Leading communications firm
) reported fourth-quarter 2012 adjusted earnings per share of 44
cents that missed the Zacks Consensus Estimate of 47 cents.
Comparing year over year, the results improved 10% from adjusted
earnings of 40 cents.
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Quarterly revenues remained at almost the same level with the
prior-year quarter at $32.58 billion, but surpassed the Zacks
Consensus Estimate of $32.15 billion. Excluding the impact of the
sale of the Advertising Solutions unit and effects of hurricane
Sandy, revenues increased 2.8% year over year.
For full-year 2012, AT&T posted earnings of $2.31 per share
(missing our projection by 2.5% but increasing 8.5% year over
year), on revenues of $127.4 billion (up 0.6% from the last
In the fourth quarter, adjusted operating income decreased 0.7%
year over year to $4.2 billion, while adjusted operating expenses
crept up 3.3% year over year to $28.4 billion.
revenues, including service and equipment, rose 5.7% year over
year to $17.6 billion in the quarter, primarily on the higher
number of smartphone sold as well as branded computing device
sales and lower churn. Wireless data revenues leaped 14.7% year
over year to approximately $6.8 billion, driven by Internet
access, multimedia and text messages.
AT&T added 1.1 million wireless customers in the reported
quarter, totaling 107.0 million. Strong additions were
attributable to the continued adoption of smartphones, including
) iPhones and
) Android-based phones. Increased sales of tablets and robust
Mobile Premise services also aided the growth.
Retail post-paid additions were 780,000 - reflecting the best
figure in the last 12 quarters. Connected device additions were
246,000 and reseller additions were 234,000 in the reported
quarter. However, the company lost about 166,000 prepaid
customers as a result of a drop in GoPhone along with
AT&T's branded computing subscribers (including tablets,
aircards, MiFi devices, tethering plans and other data-only
devices) shot up 26%, bringing the total to 6.4 million.
During the quarter, the company touched a record sale of 10.2
million smartphones that comprised 86% of post-paid device sales
and 89% of post-paid phone sales. Almost 55% postpaid smartphone
subscribers have 4G-based devices. Notably, 16% of the iPhone
customers were new to AT&T that provided new connections to
8.6 million phones.
Total churn for the quarter was 1.19% compared to 1.21% in the
prior-year quarter. Post-paid ARPU (average revenue per user)
grew 1.9% year over year to a record $64.98, driven by healthy
revenues dipped 0.5% year over year to $14.9 billion. Strong data
revenues driven by improving consumer and business strategic
services revenue trends partly compensated for lower voice and
Revenues from residential customers increased 3.0% year over year
(maximum growth in more than four years) to $5.5 billion, driven
by robust AT&T U-verse services. Business revenues slid 2.1%
year over year to $9.1 billion, reflecting the impacts of a
sluggish economy. Strategic business services such as Ethernet,
Virtual Private Networks, hosting, IP conferencing and
application services, spiked 10.6% year over year.
AT&T's total video subscribers, which include U-verse TV and
bundled satellite customers, touched 8.0 million at the end of
the fourth quarter. Total U-verse TV subscribers reached 4.5
million with the net addition of 192,000 customers on continued
high-speed Internet attach rates.
At the end of 2012, AT&T had $4.87 billion in cash and cash
equivalents. The company had long-term debt (including current
portion) of $69.8 billion, representing debt-to-capitalization
ratio of 43.0%.
AT&T generated $39.2 billion of cash from operations in 2012.
The company's capital expenditure amounted to $19.5 billion.
During 2012, the company repurchased 371 million shares for $12.8
billion in the reported quarter.
For 2013, AT&T expects to witness revenue growth of more than
2%, aided by contributions from wireless services and wireline
consumer business. Earnings per share will improve to upper
single digits and above, while capital expenditure is expected to
be around $21 billion.
Another Major Telecom Stock
The largest U.S. mobile service provider
Verizon Communications Inc.
) reported fourth quarter 2012 results on Jan 22, with adjusted
earnings of 45 cents per share coming below the Zacks Consensus
Estimate of 54 cents. The results also lagged the year-ago figure
of 52 cents.
AT&T currently holds a Zacks Rank #3 (Hold). We see strong
growth prospects for the company driven by subscriber accretion,
higher smartphones adoption, LTE mobile broadband network, iPhone
sales and U-verse expansion. However, persistent access line
losses, competitive pressures and heavy iPhone subsidies might
drag near-term margins and earnings.