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AT&T reports strong wireless growth, meets Q2 earnings estimates

Published: 15:50 21 Jul 2011 BST

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Citing strong wireless revenues, AT&T reported second quarter earnings that met analyst estimates Thursday.

For the three months ending June 30, the telecommunications company reported net income of $3.6 billion, or 60 cents per share, compared to $4.0 billion, or 67 cents per share, a year earlier.

The company said earnings per share for the latest quarter matched earnings excluding the Telmex Internacional transaction a year ago.

Revenue rose 2.2%, up more than $680 million, to $31.5 billion, marking the company's sixth consecutive quarter with a year-over-year revenue increase, and topping sales estimates.

"We delivered another strong quarter capping a solid first half of the year," said chairman and CEO Randall Stephenson.

"Mobile broadband growth continues to be robust, and we are seeing encouraging signs in wireline revenues. This adds to our confidence as we look ahead.

"Mobile broadband with IP infrastructure and cloud services are transforming our industry and are creating unprecedented opportunity. AT&T is strongly positioned to lead in this new era."

The company saw 9.5% growth in wireless revenues, which includes equipment sales, to $15.6 billion. Wireless services revenue climbed 7.4% increase to $14.2 billion and wireless data sales improved over 23% to $5.4 billion.

Total wireless subscribers rose by 1.1 million to reach 98.6 million subscribers in service, with gains in every customer category, including 331,000 postpaid, or contract monthly, net additions.

AT&T said that it reached record smartphone sales of 5.6 million in the second quarter, nearly 70% of total postpaid sales. Smartphone sales rose over 43% year-over-year, while sales of non-iPhone smartphones more than doubled year over year.

In addition, branded computing subscribers, which includes tablets and other data-only devices, almost doubled since a year ago to reach 4.0 million. Most of those new subscribers were tablets, with 377,000 added in the quarter, of which 30% were postpaid.

Total churn, or the percentage of subscribers that discontinue their service, was 1.43% versus 1.29% in the second quarter of 2010.

Operating expenses were $25.3 billion, versus $24.7 billion a year earlier, reflecting higher operating costs from strong smartphone sales, high customer upgrade levels and merger costs.

In the wireline segment, total wireline revenues dropped more than 4% year-over-year, reflecting sluggish sales in voice and legacy data products, helped by IP data revenue, which neared half of consumer wireline revenues.

AT&T U-verse TV added 202,000 subscribers to reach 3.4 million in service, while U-verse High Speed Internet delivered a second-quarter gain of 439,000 subscribers to reach a total of 4.1 million, helping offset losses from DSL.

The company said that during the period, it posted a decline in total consumer revenue connections, primarily due to expected declines in traditional voice access lines, consistent with broader industry trends, somewhat offset by increases in U-verse TV and broadband connections.

Led by increased wireless demand, AT&T said it now expects capital expenditures in the $20 billion range for the full year, having previously forecast in the low to mid $19 billion range.

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