AT&T first-quarter revenues reach USD32.6bn, net income slips to USD3.2bn

23 Apr 2015

US giant AT&T has published a solid set of financial and operational results for the first three months of this year, with consolidated revenues of USD32.6 billion up 0.3% when compared to 1Q14. The carrier noted that, excluding the divestment of Connecticut wireline assets, first-quarter turnover increased by 1.2% year-on-year. Operating expenses in 1Q15 stood at USD27.1 billion, up from USD26.2 billion in the corresponding period of 2014; operating income rose USD800 million to USD6.3 billion, although the operating income margin narrowed by almost three percentage points to 16.7% from 19.3% previously. Further, net income attributable to shareholders fell to USD3.2 billion from USD3.7 billion.

AT&T said wireless revenues increased by 1.8% y-o-y to USD18.2 billion and equipment sales soared 36% to USD3.4 billion, as efforts to entice customers to buy equipment instalment plans bore fruit. The carrier pointed out that in the first three months of this year it continued to promote its AT&T Next Valueplan i.e. no-device subsidy) and Mobile Share Valueplan and reduce its strategic focus on offering subsidised plans. The company added a net 1.2 million wireless users in Q1, including 441,000 post-paid users, 98,000 pre-paid and 945,000 ‘connected devices’, for a total of 121.772 million at end-March. However, AT&T’s phone-only post-paid ARPU fell 9.6% it said. The country’s No. 2 wireless provider by subscribers also said that it expects its acquisition of DIRECTV (DTV) to gain regulatory approval during the second quarter; it expects financial benefits from the deal to reach at least USD2.5 billion on an annual run rate by year three after closing. This is an increase from USD1.6 billion that was expected at the time the deal was announced.

Turning to wireline activities, AT&T’s fixed line business, which includes the results of its U-verse branded internet and TV services, reported total revenue of USD14.1 billion in 1Q15, down 3.1% due to the decline in the business customer segment. However, adjusted U-verse revenues grew 20.3% y-o-y, and revenues from residential customers totalled USD5.7 billion. When adjusting for the sold Connecticut operations, revenue grew 2.1% y-o-y, it said. AT&T closed out March 2015 with a total of 16.097 million broadband subscribers, while the TV business added a net 58,000 subscribers in the quarter for a total of 5.993 million. AT&T says that U-verse (internet, TV and VoIP) now accounts for 69% of wireline consumer revenues, up from 59% a year ago.

Commenting on the results, Randall Stephenson, AT&T chairman and CEO, said: ‘The first quarter was a significant step in a transformative year for AT&T … The repositioning of our wireless customer base to no-device-subsidy plans drove industry-leading post-paid churn. IP technologies continue to transform our wireline operations, expand our broadband base and drive strong demand for strategic business services. Plus, we established a good foothold in the Mexican wireless market with our acquisition of Iusacell and we are on track to close our acquisition of Nextel’s Mexico operations shortly. This, along with our expectation that we’ll gain final approval of the DIRECTV deal in the second quarter, adds to our confidence that we’re on track to be a very different company uniquely positioned for growth.’

United States, AT&T, AT&T Communications