent to 45 percent increase in cellular customers in the second quarter, down slightly from 50 percent for all of 1994. That projection excludes Pacific Telesis, which spun off its wireless operations last year.

The cellular industry is signing up 28,000 customers per day. Monthly cellular phone bills are about $60, down from $100 in 1988.

Meanwhile, the Bells continue to cut costs and make efforts to enter the $70 billion U.

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