This is a summary of the first quarter fiscal 2009 earnings call conducted by AT&T Inc. (T) on April 22, 2009.
Executives:
Brooks McCorcle –
Head of IR
Rick Lindner –
CFO
Key Investor Issues:
- First quarter profit fell to $3.13 billion, or 53 cents per share, from $3.46 billion, or 57 cents a share, a year ago.
- Revenue slid 0.6% from a year ago to $30.57 billion.
- AT&T added 284,000 subscriptions to U-verse in the latest quarter, beating estimates.
- The company also added 359,000 broadband Internet subscribers in the quarter.
- AT&T said 1.6 million customers activated services on the AT&T network using iPhone, more than 40% of which were new AT&T customers.
First Quarter Highlights:
EPS for the quarter was $0.53. That includes $0.05 of pressure from incremental non-cash pension and retiree benefit costs. It is consistent with the full year outlook provided in January. Consolidated revenues were relatively stable reflecting economic pressures primarily in voice, largely offset by continued strength in wireless, AT&T U-verse, broadband and strategic business services.
The first quarter consolidated operating income margin was also in line with the full year outlook at 18.8%.
This reflects strong wireless results and good execution on wire line and company wide cost initiatives. It was a strong free cash flow quarter with $4.6 billion versus $700 million in the first quarter a year ago, reflecting lower capital expenditures and cash tax payments.
Economy has put pressure on usage and volumes particularly wire line voice in the company’s business operations and access line loss continues to impact consumer revenues.
In this environment AT&T have taken a disciplined approach to cost which is reflected in the first quarter margins and free cash flow. AT&T will continue to maintain a sharp focus on cost management this year. AT&T have continued to invest in and to ramp growth in the wireless data, advanced business services and AT&T U-verse platform.
AT&T delivered strong wireless growth with post-paid net adds up 24%.
iPhone activations continue to be strong and we have seen no lessening in the iPhone’s attractive ARPU and churn characteristics.
The wireless EBITDA margin expanded to over 40% this quarter. U-verse TV growth continues to ramp. AT&T took a significant step up in broadband net adds. Wire line IP data revenue growth improved to 16% driven by U-verse and advanced business services. AT&T consolidated margins are on track with the full year outlook provided in January.
Total consolidated revenues were $30.6 billion that is down slightly year-over-year.
This reflects a 12% reduction in wire line voice revenues and reductions in print advertising offset by growth in wireless and data services.
Wireless service revenues were up more than $1 billion, 9.6% and wire line data revenues were up 5.3%, slightly above the growth rate in this category over the past few quarters. Wire line IP data revenues were up 16.4% with double digit growth in both consumer and business.
Total wireless service revenues were up more than $1 billion versus first quarter a year ago and wireless subscribers were up 6.9 million.
AT&T had a strong post-paid quarter. Gross adds were up 9%. Net adds increased 24% and it was the third straight quarter of strong double digit in post-paid net adds.
AT&T continue to have industry leading post-paid data ARPU which was up 27% to $16.48 and total post-paid subscriber ARPU was up 2%. Wireless data growth continues to be robust driven by data capable devices and richer content and applications. Wireless data revenues were up nearly $900 million versus the first quarter a year ago. In the first quarter AT&T network carried more than 94 billion text messages, more than double the total in the year-earlier quarter.
For the first time, AT&T had more than a billion multimedia messages.
Media bundles and Internet access revenues both grew better than 40% and nearly 50% of the post-paid subscribers now are on monthly recurring data plans. Data usage and data revenues are driven by integrated devices.
Over the past year AT&T have more than doubled the number of integrated devices on its network.
Penetration of the post-paid base also more than doubled to nearly 32%. In the first quarter nearly 60% of the total wireless device sales were integrated devices.
This growth was led by the iPhone. AT&T had over 1.6 million iPhone activations in the quarter. Since the iPhone 3G launch in July of last year AT&T have had nearly six million iPhone 3G activations. More than 40% of iPhone activations in the first quarter were for new customers.
