Q4 2011 Earnings Call
January 26, 2012 10:00 am ET
Brooks McCorcle - Senior Vice President of Investor Relations
John Joseph Stephens - Chief Financial Officer and Senior Vice President
Randall L. Stephenson - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
John C. Hodulik - UBS Investment Bank, Research Division
Philip Cusick - JP Morgan Chase & Co, Research Division
Michael McCormack - Nomura Securities Co. Ltd., Research Division
Michael Rollins - Citigroup Inc, Research Division
Jason Armstrong - Goldman Sachs Group Inc., Research Division
David W. Barden - BofA Merrill Lynch, Research Division
Jonathan Chaplin - Crédit Suisse AG, Research Division
Simon Flannery - Morgan Stanley, Research Division
Craig Moffett - Sanford C. Bernstein & Co., LLC., Research Division
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With that being said, I'll turn the conference now to Brooks McCorcle. Please go ahead.
Thanks, John. Good morning, everyone. Welcome to our fourth quarter conference call. It's really great to have you with us this morning. As John mentioned, this is Brooks McCorcle, Head of Investor Relations for AT&T, and on the call joining me this morning are Randall Stephenson, AT&T's Chairman and Chief Executive Officer; and John Stephens, AT&T's Chief Financial Officer. Randall will provide opening comments, then John will cover our results, and then we'll follow with Qs & As.
Let me remind you that our earnings material is available in the Investor Relations page of the AT&T website. As a reminder, that is www.att.com/investor.relations.
I also need to reference our Safe Harbor statement, which is on Slide 3, and that says that this presentation and comments may contain forward-looking statements. They're subject to risks, and details are in our SEC filings and on AT&T's website.
With that, I will now turn the call over to AT&T's Chairman and Chief Executive Officer, Randall Stephenson. Randall?
Randall L. Stephenson
Thanks, Brooks. Good morning, everybody. I'll start with just a couple of brief comments on 2011, then what I want to do is just move into our plans and outlook for 2012. And 2011 was obviously an eventful year not only for us but the entire industry, and what I hope didn't get lost in all the news cycles on mergers and iPhones is what AT&T accomplished during the course of the year and really how that positioned us for 2012.
We came out of 2011 with each of our key growth platforms, mobile broadband, strategic business services and U-verse, all growing at strong double digits. That means better than 3/4 of our total revenues now come from wireless data and managed services and those have a combined growth rate above 7%. We had really strong mobile sales throughout the year. In fact, we had a blowout holiday season. And in the fourth quarter, we sold 9.4 million smartphones, that's 50% above our previous record.
In the year, when our competitors began selling the iPhone, we outsold them in every single quarter. We also led all competitors in total wireless subs added, 7.7 million for the year. And we're #1 in just about every key mobile broadband growth metric: smartphones, emerging devices, postpaid data ARPU and customers on tiered pricing plans.
And when you look at the network side of the equation, this was, for us, an unprecedented year. We challenged our network team to push call retainability on our 3G network above 99% by year end, and we've now hit or beat that 3 months running. We closed the year with 80% of our total mobile data traffic on Ethernet backhaul. That's well ahead of our original plan. And we're pleased to have that deployment behind us because we believe we now have the most robust backhaul infrastructure in the industry. And this is a backhaul infrastructure that is built for data.
On top of this infrastructure and on our HSPA+ platform, we're now deploying 4G LTE. And today, we have the best data speeds in the country. The iPhone 4S on our network has download speeds that are 3x our peers.
In wireline, our U-verse build is now largely complete, so we have in place an IP video and broadband platform that reaches 30 million customer locations, which gives us significant headroom now to drive penetration.
On the business side of the equation, despite the economy, we've executed a very steady climb in revenue trends. We're now 2 straight quarters of sequential increases and we have line of sight to year-over-year growth this year. And we continue to be very, very strong in terms of cash generation capabilities on operations, better than $34 billion for the year.
So with these data points, I'd like to -- I like how we're set up for 2012. And as we sit here in January, I'd tell you, we probably have the best visibility going forward than we've had in quite some time. John is going to cover the outlook in detail, but at a very high level, here is what you ought to expect from us as we go into 2012.
We're going to continue to be very aggressive in growing our mobile broadband franchise. We'll return to revenue growth in our business segments. We'll expand wireless and consolidated margins. We'll achieve mid-single-digit EPS growth or better. Cash generation continues to look very strong again next year. And given the operational momentum we have in the business, all of this appears very achievable and probably at the conservative end of our expectations.
I'd add that this outlook is not dependent on any kind of boost from the economy. Holiday sales suggest there's a possibility for some light tailwinds and we're hopeful for that, but all the core fundamentals suggest we're looking at continued slow U.S. economic growth and then higher unemployment so we built our plans around a fairly low growth scenario.