Updated from 2:06 p.m.

Cingular Wireless

expects to break into the black next year, thanks to increasing benefits from its recent acquisition of AT&T Wireless.

The company, the nation's largest wireless service provider, told analysts and investors on a conference call Wednesday that it has completed "key integration activities ahead of schedule." Parent

SBC

(SBC)

-- which owns Cingular along with Atlanta telco

BellSouth

(BLS)

-- said it expects that Cingular's buy of AT&T Wireless will start adding to SBC earnings a year ahead of schedule, in 2006.

SBC expects the $41 billion deal to sap its earnings by 8 cents a share this year and 20 cents a share in 2005. After that, though, the company expects to benefit from "increased operating synergies and reduced accounting impacts," as compared to what SBC and BellSouth estimated when announcing the deal on Feb. 17.

Back then, Cingular saw the deal adding 2 cents to 2007 earnings at SBC, a mere fraction of its 28-cent-add forecast of Wednesday.

Cingular CEO Stan Sigman said Wednesday at the company's financial and operational update that the integration of AT&T Wireless was going well. Integration costs and capital spending will be "in line" with projections, Sigman said, while other costs will be less than anticipated. Those trends should help Cingular to reach profitability in 2005, a year ahead of schedule, said Sigman.

The executive's comments come as Cingular seeks to squeeze more out of AT&T Wireless, once a leader in the U.S. cell-phone business but recently a laggard facing massive customer defections. Analysts say Cingular will need to improve its network and its customer service if it's going to hold onto its lead over No. 2 player

Verizon Wireless

.

To that end, Cingular late Tuesday confirmed it would split an important network upgrade project among telecom gear giants

Ericsson

(ERICY)

,

Lucent

(LU)

and

Siemens

(SI) - Get Report

.

Last winter, Cingular was more circumspect in quantifying the impact of the AT&T Wireless deal. "We expect to generate more than $1 billion in operating expense and capital expenditure savings in the second year, 2006," Sigman told analysts on a conference call in February. "And more than $2 billion in annual savings beginning in 2007. And we believe this is conservative."

Meanwhile, Cingular said Wednesday it will increase capital spending 17% next year, hitting about $7 billion. That's up from the $6 billion the company expects to spend this year. The Cingular executives on the conference call said that would be a peak level for network spending and that future budgets will likely fall back to a normal range of spending, closer to 15% of revenue.

For suppliers, this isn't necessarily good news. Though Cingular has increased its outlay, $3 billion in annual spending from AT&T Wireless has been wiped out.

On Wednesday, SBC rose 43 cents to $25.60 and BellSouth added 62 cents to $27.44.