DSL SBC's Bright Spot


Despite a drop in quarter-over-quarter revenue and earnings, SBC
Communications Inc. posted substantial digital-subscriber-line additions in the
second quarter of 2002.

The regional Bell operating company tallied 213,000 DSL additions -- a
dramatic increase over a year ago, when it added 83,000 subscribers, and a
sequential gain from the first quarter's 183,000. SBC now counts 1.7 million DSL

But SBC was sanguine about the rest of its business. Revenue in the quarter
dropped to $13.1 billion from $13.6 billion a year ago. Earnings dropped to $1.8
billion from $2.1 billion, as SBC saw lower revenue from business phone lines
and residential service, where access lines dropped 3.8 percent.

Chairman Ed Whitacre said, 'We do not see indications of an upturn. We see no
revenue rebound this year.'

On DSL, Whitacre said, 'We expect to have a very good year.' He added that
cable MSOs 'continue to take some telephony customers,' but that trend has not
increased dramatically.

BellSouth Corp. posted weaker numbers, with second-quarter net income
dropping to $293 million from $880 million a year ago. As a result of the weak
economy, the company lowered its forecasts for revenue, capital spending and DSL
growth this year.

BellSouth added 75,000 DSL subscribers in the quarter, down from the first
quarter's 108,000. It was the fewest DSL additions for BellSouth since
third-quarter 2000, when the company was just gearing up its DSL business.

The company now estimates that it will have 1 million DSL subscribers by
year-end, down from an earlier forecast of 1.1 million.