AT&T reported fourth-quarter revenues up 1.8 percent from a year earlier to USD 33.2 billion. Adjusted operating profit rose to USD 5.2 billion from USD 4.2 billion, giving a margin of 15.5 percent, and adjusted EPS was up 20.5 percent to USD 0.53. Net profit reached USD 6.9 billion, versus a loss of USD 3.9 billion a year ago, thanks to one-time gains on pension holdings and the sale of America Movil shares. These were offset in part by charges for debt redemption and lay-offs.
Wireless revenues rose 4.5 percent to USD 18.4 billion in Q4, including a 4.8 percent increase in service revenue and 16.8 percent growth in data revenue. Operating profit from the mobile activities rose to USD 3.9 billion, up 53.8 percent year-on-year. AT&T added a net 809,000 new mobile lines in Q4, including postpaid net adds of 566,000 and 398,000 new connected devices, offset by the loss of 32,000 prepaid users and 123,000 lines at resellers. Retail smartphone adds slowed to 529,000, and tablet net adds reached 440,000. Among postpaid customers, 77 percent were using smartphones and 29 percent were on a Mobile Share plan at the end of the quarter.
Wireline revenues fell 1.4 percent to USD 14.7 billion in Q4, including a 0.7 percent drop in service revenue. After a 1.0 percent rise in costs, operating profit was down 18.8 percent to USD 1.5 billion. Consumer revenues continued to increase, up 2.9 percent to USD 5.6 billion, thanks to expansion of the U-verse services. U-verse gained 194,000 TV subscribers and 630,000 broadband customers in the three months, helping offset AT&T's losses in the DSL market. In the business market, revenues fell 3.4 percent to USD 8.8 billion.
The LTE deployment is expected to be substantially complete by this summer, after which AT&T said it will focus more on developing new services for the network, such as the connected car and home automation. The operator also announced a new efficiency drive called Project Agile, which is expected to "streamline and improve" every part of the business. Execution of the project has already started and will be a focus in 2014.
The company expects revenue growth to improve slightly in 2014 to 2-3 percent, led by the wireless and consumer wireline activities. Overall margins should be stable, as improvement in wireless offsets pressure from Project VIP investments in wireline. Adjusted EPS is expected to grow in the mid single digits this year, excluding any impact from the share buyback, after an 8.2 percent increase in 2013. AT&T expects capex stable at around USD 21 billion in 2014, while free cash flow is forecast at USD 11 billion. The outlook excludes any "lift from the economy", AT&T said, nor does it include the proposed takeover of Leap Wireless.
