ATT today reported fourth-quarter results with growth in wireless service revenues and subscribers. Here are some highlights from the financial reports:
- $0.51 diluted EPS for the fourth quarter versus $0.41 in the year-earlier period - $34.4 billion full-year cash from operating activities versus $33.7 billion in 2008, and $17.1 billion free cash flow, up 28.4 percent versus 2008 (free cash flow is cash from operations minus capital expenditures) - 2.7 million fourth-quarter net addition in total wireless subscribers, the second highest quarterly net gain in the company's history; full-year wireless net adds totaled 7.3 million, equaling the company's best-ever annual total, to reach 85.1 million subscribers in service - Best-ever fourth-quarter wireless subscriber churn levels ? 1.19 percent postpaid and 1.44 percent total - 2.6 percent growth in postpaid wireless subscriber ARPU (average monthly revenues per subscriber), eighth consecutive quarter with a year-over-year increase - Continued robust growth in revenues from wireless data services such as messaging, access to applications and related services; up $805 million, or 26.3 percent, versus the year-earlier quarter to $3.9 billion - 248,000 net gain in AT&T U-verseSM TV subscribers to reach 2.1 million in service, up more than 1 million in 2009, with continued high broadband and voice attach rates - 18.8 percent growth in wireline IP data revenues driven by AT&T U-verse expansion and growth in advanced business solutions - 17.0 percent growth in revenues from strategic business services such as Ethernet, Virtual Private Networks (VPNs), hosting and application services
Wireless Operational Highlights
AT&T's fourth-quarter wireless growth was driven by the company's premier nationwide network capabilities, rich access to applications and attractive device lineup. Highlights include:
* Strong Subscriber Gains. In the fourth quarter, AT&T posted a net gain in total wireless subscribers of 2.7 million, the second highest quarterly net add total in the company's history, reflecting rapid adoption of smartphones and emerging devices such as eReaders, netbooks and navigation devices. Full-year wireless net adds totaled 7.3 million, equaling the company's best-ever annual total, to reach 85.1 million subscribers in service. Retail postpaid net adds totaled 910,000 for the quarter and 4.3 million for the full year.
* Best-Ever Fourth-Quarter Subscriber Churn. Average monthly subscriber churn improved to best-ever fourth-quarter levels. Postpaid churn was 1.19 percent, down from 1.20 percent in the year-earlier quarter; total churn was 1.44 percent versus 1.64 percent in the fourth quarter of 2008. This marked AT&T's sixth consecutive quarter of year-over-year improvement in both total and postpaid wireless churn.
* Sustained Robust Growth in Wireless Data Revenues. Wireless data revenues ? from messaging, access to applications and related services ? increased $805 million, or 26.3 percent, from the year-earlier quarter to $3.9 billion. Versus the year-earlier quarter, total text messages carried on the AT&T network increased 70 percent to 135 billion and multimedia messages more than doubled to more than 2 billion.
* Eighth Consecutive Quarter of Postpaid ARPU Growth. Driven by strong data growth, postpaid subscriber ARPU increased 2.6 percent versus the year-earlier quarter to $61.13. This marks the eighth consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU. Postpaid data ARPU reached $19.16, up 17.5 percent versus the year-earlier quarter.
* Strong Growth in 3G and Integrated Devices. Key drivers of AT&T's wireless data growth are increased penetration of integrated devices (handsets with QWERTY or virtual keyboards in addition to voice functionality) and greater usage of the company's extensive 3G network. The number of postpaid 3G integrated devices on AT&T's network increased by more than 4 million in the fourth quarter and nearly tripled over the past year. At the end of the year, 46.4 percent of AT&T's 65.1 million postpaid subscribers had integrated devices, up from 27.0 percent a year earlier. AT&T's fourth-quarter integrated-device growth included 3.1 million iPhone activations, the second highest quarterly total to date, with more than a third of the activations for customers who were new to AT&T. The average ARPU for integrated devices on AT&T's network continues to be 1.8 times that of the company's nonintegrated-device base.
* Leadership in Emerging Devices. AT&T's fourth-quarter subscriber gains also reflect strong growth in wireless connectivity for emerging devices including eReaders such as the Amazon Kindle, the Sony Reader Daily Edition and the Barnes & Noble nook. Total emerging devices on AT&T's wireless network increased by more than 1 million in the fourth quarter, its strongest quarter in this category to date, predominantly reflected in reseller subscriber totals.
* Wireless Margin Improvement. AT&T delivered year-over-year margin expansion and sequential margin stability in the fourth quarter ? reflecting continued low churn, improved operating efficiencies and further growth in the company's base of high-quality subscribers. Fourth-quarter wireless service revenues totaled $12.6 billion, up 9.2 percent from the fourth quarter of 2008, and operating expenses totaled $10.4 billion, up 2.4 percent versus the year-earlier quarter. Versus the fourth quarter of 2008, wireless operating income was $3.4 billion, up 27.4 percent; wireless operating income margin was 24.7 percent versus 20.9 percent; and wireless OIBDA service margin was 38.8 percent, compared with 35.8 percent.
As a fan (and a customer) of AT&T, I'm very glad to hear this. I hope AT&T's management will use a good amount of the resulting increase in revenue to improve and expand the company's wireless infrastructure. The future looks bright and exciting.
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