* Sandy repair costs could run $550-600 mln -analyst
* Verizon still pumping water from central offices
* Costs from Sandy seen "significantly worse" than Irene
By Sinead Carew
NEW YORK, Nov 1 Hurricane Sandy will likely cost
telephone and cable service providers hundreds of millions of
dollars, with companies such as Verizon Communications
and Cablevision Systems Corp hit hardest, according to
The storm could end up costing cable and telephone network
operators $550 million to $600 million in clean-up and repair
costs, according to Barclays analyst James Ratcliffe.
Along with Cablevision and Verizon, Ratcliffe also included
costs at Time Warner Cable and the wireless operations
of AT&T Inc and Sprint Nextel in his estimate.
New York-based Verizon has been struggling to restart its
services in parts of New York due to flooding and power outages
in Lower Manhattan, Queens and Long Island after Sandy hit the
U.S. Northeast on Monday night.
Verizon was still trying to pump out water from its central
offices in lower Manhattan on Thursday. An executive said it
could take Verizon two weeks to restore services to all its
The company is using tens of thousands of gallons of fuel
per day to power repair trucks and backup generators in areas
where electricity is out. And with reports of fuel shortages in
the hurricane zone, "there's a decent amount of competition" to
procure diesel for the generators, he said.
Many Verizon employees involved in the recovery are
scheduled to work 12-hour days seven days a week to fix the
network, up from their typical 40 hour week, he said.
Ratcliffe estimated that Sandy would cost Verizon about $306
million, compared with his estimate for $180 million in costs
from Hurricane Irene, which hit the New York region in 2011.
"The damage is worse and downtown Manhattan is a huge hub of
network infrastructure," Ratcliffe said.
In the third quarter of 2011, Verizon booked a charge of
$250 million or 5 cents per share as a result of Hurricane Irene
and a two-week strike by about half its wireline workers.
Evercore analyst Jonathan Schildkraut estimated that most of
that charge was related to Irene.
"I'd imagine this is significantly worse," he said referring
to costs from Sandy.
Verizon reported a profit of $1.59 billion, or 56 cents per
share in the third quarter of 2012.
Barclay's Ratcliffe estimated that Cablevision would be set
back about $36 million by Sandy. This would represent more than
6 percent of his expectation for fourth-quarter earnings before
interest, tax, depreciation and amortization (EBITDA). Damage
from Irene cost Cablevision about $16 million.
In comparison the costs will represent just 3 percent of
Verizon's EBITDA, Ratcliffe said.
Cablevision will have "the biggest impact relative to its
size" according to the analyst.
Cablevision said on Thursday that roughly half its 3.3
million customers were without power and some customers who had
electric power still had no cable service.
After the outage, analysts including Michael McCormack at
Nomura worried whether Cablevision would be able to raise its
prices for customers this year, as is expected by many analysts.
Wireless operators are also struggling to restore services
to their customers as cellphone towers were knocked off line by
power outages and flooding.
The U.S. Federal Communications Commission said on Thursday
that about 19 percent of towers were still offline that morning
down from 25 percent the day after the storm.
Verizon Wireless, a venture of Verizon Communications and
Vodafone Group Plc, said on Thursday that about 96
percent of their cellsite were up an running, up from 94 percent
the day before.
Sprint, the No. 3 U.S. operator said that more than 80
percent of its network was operating by Thursday evening.
T-Mobile USA, a unit of Deutsche Telekom, said it
had completed 85 percent of its restoration in New York by
Thursday evening. However it is only 80 percent complete in
Staten Island, a borough of New York.
AT&T and T-Mobile USA on Wednesday agreed to open their
networks to each other's customers in a roaming deal to help
provide their customers service more quickly after the storm.
Nomura's McCormack said that operator costs from Sandy could
be twice or three times the costs from Irene, but even then he
said the telecom and cable companies are big enough to absorb
the extra expenses without hurting valuations.
"Right now the only concerns I've heard from investors is
whether this will be a distraction from the ongoing business,"