BellSouth reported a sharp increase in fourth quarter earnings even as it acknowledged further erosion of its customer base on Thursday.

BellSouth (NYS: BLS) said its fourth quarter net was 37 percent higher than in 2002, hitting $787 million or 43 cents a share.
However, the company also said it lost 3.6 percent of its phone line base.

The company, which shed more than 1,000 jobs in the past year, also reiterated plans to further cut payroll this quarter.

“We have already indicated some reduction in force for the first quarter, and I imagine we will continue to see pressure on employees,” said Ronald Dykes, BellSouth’s chief financial officer, in a conference call with analysts.