AT&T Swings To Profit In Q4; Issues Weak FY22 Outlook

at&t aug07 26jan22 lt

Telecom giant AT&T, Inc. (T) reported Wednesday a profit for the fourth quarter compared to a loss last year, primarily boosted by continuing customer growth in wireless, fiber and HBO Max, despite a 10 percent drop in revenues. Both adjusted earnings for the quarter and quarterly revenues also topped analysts' expectations. However, the company issued weak earnings and sales growth outlook for the full year 2022.

For the fourth quarter, net income attributable to common stock was $4.99 billion or $0.69 per share, compared to a net loss of $13.94 billion or $1.95 per share in the prior-year quarter.

Excluding other items, adjusted earnings was $0.78 per share, compared to $0.75 per share in the year-ago quarter.

AT&T's consolidated revenues for the quarter declined 10.4 percent to $40.96 billion from $45.69 billion in the same quarter last year.

On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.76 per share on revenues of $40.43 billion for the quarter. Analysts' estimates typically exclude special items.

Revenues were primarily impacted by divested businesses, mainly U.S. Video in the third quarter and Vrio in the fourth quarter, and lower Business Wireline revenues. The decreases were partially offset by higher WarnerMedia revenue, including a partial recovery from prior-year pandemic impacts, and higher Mobility and Consumer Wireline revenues.

Excluding impacts of the U.S. Video business and Vrio from both quarters, consolidated revenues totaled $40.6 billion, compared to $39.0 billion in the year-ago quarter.

Operating revenues for the communications segment, consisting Mobility, Consumer Wireline and Business Wireline business units, grew 2.4 percent to $30.21 billion from last year, due to increases in Mobility and Consumer Wireline more than offsetting a decline in Business Wireline.

WarnerMedia operating revenues increased 15.4 percent to $9.87 billion from last year, driven by higher content and other revenues, including the partial recovery from prior-year impacts of the pandemic and higher subscription revenues, partially offset by lower advertising revenues.

Operating revenues for the Latin America segment, consisting of Vrio and Mexico business units and is subject to foreign currency fluctuations, were down 29.0 percent year-over-year to $1.06 billion, due to the sale of Vrio in November 2021.

Operating revenues from AT&T Business Solutions, including wireless and fixed operations, edged down 0.9 percent to $9.04 billion, driven by declines in wireline serves revenues, partially offset by growth in wireless service revenues.

Operating income for the quarter was $5.31 billion, compared to an operating loss of $10.75 billion last year, due to non-cash asset impairments in the prior year.

Total operating expenses decreased 36.8 percent to $35.65 billion from $56.44 billion in the year-ago quarter, primarily due to $16.4 billion of non-cash asset impairments in the prior year, the separation of the U.S. Video operations, and impacts of Vrio and other divested businesses.

These expense decreases were partially offset by higher WarnerMedia programming, marketing and selling costs, and higher domestic wireless equipment costs, including 3G network shutdown costs, as well as $1.3 billion lower depreciation and amortization expense.

"Our momentum is strong and we're confident there is more opportunity to continue to grow our customer base and drive costs from the business," said John Stankey, AT&T chief executive officer.

Looking ahead to fiscal 2022, including WarnerMedia and Xandr, the company now projects adjusted earnings in a range of $3.10 to $3.15 per share on consolidated revenue growth in the low-single digits range, with revenue contribution for WarnerMedia and Xandr in the $37 billion to $39 billion range.

The Street is looking for earnings of $3.21 per share on a revenue decline of 6.1 percent to $158.1 billion for the year.

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