AT&T posts USD6.7bn loss on T-Mobile deal; 4Q sales up 3.6% to USD32.5bn

27 Jan 2012

US telco AT&T has reported consolidated revenues of USD32.5 billion for the three months ended 31 December 2011, a rise of 3.6% compared to the same period a year earlier. Wireless sales accounted for the lion’s share of revenues in 4Q11, rising 10.0% to USD16.7 billion. Total fourth-quarter wireline revenue was USD14.9 billion, down 1.4% versus the year-earlier quarter, and down slightly sequentially. However, despite notching up what CEO Randall Stephenson termed ‘a blowout quarter for sales’, AT&T posted a net loss of USD6.7 billion in October-December, chiefly the result of a USD4 billion ‘break-up charge’ relating to its ill-fated USD39 billion merger with T-Mobile USA, a deal which was officially abandoned in late-December after fierce regulatory opposition. In addition, the fourth quarter of 2011 saw AT&T make a USD1 billion contribution towards the company’s pension fund.

In operational terms, AT&T Wireless added 2.5 million net new customers, quarter-on-quarter, for a total of 103.2 million at the end of December. Of the new additions 717,000 were post-paid subscribers, and 159,000 were pre-paid users. Of the remaining additions, 592,000 were attributed to resellers and a further 1.029 million subscriber accounts were classified as ‘connected devices’. Post-paid average revenue per user (ARPU) increased 1.4% to USD63.8 per month, representing the twelfth consecutive quarterly rise; AT&T described its ARPU figures as ‘industry leading’. It also noted that 4Q11 was the company’s ‘best ever smartphone sales quarter’, with sales rising around 60% year-on-year. Of the 9.4 million smartphones sold during the last trimester, 7.6 million were iPhones, with the majority of them believed to be the iPhone 4S, which went on sale on 14 October.

On the fixed line side, residential voice connections dropped from 43.4 million to 41.3 million year-on-year, while AT&T’s ‘U-verse’ high speed broadband service saw fixed line broadband connections increase by 587,000 to finish the quarter with 5.2 million, helping to offset DSL losses. Despite the widespread uptake in U-verse products, AT&T lost a net 49,000 broadband connections y-o-y. Around 74% of AT&T broadband customers are now signed up to a plan offering transmission speeds of 3Mbps or above, compared to 65% at end-2010.

AT&T CEO Randall Stephenson commented: ‘We had a tremendous year in terms of execution, and we have excellent momentum across our growth platforms. This was a blowout quarter for sales. Our network performance is at a high level on voice quality and best-in-class mobile download speeds. Sales continue to be strong and business revenue trends are on a good track. Looking ahead, we start 2012 with the best visibility we’ve had in some time, and we are well positioned to deliver solid results — including continued revenue growth with margin expansion, solid earnings per share growth and strong cash flow’.

United States, AT&T, AT&T Communications, T-Mobile US