Over the holiday season, AT&T sold a record number of smartphones. But its quarterly earnings took a hit from pension costs and Hurricane Sandy.
Matt Rourke/Associated Press
AT&T reported a fourth-quarter loss of $3.9
billion, up from $6.7 billion a year before, on flat revenue of $32.6
billion.
Despite the setbacks, AT&T’s business had a strong fourth quarter.
It sold more smartphones than its main competitor, Verizon Wireless. It
also added many new contract subscribers and increased the revenue that
it gets from mobile data, the fees that people pay to use the Internet
on its network.
“We had an excellent 2012,” said Randall Stephenson, AT&T’s chief
executive, in a statement. “Looking ahead,” he added, “our key growth
platforms — mobile data, U-verse and strategic business services — all
have good momentum with a lot of headroom.”
On Thursday, AT&T reported a loss in the fourth quarter of $3.9
billion, or 68 cents a share, up from a loss of $6.7 billion, or $1.12 a
share, from the same quarter a year earlier.
The company said revenue was essentially flat at $32.6 billion.
Its adjusted per-share earnings were 44 cents a share, excluding pension
costs, the impact of Hurricane Sandy and the sale of its advertising
units. Wall Street analysts had expected 45 cents a share on earnings of
$32.2 billion, according to Thomson Reuters.
The company, based in Dallas, said that it sold 10.2 million smartphones
over the quarter, the most ever sold by any American carrier. A
majority of those smartphones were iPhones: AT&T sold 8.6 million
iPhones, in contrast to Verizon Wireless’s 6.2 million iPhones.
AT&T did not, however, beat Verizon in an important metric for
carriers: the number of new contract subscribers, who are the most
valuable type of customer. AT&T gained 780,000 new contract
subscribers over the quarter, compared with Verizon’s 2.1 million. In
the wireless industry, subscription growth is crucial as carriers joust
for the few remaining people who do not already own cellphones.
The iPhone,
the most popular smartphone in the world, has been an important weapon
for carriers to get new subscribers. Although AT&T still leads as
the nation’s top seller of iPhones, Verizon has been increasing its
iPhone sales every quarter, and it is getting close to catching up, said
Chetan Sharma, an independent mobile analyst.
“There’s always been this attachment in consumers’ minds that AT&T
is the brand for iPhone,” Mr. Sharma said. “I think that’s starting to
even out in the marketplace.”
Similar to Verizon, AT&T last summer started offering shared data plans,
which allow customers to share a single pool of data across multiple
devices, including smartphones, tablets and computers. It said on the
earnings call that it already had 6.6 million subscribers on these
plans, about a quarter of whom are opting for plans with at least 10
gigabytes. Thanks in part to these new shared data plans, revenue from
mobile data grew 14.7 percent over the quarter, to $6.8 billion, up from
$5.9 billion last year.
AT&T’s success with shared data plans is good news for the company,
because they help to pry customers off flat-rate, unlimited data plans
so that they eventually pay more for data, said Jan Dawson, an analyst
with Ovum, a research firm. Indeed, AT&T said more than 15 percent
of shared data plan customers were switching from unlimited data plans.
AT&T also saw a rise in customers for U-verse, its digital phone,
television and high-speed Internet service for households. It added
609,000 U-verse customers over the quarter, bringing the total number of
subscribers to about 7.7 million.
The carrier has big plans this year to attract more customers. It is in the process of a major wireless network expansion.
It said late last year that it would invest an extra $14 billion to
expand its wireless and broadband services through 2015. It expects that
its fourth-generation network technology, called LTE, will cover 300
million people by the end of next year.
Beyond making upgrades to its wireless network, AT&T has plans to
offer new services that might create new revenue streams. In March, it
will begin selling its new wireless home security system, Digital Life,
which will allow people to use tablets or phones to monitor their homes
from afar. If a burglar trips a motion sensor in the house, for example,
a user can receive a text message, then call the police. Ralph de la
Vega, chief executive of AT&T Mobility, has said that he believes home security will be a big opportunity
to increase revenue, because only 20 percent of American homes have
security systems, leaving millions of homeowners as potential buyers.
AT&T’s Mr. Stephenson said he was excited about the “vibrant
options” for phones set to arrive in the coming year, including devices
with Research in Motion’s new BlackBerry 10 system.
“I’m very optimistic about BlackBerry 10,” Mr. Stephenson said. “I hope that it’s as good as it appears to be.”
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