AT&T Q1 Earning Report 2012

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Tuesday, 24 April 2012

AT&T Q1 Earning Report 2012

Solid Growth in Earnings, Revenues and Margins, and $4.7 Billion Returned to Shareholders Highlight AT&T's First-Quarter Results

Wireless Margins Expand and Smartphone Sales Set First-Quarter Record; 30 Percent of Smartphone Customers are on 4G-Capable Devices
Dallas, Texas, April 24, 2012

$0.60 diluted EPS compared to $0.57 diluted EPS in the first quarter of 2011
Consolidated revenues of $31.8 billion, up $575 million, or 1.8 percent, versus the year-earlier period
Wireless operating income margin up to 27.2 percent; wireless EBITDA service margin up significantly to 41.6 percent even with strong smartphone sales
More than $2 billion in stock buybacks; 67.7 million shares repurchased
AT&T's growth engines - wireless, wireline data and managed services - represented 78 percent of total revenues and grew 6.2 percent versus the same quarter a year ago, led by:
19.9 percent growth in wireless data revenues, up more than $1 billion versus the year-earlier quarter
19.0 percent growth in strategic business services revenues
38.2 percent growth in consumer U-verse revenues
Smartphone sales of 5.5 million, exceeding the previous first-quarter record, with about 30 percent of all postpaid smartphone subscribers on 4G-capable devices
726,000 total wireless net adds, with gains in every customer category
Postpaid wireless churn of 1.1 percent, lowest level in seven quarters
Record first-quarter branded computing (tablets, tethering plans, etc.) net adds of 460,000 to reach a total of 5.8 million, up almost 70 percent versus a year ago
Postpaid wireless subscriber ARPU (average monthly revenues per subscriber), up 1.7 percent to $64.46
Wireline business year-over-year revenue comparisons continue to improve
Wireline consumer revenues up 1.0 percent versus the year-earlier period; seventh consecutive quarter of year-over-year growth
AT&T U-verse® subscribers (TV and high speed Internet) top 6 million; U-verse TV subscribers reach 4 million in service
Note: AT&T's first-quarter earnings conference call will be broadcast live via the Internet at 10 a.m. ET on Tuesday, April 24, 2012, at

AT&T Inc. (NYSE:T) today reported first-quarter results highlighted by strong 4G mobile data sales and wireless margins, and solid revenue and earnings growth. "We continue to capitalize on our terrific momentum in mobile Internet," said Randall Stephenson, AT&T chairman and chief executive officer. "Smartphone and branded computing device sales continue to set a record pace, mobile data revenues were up nearly 20 percent, and we achieved this growth with expanding margins. These results add confidence in our outlook for the year."

First-Quarter Financial Results:

For the quarter ended March 31, 2012, AT&T's consolidated revenues totaled $31.8 billion, up $575 million, or 1.8 percent, versus the year-earlier quarter.

Compared with results for the first quarter of 2011, operating expenses were $25.7 billion versus $25.4 billion; operating income was $6.1 billion, up from $5.8 billion; and operating income margin was 19.2 percent, compared to 18.6 percent.

First-quarter 2012 net income attributable to AT&T totaled $3.6 billion, or $0.60 per diluted share, up from $3.4 billion, or $0.57 per diluted share, in the year-earlier quarter.

First-quarter 2012 cash from operating activities totaled $7.8 billion, and capital expenditures totaled $4.3 billion. Free cash flow - cash from operating activities minus capital expenditures - totaled $3.5 billion. During the first quarter, AT&T began repurchasing shares under its outstanding 300 million share buyback authorization. The company repurchased 67.7 million of its shares for $2.1 billion in the quarter.


Led by mobile data growth in the first quarter, AT&T delivered strong smartphone and branded computing device sales with solid data revenue growth, lower postpaid churn and expanding margins. Highlights included:

Wireless Data Revenues Increase $1 Billion. Total wireless revenues, which include equipment sales, were up 5.4 percent year over year to $16.1 billion. Wireless service revenues increased 4.3 percent, to $14.6 billion, in the first quarter. Wireless data revenues - driven by Internet access, access to applications, messaging and related services - increased by more than $1 billion, or 19.9 percent, from the year-earlier quarter to $6.1 billion. First-quarter wireless operating expenses totaled $11.7 billion, up 3.4 percent versus the year-earlier quarter, and wireless operating income was $4.4 billion, up 11.3 percent year over year.

Wireless Margins Expand Even With Strong Smartphone Sales. First-quarter wireless margins grew significantly, driven by improved operating efficiencies and further revenue gains from the company's 41 million high-quality smartphone subscribers. AT&T's first-quarter wireless operating income margin was 27.2 percent versus 25.8 percent in the year-earlier quarter, and AT&T's wireless EBITDA service margin was 41.6 percent, compared with 39.0 percent in the first quarter of 2011. (EBITDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

Subscriber Gains in Every Category. AT&T posted a net increase in total wireless subscribers of 726,000 in the first quarter to reach 103.9 million in service. This included gains in every customer category. Subscriber additions for the quarter include postpaid net adds of 187,000. Prepaid net adds were 125,000, connected device net adds were 230,000 and reseller net adds were 184,000. First-quarter net adds reflect continued adoption of smartphones and sales of tablets.

Smartphone Sales Exceed First-Quarter Record. AT&T sold 5.5 million smartphones, exceeding a first-quarter sales record set last year. Smartphones represented more than 78 percent of postpaid device sales. At the end of the quarter, 59.3 percent, or 41.2 million, of AT&T's postpaid subscribers had smartphones, up from 46.2 percent and 31.5 million a year earlier. AT&T's ARPU for smartphones is 90 percent higher than for non-smartphone subscribers. About 88 percent of smartphone subscribers are on FamilyTalk® or business plans. Churn levels for these subscribers are significantly lower than for other postpaid subscribers. About 30 percent of AT&T's postpaid smartphone customers use a 4G-capable device.

Both Android and iPhone device sales remain strong. iPhone sales were helped by AT&T's 4G network, which lets iPhone 4S download three-times faster than other U.S. carriers' networks. In the quarter, the company activated 4.3 million iPhones, with 21 percent new to AT&T.

Strong Branded Computing Sales. AT&T had its best-ever first-quarter sales for branded computing subscribers, a new wireless data revenue growth area for the company that includes tablets, tethering plans, aircards, mobile Wi-Fi hot spots and other data-only devices. AT&T added 460,000 of these devices to reach 5.8 million, up almost 70 percent in total subscribers from a year ago. During the quarter, 240,000 tablets were added, about three-quarters of which were postpaid.

61 Percent of Smartphone Subscribers on Tiered Data Plans. The number of subscribers on tiered data plans also continues to increase. About 25 million, or 61 percent, of all smartphone subscribers are on tiered data plans compared to 38 percent a year ago, and more than 70 percent have chosen the higher-tiered plans. AT&T's postpaid wireless subscribers on data plans increased by 15.1 percent over the past year.

Industry-Leading Postpaid ARPU Continues Growth. Postpaid subscriber ARPU increased 1.7 percent versus the year-earlier quarter to $64.46. AT&T continues to lead the industry with postpaid subscriber ARPU. This marked the 13th consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU. Postpaid data ARPU reached $26.92, up 15.3 percent versus the year-earlier quarter.

Postpaid Churn Improves. Postpaid churn reached its lowest level in seven quarters. For the first quarter, postpaid churn was 1.10 percent, compared to 1.18 percent in the year-ago first quarter and 1.21 percent in the fourth quarter of 2011. Total churn was up, at 1.47 percent versus 1.36 percent in the first quarter of 2011 and 1.39 percent in the fourth quarter of 2011, due to higher reseller and connected device churn.

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