US telecommunications companies face a long haul back to real profit growth, according to the Dow Jones wire service. It reports that the top three long-distance companies saw a share- weighted average of 30% less in the second quarter than this time last year. Earnings at AT&T Corp, MCI Corp and Sprint Communications Corp are projected to have fallen by 39%, 14% and 7% respectively and revenues are slumping badly – a high price for maintaining market share. The companies are diversifying into local and wireless services, but investment is high, eating into their declining profits. AT&T warns that earnings will stay flat or decline further over the next two years. A serious problem is how to crack open local markets which regional providers continue to dominate, despite the deregulation provisions of the 1996 Telecommunications Act.
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