NEW YORK (Dow Jones News) -- Despite increased competition nibbling away at growth in their traditional markets, the nation's leading long-distance phone companies should show substantial revenue growth in the first quarter.
AT&T Corp., MCI WorldCom Inc., Sprint Corp. and Qwest Communications International Inc. are expected to report strong revenue growth from data and Internet operations.AT&T, the world's largest long-distance company, will see its profits dented by a capital spending campaign heavily concentrated in the first half of the year and by dilution from its purchase of cable company Tele-Communications Inc.
AT&T's revenue should top $16 billion during the quarter, versus roughly $14 billion a year ago, driven by customer gains in wireless, data and cable operations.
"They continue to add lots of high-speed data and digital subscribers," said Lehman Brothers analyst Blake Bath. "They bought (cable) assets that needed a lot of plant upgrades, and they had a lot of catching up to do."
The company has said it will spend at least $3.8 billion on wireless alone, and the company should announce that it added more than 400,000 new customers in the quarter.
Bath believes the company also added 230,000 digital cable subscribers during the quarter and came close to adding 300,000 high-speed data subscribers.
WorldCom is the most upfront about its revenue shift. Chief executive Bernie Ebbers recently bristled at the suggestion that the company is just a telecommunications business. Last week, WorldCom retooled itself during a press conference as an "e-business enabler."
Wachovia Securities analyst Steve Shook expects WorldCom will report revenue of $9.2 billion vs. last year's $8.4 billion.
"They identified data and Internet as an area of growth a few years ago and have consistently invested in it," Shook said. "We don't show a lot of revenue growth in voice, but the profitability is growing."
Sprint, the No. 3 long-distance company, has seemingly fallen beneath Wall Street's radar pending its merger with WorldCom.
The company, whose Wall Street darling wireless group trades as Sprint PCS and reports results separately, should have about $4.4 billion in revenue compared with last year's $4.1 billion.
Qwest, which expects to close its merger with U S West Inc. by the middle of the year, will likely have $1.8 billion in revenue, vs. revenue of $712 million in the year-ago period.
The company's profit will be diminished slightly by an equity income loss of roughly $15 million from KPNQwest NV, which is building a pan-European network.
Qwest is expected to derive almost 35 percent of its revenue from data by year's end, a path the other long-distance carriers will follow.