AT&T Q1 profits fall on acquisition costs, flat revenues

Nieuws Algemeen Verenigde Staten 23 APR 2015
AT&T Q1 profits fall on acquisition costs, flat revenues
AT&T reported nearly flat revenues for the first quarter, due to tough competition in the mobile market and the sale of some of its wireline activities. Revenues were up just 0.3 percent year-on-year to USD 32.6 billion. If the divested Connecticut wireline properties are excluded, revenues rose 1.2 percent. Operating profit fell to USD 5.5 billion from USD 6.3 billion a year ago, hurt by a rise in costs for reducing staff and merger and integration expenses. 

Net profit dropped to USD 3.2 billion or USD 0.61 per diluted share, compared to USD 3.7 billion or USD 0.70 per share in the year-ago quarter. This includes 3 cents a share for voluntary employee separations, 4 cents for merger and integration expenses and a 5-cent gain from a tax item. After a drop in capital expenditures to just under USD 4.0 billion, free cash flow totaled USD 2.8 billion. 

AT&T said it was on track to meet its full-year guidance and close the acquisition of DirecTV in the second quarter. The company also increased the expected cost synergies from the acquisition to USD 2.5 billion per year, compared to an estimate of USD 1.6 billion when the deal was announced last year.

AT&T Wireless reported quarterly revenues up 1.8 percent to USD 18.2 billion. Equipment revenues jumped 36 percent to USD 3.4 billion, while service revenues were down 3.7 percent to USD 14.8 billion. AT&T blamed the fall on more customers taking its Mobile Share Value plans. The higher equipment costs and integration of Leap Wireless led to a rise in operating costs and pressure on margins, and operating profit fell 12.0 percent year-on-year to USD 4.4 billion. 

The mobile operator added a net 1.218 million mobile Sims in the quarter, including 441,000 postpaid customers and 945,000 connected devices. Postpaid churn fell to 1.02 percent, and total churn was at 1.40 percent. Phone-only postpaid ARPU decreased 9.6 percent versus the year-earlier quarter, a year since the start of the Share plans.

In the wireline market, AT&T saw revenues fall 3.1 percent to USD 14.1 billion. Excluding the divested activities, sales fell 1.2 percent, as weakness in the business market offset an over 20 percent increase in U-verse revenues. Despite a 3.1 percent fall in operating costs, operating profit was still down 3.5 percent to USD 1.4 billion, amid pressure from TV content costs, declines in legacy services and higher benefit expense. 

U-verse internet customers increased by 440,000 in Q1 to 12.6 million, offsetting losses in DSL for a net gain of 69,000 broadband customers in the quarter. U-verse TV gained 50,000 subscribers for a total 5.99 million at end-March. Voice connections fell by 629,000 in the three months to 24.15 million.

  

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