BellSouth revenues were up, due in large part to Cingular Wireless’ growth, but profits fell 55 percent for the fourth quarter, as the cost of hurricane recovery increased.

Separate of non-rucurring items, the company saw "strong results across three assets" -- Cingular, its communications group and its advertising/publishing sector, said Pat Shannon, CFO, describing a 36% increase in the normalized earnings per share as a reflection of the "value of our asset mix."

The non-recurring items included costs of the AT&T Wireless merger into Cingular, severance costs and the cost of Hurricane Katrina restoration. Shannon said the cost of non-Katrina hurricane repairs -- for Hurricanes Dennis, Rita and Wilma -- were factored in as normal business expenses.

The company is the first of the former Bells to report earnings for 2005, and saw access line decline offset by increases in DSL and long-distance sales. Its ongoing cost for recovering from Hurricane Katrina is now estimated at $700 million to $900 million, up from $400 million to $600 million, with as much as $250 million being paid by insurance, Shannon said. The company reported $500 million in wireline network restoration and capital costs for 2005.

For the fourth quarter, net income declined to $618 million, or 34 cents a share, from $1.47 billion, or 74 cents, from the fourth quarter of 2004, in which BellSouth recorded a profit from its sale of Cellcom, its Latin American assets, the company stated in a press release. Revenue rose to $5.24 billion.

For the full year 2005, income from continuing operations was $2.9 billion compared to $3.4 billion for the full year of 2004.

Katrina-related billing credits and loss of access lines reduce fourth quarter by $48 million. BellSouth reported $244 million of incremental expense and $189 million of incremental capital during the fourth quarter.

Communications Group revenues were $4.7 billion, up almost one percent over the same quarter of 2004, and operating margin was up to 21.9 percent from 21.6 percent. For the full year, Communications Group revenue was $18.5 billion, but operating margin was down from 25.0 to 23.0, due to higher retiree medical expenses and hurricane-related overtime and billing credits.

The company added 204,000 net DSL customers and increased its data revenues by 7.7%, to $1.25 billion. Access lines were down 6.2 percent.

"We are finding that customers are not churning off as they finish promotional offers," Shannon said.

Small business remains a highlight, and large business and wholesale services are doing better in difficult pricing markets, he added.

"Small business revenue grew 6.4% as our efforts to retain and recapture customers are paying off," Shannon said. "Large business revenues declined 2.1% due to pricing pressures, but revenues broke into positive growth in the fourth quarter.?

Cingular Wireless results contributed heavily to BellSouth, as its fourth quarter revenues were up 9.4 percent to $8.8 billion. The wireless carrier reported its results Tuesday.