Leading communications firm
) reported second-quarter 2013 adjusted earnings per share of 67
cents, missing the Zacks Consensus Estimate by a penny. The
company's performance was hurt by steeper cost of service and
sales. Comparing year over year, the results improved 1.5% from
adjusted earnings of 66 cents.
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Quarterly revenues increased 1.6% from the prior-year quarter to
$32.1 billion and surpassed the Zacks Consensus Estimate of $31.8
billion. Excluding the impact of Advertising Solutions unit sale,
revenues increased 2.6% year over year. The growth was attributed
to efficient network operations and an expanding broadband
Operating income decreased 10.3% year over year to $6.1 billion,
while operating expenses increased 4.9% year over year to $25.9
revenues, including equipment sales, rose 5.7% year over year to
$17.3 billion in the quarter, primarily on the higher number of
smartphones sold and more upgrades. Wireless data revenues leaped
19.8% year over year to approximately $5.4 billion, driven by
Internet access, multimedia and text messages.
AT&T added 632,000 wireless customers in the reported
quarter, totaling 107.9 million. This was primarily due to
continued adoption of smartphones, including
) iPhones and
) Android-based phones.
Retail post-paid additions were 551,000 and connected device
additions were 484,000. The company added only 11,000 prepaid
customers and lost 414,000 reseller users due to less or no
The company added 1.2 million post-paid smartphone users and sold
6.8 million smartphones of which 88% comprised post-paid phone
sales. At quarter end, nearly 73% of the post-paid phone users of
AT&T used smartphones. Almost 65% post-paid smartphone
subscribers have 4G-based handsets.
Total churn was 1.36% compared with 1.18% in the prior-year
quarter. Post-paid ARPU (average revenue per user) grew 1.8% year
over year to $66.12, driven by healthy data growth.
revenues dipped 0.9% year over year to $14.8 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 2.4% year over year
to $5.6 billion, driven by robust activities in consumer IP data
services. Business revenues slid 2.2% year over year to $8.9
billion, reflecting a drop in legacy service. Strategic business
services such as Ethernet, Virtual Private Networks, hosting, IP
conferencing and application services, increased 15.0% year over
AT&T's total U-verse subscribers, which include TV and
high-speed Internet customers, touched 9.4 million at the end of
the second quarter. Total U-verse TV subscribers reached 5.0
million (233,000 users added) and high-speed Internet users
touched 9.1 million (641,000 subscribers added).
As of Jun 30, 2013, AT&T had $4.6 billion in cash and cash
equivalents. The company had long-term debt (including current
portion) of $75.2 billion, representing a debt-to-capitalization
ratio of 46.6%.
AT&T generated $9.5 billion of cash from operations in the
quarter, while capital expenditure totaled $5.5 billion.
The company repurchased 89 million shares for $3.3 billion.
Another Major Telecom Stock
Another U.S. mobile service giant
Verizon Communications Inc.
) reported second quarter 2013 earnings of 73 cents per share, in
line with the Zacks Consensus Estimate. The results improved
14.1% from 64 cents a year ago.
AT&T currently holds a Zacks Rank #3 (Hold). We believe that
AT&T will benefit from consistent launch of new and
attractive data plans along with the introduction of updated and
hardy smartphones. The company is also continuously collaborating
with several companies to strengthen its presence within the
domestic market as well as spread its operational wings to