AT&T, the nation's top telecom company, said on Thursday fourth-quarter earnings rose, bolstered by growth in Internet and wireless subscribers.
The San Antonio company also raised its forecast on the expected benefits from its merger with BellSouth, a deal that closed in late December and reinforced its position as the biggest U.S. phone company.
AT&T said profit, excluding merger-related costs and other special items, rose 38.5% from a year earlier, to $2.4 billion, or 61 cents a share. The results include AT&T's 60% stake in Cingular Wireless -- a stake that rose to 100% when AT&T acquired BellSouth, which had owned the remaining 40% in Cingular. Results exceeded a Thomson Financial consensus estimate by two cents.
Including costs such as those related to recent mergers, AT&T's net income rose 17.1% from the same quarter a year earlier to $1.9 billion, or 50 cents per diluted share.
AT&T will host a webcast at 10 am to discuss results.
Formed through a merger of SBC Communications and AT&T in 2005, the company's acquisition strategy has given it a competitive advantage to offset declining sales of traditional phone lines, analysts say.
Cingular, which is being rebranded as AT&T, said on Wednesday its fourth quarter profit nearly quadrupled, boosted by stronger-than-expected customer additions. It was the last quarter Cingular will report as a standalone entity.
The wireless unit earned $782 million, compared with $204 million in the same quarter of 2005. The company reported revenue of $9.8 billion for the fourth quarter of 2006.
AT&T also said its high-speed Internet subscribers totaled 8.5 million, up 23.4% from a year earlier.
AT&T said it realized $1.1 billion in total synergies from the SBC merger, compared to its forecast last year for $600 million to $800 million in synergies.
The company said it expects synergies from the BellSouth merger to be higher than previously forecast. It said it expects total synergies to be $0.8 billion to $1.2 billion in 2007, up from a previously expected $0.5 billion to $0.8 billion.
It said it now sees the net value of the synergies to be around $22 billion, up from a previous estimate of $18 billion.
The company now expects to deliver double-digit percentage growth in adjusted earnings per share in 2007 and 2008, it said.