Question-and-Answer Session
Operator
(Operator Instructions)Your first question comes from the line of Scott Goldman - Bear Stearns.
Scott Goldman - Bear Stearns
On the margin side you guys have obviously done a great job increasing ARPUs as well as maintaining cost controls. Aside from seasonal pressures we might typically see in the fourth quarter, is there anything that might pressure margins going forward?
Secondly on DSL trends, I think AT&T yesterday and you guys today, both a little bit lighter than we had anticipated sequential growth relative to last year, not as much. Wondering if there's anything on the cable competition side, maybe from the pricing side or are we at the point where we're reaching some sort of inflection point of penetration levels in broadband where it's a little bit harder to come by net adds? Thanks.
Pat Shannon
Sure. As far as the margins, the pressure is on our margins and the impacts that we've seen really over the last several years, there are no new trends in that. We have significant competition from cable in bundled services and that will certainly continue into the future. We'll continue to look at our costs and continue to realign those with the demands in the business. So again, nothing real new in the fourth quarter. There could be some seasonality around marketing expenses and things like that. But the trends are pretty well known in the wireline side of the business and I don't see anything really changing.
As far as the DSL trends go, our net adds year-over-year are down 14% and for BellSouth, that's more of a reflection of our shift in strategy to improve the mix than it is really a true drop in demand. I'll give you a few numbers. We added 176,000 net adds in 2006 in the third quarter, and I'll tell you that from a value creation standpoint, that 176,000 subscribers was far superior to the 204,000 that we added in the third quarter of last year and is due to the mix change.
We made a significant change over the last year to de-emphasize our lower speed product and really emphasize the 3 to 6 megabit product. So this year we actually added 89,000 more 3 and 6 megabit product customers in the third quarter this year than we did last year. Which represents an over doubling of that mix. And we had a net swing of 115,000 in the 256-K product because we actually lost about 30,000 customers this year in the lower speed.
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