Bell Atlantic profits up 24% in 4th-quarter Strong results reflect boost in cell phone segment of company

January 24, 1996|By Michael Dresser | Michael Dresser,SUN STAFF

Buoyed by soaring growth at its cellular phone affiliate, Bell Atlantic Corp. yesterday reported strong profits for the fourth quarter of 1995 and a record earnings increase for the full year.

The Philadelphia-based telephone company said its profits for the three months ended Dec. 31 were $391.9 million, a 24 percent increase over the 314.9 million it earned in the same period in 1994.

Per-share earnings rose to 89 cents a share from 72 cents a year earlier.

Adjusted to exclude a debt refinancing charge, the company's operating results came in at 90 cents a share -- slightly more than the consensus of analysts' estimates. Bell Atlantic's stock price fell 62.5 cents yesterday to close at $67.375 amid general concerns about the federal budget.

"Results for 1995 demonstrate the tremendous vitality of our business," said Bell Atlantic Chairman Raymond W. Smith.

Total operating revenues decreased to $3.15 billion, compared with $3.49 billion in 1994. The drop was largely caused by an accounting change resulting from the shift of its wireless operations to Bell Atlantic Nynex Mobile, a partnership with Nynex Corp.

The results from the partnership reflected the continuing boom in the cellular telephone business. The combined business reported a million new subscribers for the year, 383,000 of whom were added during the fourth quarter, for a total of 3.36 million.

Bell Atlantic said the fourth-quarter figure represents a record for quarterly growth by a U.S. wireless telephone company.

Bell Atlantic Nynex's pretax income for the full year more than tripled, from $125.4 million to $379.6 million. Operating cash flow margin increased to a whopping 40.1 percent last year, compared with 28.8 percent a year earlier. The cost of acquiring a new subscriber dropped 12.1 percent.

While the wireless segment posted the most dazzling numbers, Bell Atlantic's bread-and-butter network also showed steady gains. Revenue from the network grew 2.9 percent for the year and 3.2 percent for the quarter as strong demand for second residential lines and Centrex services overcame government-ordered reductions in long-distance access charges.

Meanwhile network operating expenses increased 2.3 percent from the previous year, reflecting a 4.9 percent cut in the work force from 1994 staffing levels.

Bell Atlantic continued to show growth in its revenue from network access charges, which increased 4 percent to $845.2 million from $813.2 million, during the fourth quarter of 1995.

Such access charges are the focus of complaints from MCI Communications Corp. and other long-distance companies, which estimate they account for 45 percent of the cost of long distance calls.

Yesterday MCI claimed that a study it sponsored showed Bell Atlantic-Maryland earns almost $250 million a year in excess profits on the access charges it imposes on long distance companies.

The report is designed to bolster MCI's case as it goes before the Federal Communications Commission and state regulators to argue that Bell Atlantic is overcharging customers and overestimating its costs.

Shannon Fioravant, a spokeswoman for Bell Atlantic, said MCI has "grossly underestimated" the cost of universal service in Maryland at $18 million. She estimated the cost at $60 million instead.

"This is another tactic pulled out of a tired old bag of tricks that MCI and AT&T have used on access charges," she said.

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