Fitch: DSL & Wireless Support 2004 U.S. ILEC Industry Growth

CHICAGO--(BUSINESS WIRE)--March 23, 2005--Consolidated revenues for the incumbent local exchange carrier (ILEC) industry continued to improve, with fourth-quarter 2004 revenues increasing 5.6% and full-year 3.1%, according to Fitch Ratings. This yearly growth rate compares favorably to a decline of 0.8% in 2003. This growth rate was in part due to the acquisition of AT&T Wireless by Cingular, which was completed on Oct. 26, 2004 but also reflected strong growth from DSL and wireless services. While access line erosion reached 5% for 2004, total connections, representing the sum of access lines, wireless subscribers, and digital subscriber line (DSL), increased 12.1% for 2004 and normalized for the AT&T Wireless acquisition at 4%.

Wireless continues to be the key driver of ILEC revenue growth. Wireless revenues grew 16.5% in fourth-quarter 2004, with a full-year 2004 increase of 20.3% over that of 2003. Wireless now represents approximately 37% of total consolidated revenues, compared with approximately 29% in 2003.

“Wireless remains a key piece to a stable credit profile for many ILEC operators and its proportion of consolidated revenues should continue to grow”

"Wireless remains a key piece to a stable credit profile for many ILEC operators and its proportion of consolidated revenues should continue to grow," said Michael Weaver, Managing Director, Fitch Telecommunications and Cable Team.

Wireline data revenues grew 3.7% in the fourth quarter and 7.4% for the year, a result of strong DSL growth. DSL penetration reached 8.2% of total access lines, compared with 5.2% for 2003, representing approximately 4.4 million new DSL lines.

Additional trend discussion, aggregate data points, and individual operator comparisons are available in the report.

The Fitch Ratings' "Quarterly ILEC Aggregates and Comparative Statistics" provides numerous operational and financial measures for the industry, representing approximately 95% of the total industry access lines. This information is shown in a historical format for easy trend comparisons.

The full report is available on the Fitch Ratings web site at www.fitchratings.com. The report is located under "Corporates" and the "Corporate Finance" header and then under "Special Reports" once on the "Corporates" home page.