BellSouth Rides Cingular Gains

The company's fourth quarter beats estimates.
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BellSouth

(BLS)

blew past fourth-quarter targets Wednesday, boosted by strong numbers from Cingular.

The Atlanta regional phone giant posted a fourth-quarter profit of $618 million, or 34 cents a share. Excluding one-time events like hurricane restoration, BellSouth's earnings were 53 cents a share on sales of $8.66 billion. Those numbers compare with an adjusted profit of 46 cents on $8.5 billion in sales in the third quarter.

Analysts had expected BellSouth to post a fourth-quarter profit of 44 cents on $8.5 billion in revenue, according to Reuters Research.

News of the solid earnings performance helped drive the company's shares up 68 cents to $27.60 in premarket trading Wednesday.

"BellSouth's earnings for the quarter reflect the value of our asset mix as the industry continues to undergo a transition to new services and new competition emerges," CEO Duane Ackerman said in a press release.

Though the company's total number of phone lines dropped 6.2% last year, growth in wireless, DSL and long distance helped offset the erosion of BellSouth's core local phone service.

Cingular, co-owned by BellSouth and

AT&T

(T) - Get Report

, posted 1.8 million net new subscriber gains in the fourth quarter and cut its monthly churn, or subscriber defection rate, to 2.1%. Digital subscriber line customers increased by 207,000 to 2.9 million.

The company says it credited $48 million to customers affected by Hurricane Katrina. Total credits were $111 million in 2005 and BellSouth says it lost about 100,000 phone connections in the storm zone.

Total cost of hurricane restoration is about $800 million, BellSouth estimates. The company expects insurance to cover most of those expenses after it pays a $250 million deductible.