Cingular Profit Falls

Cingular posted solid third-quarter results Wednesday, adding 657,000 new users and boosting revenue by 5% from a year ago.

For the quarter ended last month, the Atlanta-based venture of SBC (SBC) and BellSouth (BLS) reported income of $145 million, down 21% from a year ago. But revenue rose to $4.26 billion from $4.06 billion a year earlier, driven by strong gains in text messaging, mobile instant messaging, mobile email, downloadable ringtones, games and photo messaging.

Cingular said it had 2.8 million gross customer additions for the quarter and that its monthly customer defections, as measured by so-called churn, were roughly flat at 2.8%.

"Ahead of our proposed acquisition of AT&T Wireless, Cingular executed at a high level," said CEO Stan Sigman. "We grew the business, with net adds significantly above our run rate the past three quarters. Our brand is strong, as evidenced by our record gross adds. Response to the customer care innovations we have implemented this year continues to be positive. And our results this past quarter demonstrate solid momentum ahead of our proposed acquisition of AT&T Wireless."

Cingular agreed last February to pay $41 billion to buy AT&T Wireless, which continues to struggle with customer service issues. The Redmond, Wash., carrier reported Tuesday that its own churn number bounced up to 3.7% in the latest quarter, showing that subscribers continue to flee the service even as the industry enjoys rapid growth.

The companies expect to close the $15-a-share deal by year-end. The combination would make Cingular the No. 1 U.S. cell-phone service provider, supplanting current leader Verizon Wireless, which is itself a venture of New York telco Verizon (VZ) and British wireless giant Vodafone (VOD).

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