Update: AT&T revenue up on BellSouth acquisition

AT&T reported net income of $3.1 billion for the third quarter of 2007, up from $2.2 billion a year earlier, largely due to its acquisition of BellSouth.

AT&T nearly doubled its revenue from a year ago, going from $15.6 billion to $30.1 billion, but those 2006 numbers don't factor in the BellSouth acquisition and revenue from Cingular Wireless, which AT&T and BellSouth co-owned. The BellSouth deal closed Dec. 29, 2006.

AT&T's revenue was up 3.2 percent from the combined revenue from AT&T, BellSouth, and Cingular in the third quarter of 2006. Comparable earnings per share were $0.50 compared to $0.56 the third quarter of 2006.

AT&T's adjusted third-quarter earnings, which exclude costs and accounting effects associated with the acquisition, were $4.3 billion, or $0.71 per diluted share, up from $2.4 billion, or $0.63 per diluted share, in the third quarter of 2006.

AT&T's third-quarter results were "excellent," Randall Stephenson, AT&T chairman and CEO, said in a statement. Stephenson cited growth in wireless, broadband, and U-verse TV customers as the reason for a strong quarter.

AT&T's renamed wireless division saw an increase in 2 million customers in the quarter, the company said. The company's wireless division now has 65.7 million subscribers.

AT&T's partnership with Apple on the new iPhone drove much of the wireless growth, said Rick Lindner, AT&T's senior executive vice president and chief financial officer. Since the iPhone launched in late June, AT&T has signed up 1.1 million iPhone subscribers, with 40 percent of them new AT&T wireless customers, he said.

AT&T's wireless division had its "best third quarter ever," Lindner said.

Independent telecom analyst Jeff Kagan called AT&T's five-year exclusive iPhone contract with Apple "a big win for the company."

"The Apple and the iPhone brand and sub-brand are both very strong," he added in an e-mail. "This should continue to add to AT&T's winning streak."

AT&T's merger integration efforts are on schedule, the company said, and cost savings are running ahead of the original estimates. In the first three quarters of 2007, cost savings from the BellSouth merger were about $2.8 billion, and AT&T expects those savings to reach more than $3 billion for the year.

Wireless data revenue increased 63.9 percent from last year, driven by increases in consumer and business data usage, including messaging, media bundles, laptop connectivity and smart phone connectivity, AT&T said.

In the broadband space, AT&T's connections, including DSL (Digital Subscriber Line), AT&T U-verse, and satellite broadband services, increased by 499,000 in the quarter to reach 13.8 million. That's up 2.2 million, or 18.6 percent, over the past year.