Leading communications firm
) reported first-quarter 2013 adjusted earnings per share of 64
cents, in-line with the Zacks Consensus Estimate. Comparing year
over year, the results improved 8.5% from adjusted earnings of 59
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The year-over-year growth was supported by strength in mobile
data services, a well-performing broadband segment and efficient
Quarterly revenues decreased 1.5% from the prior-year quarter to
$31.4 billion and missed the Zacks Consensus Estimate of $31.7
billion. Excluding the impact of Advertising Solutions unit sale,
revenues increased 0.9% year over year.
Operating income decreased 2.6% year over year to $5.9 billion,
while operating expenses were down 1.2% year over year at $25.4
revenues, including equipment sales, rose 3.4% year over year to
$16.7 billion in the quarter, primarily on the higher number of
smartphone sold and lower churn. Wireless data revenues leaped
21.0% year over year to approximately $5.1 billion, driven by
Internet access, multimedia and text messages.
AT&T added 291,000 wireless customers in the reported
quarter, totaling 107.2 million. Strong additions were
attributable to the continued adoption of smartphones, including
) iPhones and
) Android-based phones. Increased sales of tablets also aided the
Retail post-paid additions were 296,000 and connected device
additions were 431,000. However, the company lost about 184,000
prepaid customers (due to a drop in GoPhone along with
session-based tablets) and 252,000 reseller customers (on less or
no account usage).
During the quarter, the company added 1.2 million post-paid
smartphone users and sold 6.0 million smartphones that comprised
81% of post-paid device sales and 88% of post-paid phone sales.
At quarter-end, nearly 72% of the post-paid phone users of
AT&T used smartphones. Almost 60% post-paid smartphone
subscribers have 4G-based handsets.
Total churn was 1.38% compared with 1.47% in the prior-year
quarter. Post-paid ARPU (average revenue per user) grew
marginally year over year to $65.01, driven by healthy data
revenues dipped 1.8% year over year to $14.7 billion. Although
the company experienced growth in U-verse TV and High Speed
Internet segments, lower voice and legacy revenues impacted the
overall revenue figure.
Revenues from residential customers increased 2.0% year over year
to $5.5 billion, driven by robust AT&T U-verse services.
Business revenues slid 3.4% year over year to $8.9 billion,
reflecting the impact of a sluggish economy. Strategic business
services such as Ethernet, Virtual Private Networks, hosting, IP
conferencing and application services, increased 10.8% year over
AT&T's total U-verse subscribers, which include TV and
high-speed Internet customers, touched 8.7 million at the end of
the first quarter. Total U-verse TV subscribers reached 4.8
million with the net addition of 731,000 high-speed Internet
As of Mar 31, 2013, AT&T had $3.9 billion in cash and cash
equivalents. The company had long-term debt (including current
portion) of $74.1 billion, representing a debt-to-capitalization
ratio of 45.6%.
AT&T generated $8.2 billion of cash from operations in the
quarter, while capital expenditure totaled $4.3 billion.
The company repurchased 168 million shares for $5.9 billion.
Additionally, management approved another 300 million share
For 2013, AT&T expects to witness revenue growth aided by
contributions from wireless services and wireline consumer
business. Capital expenditure is expected to be around $21.0
billion. For 2014 and 2015, the company aims to spend around
$20.0 billion each year.
Another Major Telecom Stock
The largest U.S. mobile service provider
Verizon Communications Inc.
) reported better-than-expected first quarter 2013 results on Apr
18. Earnings of 68 cents per share surpassed the Zacks Consensus
Estimate of 66 cents and improved from the year-ago figure of 59
AT&T currently holds a Zacks Rank #2 (Buy). We expect the
launch of attractive handsets coupled with new data plan
offerings to add more subscribers in the coming days. Strength in
business services, the planned investment program and U-verse
expansion are also expected to boost the company's performance
over the next few months.