AT&T reported a net loss of USD 6.7 billion or USD 1.12 per share for the fourth quarter, hurt by one-time charges for ending its deal to buy T-Mobile USA as well as pensions accounting and a directories impairment. Excluding the charges, EPS fell to 42 cents from 55 a year ago. Revenues were up a solid 3.6 percent to USD 32.5 billion, supported by record smartphone sales. The latter however put pressure on margins, with adjusted operating profit falling to USD 4.4 billion from USD 5.6 billion a year earlier. AT&T said it aims to return to mid single-digit or better earnings growth in 2012, with group and wireless margins improving and wireline margins stable. The company noted that "little economic lift is assumed with these expectations". Capex is expected be stable this year, at around USD 20 billion, as increased wireless spending offsets lower wireline spend. Free cash flow is forecast at USD 15-16 billion in 2012, versus USD 14 billion last year, and AT&T announced it's starting a buyback of up to 300 million shares.
The launch of Applle's iPhone 4S helped AT&T sell a record 9.4 million smartphones in the quarter, up nearly 60 percent from a year ago and more than double the number in Q3. The company sold over 7.6 million iPhones, most of which were the 4S, while Android sales more than doubled compared to a year ago. Just under 57 percent of postpaid subscribers now have a smartphone, with their ARPU 1.9 times higher than other customers. The company also reported 311,000 tablets sold in Q4. AT&T added a net 2.5 million subscribers for a total 103.2 million at year-end. That includes 717,000 new postpaid customers (the highest in five quarters), 159,000 new prepaid lines, 1.029 million new connected devices and 592,000 customers at resellers.
Revenues at AT&T Wireless were up 10 percent from a year ago to USD 16.7 billion, with service revenues rising a slower 4 percent to USD 14.3 billion. Data revenues improved 19.4 percent to USD 5.9 billion, helping drive a 1.4 percent increase in postpaid ARPU to USD 63.76. The higher smartphone sales pushed the EBITDA margin down to 28.7 percent from 37.6 a year ago, and operating profit from wireless fell 27 percent to USD 2.5 billion.
At the wireline division, business revenues were down 1.4 percent year-on-year to USD 9.3 billion, while consumer revenues rose 0.5 percent to USD 5.3 billion. Wireline operating profit fell to USD 1.8 billion from USD 2.0 billion a year ago. The U-verse internet service gained 587,000 customers for a total 5.2 million, but the figure was offset by bigger losses in DSL. U-verse TV gained 208,000 to reach a total 3.8 million customers at year-end. Due to the loss of traditional fixed lines, total consumer revenue connections fell to 41.3 million, from 43.4 million a year ago and 41.9 million in Q3.
