AT&T Adds 1.2 Million Smartphones in Q4, Sees $33.2 Billion in Revenue

AT&T posted its fourth-quarter earnings today and revenue, profits and subscribers continue to grow. Total revenue was at $33.2 billion, up 1.8% from the year before while wireless revenue reached $18.4 billion. Operating income (profits) hit $5.2 billion for the fourth quarter, versus $4.2 billion the year before.

AT&T added 566,000 postpaid wireless customers, and added 1.2 million smartphones to its network in the fourth quarter. It saw its lowest-ever fourth-quarter postpaid churn of 1.11 percent.

AT&T today reported solid fourth-quarter results with strong revenue and EPS growth driven by continued gains in the company's key growth drivers — mobile and IP data, U-verse and strategic business services.

“2013 was the year of the network,” said Randall Stephenson, AT&T chairman and CEO. “With Project VIP, we're delivering faster speeds and new services to millions more customers. And growth on these platforms is going strong. We exceeded build targets across the board. Our 4G LTE network is nearly complete and is the nation's most reliable with lightning-fast speeds. U-verse is rapidly expanding, and our fiber-to-the-business build is off to a fast start.

“The next steps are to make our networks even more powerful and layer on services that will drive new growth in the years ahead. We have good momentum in areas like connected car, home automation and mobile business solutions. We're also committed to transforming our operations to make them more responsive and efficient. To that end, we've launched Project Agile, a broad set of initiatives to streamline and improve every part of our business. Execution has begun and will be a focus area for us in 2014 and beyond.”

Fourth-Quarter Financial Results

For the quarter ended December 31, 2013, AT&T's consolidated revenues totaled $33.2 billion, up 1.8 percent versus the year-earlier period. Compared with results for the fourth quarter of 2012, operating expenses were $20.9 billion versus $38.5 billion; operating income was $12.2 billion compared to a loss of $6.0 billion; and operating income margin was 36.9 percent compared to (18.3) percent. Adjusted operating expenses were $28.0 billion, compared to an adjusted $28.4 billion in the year-ago quarter, down 1.4 percent; operating income was $5.2 billion versus $4.2 billion a year ago; and operating income margin was 15.5 percent, up from 12.9 percent last year.

Fourth-quarter 2013 net income attributable to AT&T totaled $6.9 billion, or $1.31 per diluted share, compared to $(3.9) billion, or $(0.68) per diluted share, in the year-earlier quarter. Adjusting for $0.89 from the non-cash actuarial gain on benefit plans and $(0.11) from other significant items (which included charges of $0.07 from debt redemption costs and $0.06 from employee separations, and a $0.02 gain from the sale of América Móvil shares), earnings per share was $0.53 compared to an adjusted $0.44 in the year-ago quarter, an increase of 20.5 percent.

Fourth-quarter 2013 cash from operating activities totaled $7.9 billion, and capital expenditures totaled $5.5 billion. Free cash flow — cash from operating activities minus capital expenditures — totaled $2.5 billion.

Full-Year Results

For full year 2013, compared with 2012 results, AT&T's consolidated revenues totaled $128.8 billion versus $127.4 billion; when excluding the divested Advertising Solutions business unit, revenues were up 1.9 percent for the year. Operating expenses reflect actuarial gains on benefit plans and were $98.3 billion, compared with $114.4 billion, down 14.1 percent; net income attributable to AT&T was $18.2 billion versus $7.3 billion; and earnings per diluted share was $3.39, compared with $1.25 in the prior year. With adjustments for both years, earnings per share totaled $2.50, compared with $2.31, an increase of 8.2 percent.

AT&T's full-year cash from operating activities was $34.8 billion, down from a record $39.2 billion in 2012 reflecting higher cash tax payments, timing of working capital payments and wireless device financing related to the AT&T Next program. Capital expenditures, including capitalized interest, totaled $21.2 billion versus $19.7 billion in 2012, as AT&T began its Project Velocity IP (Project VIP) build. Full-year free cash flow was $13.6 billion.

As part of its Project VIP-related LTE deployment, the company now covers nearly 280 million POPs. The company's LTE deployment is expected to be substantially complete by this summer.

During the quarter, the company repurchased 54 million of its shares for $1.9 billion. In 2013, the company repurchased 366 million shares, or more than 6 percent of outstanding shares, for $13.0 billion. The company expects to make future repurchases opportunistically.

You can read the full report here.