Telecommunications giant AT&T Inc. (T: Quote) on Tuesday reported a 9 percent increase in profit for the second quarter, reflecting higher revenues and best-ever margins in its wireless business.
AT&T recorded a decline in smartphone sales in the quarter, helping it to save on phone subsidies and boost its margins. Earnings per share beat analysts' expectations, while revenues missed their estimates.
Second-quarter wireless operating income margin for the company was 30.3 percent, compared to 26.9 percent in the year-ago quarter.
AT&T sold 5.1 million smartphones in the quarter, with more than one-third of all the company's postpaid smartphone subscribers on 4G-capable devices. This compares to sales of more than 5.6 million smartphones in the year-ago quarter.
U.S. carriers sell smartphones such as the iPhone to subscribers at discounted prices to get them to sign up for contracts that usually run for two years. However, the discounted prices pressure the carriers' margins. AT&T activated 3.7 million iPhones in the latest quarter.
Total wireless revenues for the quarter, including equipment sales, increased 4.8 percent to $16.35 billion. Of this, wireless service revenues grew 4.3 percent to $14.77 billion. Wireless data revenue grew 18.8 percent, driven by Internet access, access to applications, messaging services and related services.
AT&T posted a net increase in total wireless subscribers of 1.3 million in the second quarter to reach 105.2 million in service. This includes gains in every customer category.
Subscriber additions for the quarter include postpaid net additions of 320,000. This compares to net additions of 331,000 in the prior-year period and 187,000 in the preceding first quarter.
AT&T added 496,000 of branded computing subscribers, including tablets, to reach 6.3 million in the quarter. This represents a 50 percent increase from a year ago.
Postpaid wireless average monthly revenues per subscriber or ARPU grew 1.7 percent to $64.93. Postpaid churn, or customers who cancel services, reached its lowest level ever.
Meanwhile, AT&T's wireline revenues for the quarter edged down 0.8 percent from last year to $14.90 billion.
The company's second-quarter net income was $3.90 billion or $0.66 per share, up from $3.59 billion or $0.60 per share in the year-ago period.
On average, 33 analysts polled by Thomson Reuters expected the company to report earnings of $0.63 per share for the quarter. Analysts' estimates typically exclude one-time items.
Revenues for the quarter rose 0.3 percent to $31.58 billion from $31.50 billion in the previous-year quarter and missed analysts' consensus estimate of $31.70 billion.
AT&T said it repurchased 75.8 million of its shares for $2.5 billion in the quarter. The company expects to continue to buyback shares consistent with its repurchase authorization.
T closed Monday's trading at $35.38. In Tuesday's pre-market, the stock is adding $0.05 or 0.14 percent to $35.43.
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by RTT Staff Writer
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