AT&T Posts Q4

AT&T reported Q4 results highlighted by solid momentum across key growth areas

January 28, 2010

4 Min Read

DALLAS -- AT&T Inc. (NYSE:T - News) today reported fourth-quarter results highlighted by solid momentum across key growth areas. Wireless service revenues grew 9.2 percent, driven by industry-leading subscriber growth and continued rapid adoption of data services. AT&T U-verse subscriber gains topped 1 million for the year. Wireline IP-based services and strategic business products both posted strong double-digit revenue growth.

Progress in these areas and continued solid execution of cost initiatives offset expected declines in legacy voice and print advertising products. Fourth-quarter revenues totaled $30.9 billion, net income attributable to AT&T was $3.0 billion, diluted earnings per share totaled $0.51 and cash from operating activities totaled $9.0 billion.

“We had a solid 2009 and led the industry in the biggest growth driver – mobile broadband,” said Randall Stephenson, AT&T chairman and chief executive officer. “Looking ahead, customer demand for connectivity, particularly mobile broadband and IP data, continues to be strong, and AT&T is well positioned at the center of this growth. Our fundamental outlook for the business is quite positive.

“Our significant investments in IP infrastructure – both mobile and fixed – provide the next-generation growth platforms for us,” Stephenson said. “Our leadership in mobile broadband will continue to set us apart as we roll out even faster 3G speeds this year and begin deploying 4G capabilities in 2011. Our IP-based U-verse service continues to scale nicely, improving our consumer revenue profile. And we continue to see solid growth from mobile broadband and IP data services in the business segment.”

Fourth-Quarter Financial Results

For the quarter ended Dec. 31, 2009, AT&T's consolidated revenues totaled $30.9 billion, compared with $31.1 billion in the year-earlier quarter and up slightly from the third quarter of 2009. This marked AT&T’s third consecutive quarter with a sequential increase in consolidated revenues.

AT&T's operating expenses for the fourth quarter of 2009 were $26.0 billion versus $26.2 billion in the year-earlier period. Operating income was $4.9 billion, compared with $4.9 billion in the fourth quarter of 2008, and AT&T's operating income margin was 15.8 percent, the same as in the year-earlier quarter. Net income attributable to AT&T totaled $3.0 billion, compared with $2.4 billion in the year-earlier quarter, and earnings per diluted share totaled $0.51, compared with $0.41 in the fourth quarter of 2008.

In addition to solid operational performance, fourth-quarter 2009 results reflect severance charges related to workforce reductions totaling $330 million, or $0.04 per share, offset by $0.04 of benefits to earnings per share from tax audits and judicial developments. Year-over-year comparisons reflect incremental noncash pension and retiree benefit expenses in the fourth quarter of 2009 of approximately $250 million, or $0.03 per diluted share.

Fourth-quarter 2008 results included a severance charge of $617 million, or $0.07 per diluted share, related to workforce reductions and a charge of $445 million, or $0.05 per diluted share, for merger-related trust investment losses. Both quarters’ severance charges are primarily reflected in the Other segment of AT&T financial statements.

Full-Year Results, Outlook

For the full year 2009, compared with 2008 results, AT&T’s consolidated revenues totaled $123.0 billion versus $124.0 billion; operating expenses were $101.5 billion, compared with $101.0 billion; net income attributable to AT&T was $12.5 billion versus $12.9 billion; and earnings per diluted share totaled $2.12, compared with $2.16.

Compared with 2008 results, AT&T's full-year cash from operating activities totaled $34.4 billion, up from $33.7 billion; capital expenditures totaled $17.3 billion versus $20.3 billion; and free cash flow (cash from operations minus capital expenditures) totaled $17.1 billion, up from $13.3 billion. AT&T's 2009 cash from operations and free cash flow were the company's best-ever annual totals.

As it continues to execute its growth and cost-improvement initiatives, in 2010, AT&T expects to deliver stable consolidated revenues and stable-to-improved consolidated operating income margins, leading to stable-to-improved earnings per share. AT&T also expects to generate strong free cash flow in 2010, generally in line with 2008 results, even with a substantial increase in wireless capital investment to further enhance wireless broadband coverage, capacity and performance. Total 2010 capital expenditures are expected to be in the $18 billion to $19 billion range, a level framed by the expectation that regulatory and legislative decisions relating to the telecom sector will continue to be sensitive to investment. AT&T expects to achieve a wireless OIBDA service margin in the low 40-percent range in 2010, and its longer-term wireless OIBDA service margin outlook continues to be in the mid-40 percent range. (OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

AT&T Inc. (NYSE: T)

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