AT&T Reports Growth in IP Services Revenue

By Caron Carlson  |  Posted 2003-10-21

AT&T Corp.s business services are growing in key markets, sustaining the companys prospects even as its long-distance voice revenue falls and the telecom sector continues to wait out tight economic times.

AT&T today reported third-quarter revenue of $8.6 billion, down 8.1 percent from the third quarter last year. The decrease in revenue results from a continued decline in long-distance voice revenue, company officials said. Business services account for $6.3 billion of quarterly revenue, while consumer services account for $2.4 billion.

AT&T Chairman and CEO David Dorman said today that the results show the companys ability to succeed in a difficult environment.

Within the Business Services unit, quarterly revenue declined 6.2 percent from last years third quarter. The company attributes the decline to pricing pressure, weak demand for retail long-distance and data services, and weak telecom spending generally. Long-distance voice revenue fell 10.5 percent from last quarter.

The decline was partially offset, however, by growth in local voice services, wholesale traffic, and Internet Protocol and Enhanced services, which include hosting and security services. IP and enhanced services revenue rose 13 percent, while data services revenue fell 6.5 percent from the prior years quarter.

Within the IP unit, managed services revenue rose approximately 10 percent from last years third quarter. Managed services now account for about one-third of IP and enhanced services.

Although voice revenue fell overall, local voice revenue increased approximately 38 percent over third quarter last year. The company deployed almost 97,000 new local access lines since the second quarter, bringing its total local access to 4.3 million lines.

AT&T announced some accounting irregularities, which it found last month during a review of the accounting and internal control systems. The company said two employees, a midlevel manager and a lower-level employee, "circumvented the internal controls process," and the access and connections costs from 2001 and 2002 were understated by $125 million. The company recorded an additional expense of $125 million this quarter to reflect the correct liability.

Following a review by outside lawyers, the company made personnel changes and enhanced internal controls.

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