BellSouth to Discontinue Wholesale Operations, Close Internet Access Point

BellSouth Corp. on Tuesday said it would discontinue wholesale long-distance operations on the West Coast and in the United Kingdom, close part of its international wholesale and resale businesses and shut down its Multimedia Internet Exchange as well as its web-hosting e-Business Centers in the Southeast.

On the West Coast and overseas, BellSouth has bought capacity and then resold part of it to other communications companies.

The Atlanta-based company is exiting the businesses to achieve the greatest return on its investment, BellSouth spokesman Jeff Battcher said.

“All of these businesses aren’t bringing in the revenue which we anticipated and we are in a situation where we are having to cut costs everywhere,” he said.

“Any of those businesses posing potential credit risks we are exiting also,” Battcher added.

BellSouth also announced it would discontinue sales related to its payphone business.

The No. 3 local phone company made the disclosures Tuesday as part of its third-quarter earnings announcement.

BellSouth has outlined a revised strategy for its wholesale long-distance business. BellSouth will support wholesale operations in Latin America, where the company has operations in 11 countries primarily through wireless affiliates; leverage its local network to support domestic termination and origination in the Southeast; continue to meet the long-haul data needs of business customers as well as those of communications companies; and sell domestic toll-free services to businesses.

BellSouth is closing its Multimedia Internet Exchange, a public network access point based in Florida, where Internet service providers can pass traffic to one another. The phone giant does not disclose the number of customers in the so-called MIX but the “revenue impact is very small with negative margins,” Battcher said.

The closure marks good news for Terremark Worldwide, the owner and the operator of the NAP of the Americas in Miami.

BellSouth also is closing its e-Business Centers in Atlanta and Miami, which are facilities hosting servers for small and medium-sized companies. Though BellSouth has not determined what to do with those facilities, the company plans to provide service to those customers through another web-hosting provider, Battcher said.

To accommodate new and existing customers at the MIX and the e-Business Centers, BellSouth is collaborating with other providers, Battcher said.

On Tuesday BellSouth posted third-quarter earnings per share of 39 cents, compared to breakeven EPS a year ago. The company reported $733 million in net income, compared to reported net income of $47 million in the third quarter a year ago.

However, BellSouth’s revenue, which does not include its 40 percent stake in Cingular Wireless, slid to $5.54 billion, down from $6.01 billion in the third quarter of 2001.

As part of its restructuring, BellSouth posted a third-quarter special EPS charge of five cents. BellSouth posted a total EPS charge of 13 cents for the quarter related to a workforce reduction, service curtailments/asset impairments, foreign currency transaction losses and the early retirement of debt.

In May, BellSouth announced plans to cut 5,000 jobs, citing the economy, "increased competition and regulatory pricing pressures.”