Telecom Wireline Industry Moves Beyond Traditional Services to

Press Release:

Telecom Wireline Industry Moves Beyond Traditional Services to Grow Market Share, Says S&P

Press Release
News Article February 2005

Existing Voice Revenues Found Sluggish

NEW YORK, Feb. 10 /PRNewswire/ -- The Telecommunications wireline industry will continue looking outside of their traditional voice services for growth by moving toward higher-speed data and video offerings, taking aggressive actions to keep customers loyal, says Standard & Poor's Equity Research in a semiannual study of the industry. The survey, Industry Survey on Telecommunication: Wireline, is published twice yearly by Standard & Poor's, a leading provider of independent investment research, ratings and indices.

Standard & Poor's believes the regional Bell operating companies (RBOC) will continue to see additional access line declines of at least 4 percent, as wireless, cable, and Internet telephony offerings further penetrate US households. In 2004, wireless growth continued to be strong.

"Due to improvements in the quality, affordability, and availability of wireless services, the technology has overtaken traditional wireline voice services as the preferred means of communication," says Todd Rosenbluth, Integrated Telecommunications Services Equity Analyst with Standard & Poor's Equity Research Services and author of the report.

"With the RBOCs having successfully entered the long-distance markets, pricing pressures likely will continue," says Mr. Rosenbluth. "Traditional voice revenues for the telecom wireline carriers may be sluggish, however, we see continued customer growth in their wireless, DSL, and long-distance customer bases due to bundling efforts."

Another major development in the industry is the possible merger between SBC and AT&T. SBC has agreed to acquire AT&T in a mostly stock-based $16 billion deal, which is subject to approval by shareholders and regulators. It is expected to close by mid-2006. "If consummated, consumer-oriented SBC will see long-term benefits from AT&T's nationwide network and enterprise customer base," says Rosenbluth. SBC expects the planned deal to begin adding to its earnings in 2008.

Standard & Poor's Industry Survey on Telecommunications: Wireline looks at the issues affecting the main segments of the industry. These include competition from cable and wireless providers, the eroding difference between local and long-distance carriers, continued Merger and acquisition activity, and labor issues. In addition there is a look at key players in the wireline telecommunications industry such as AT&T, SBC Communications, and Verizon.

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