AT&T has posted a US$6.68 billion loss for the fourth quarter of its current financial year mainly on the back of fees the operator has had to pay as result of its failed acquisition of T-Mobile USA. AT&T shares lost two and a half per cent despite the fact that the company shifted a total of 9.4 million smartphones over the quarter, the bulk of which (7.6 million) were Apple iPhones. Martyn Warwick reports.
The record-breaking iPhone sales saw AT&T's revenues rise by four per cent in Q4 to $32.5 billion. Randall Stephenson, AT&T's chairman and CEO, said the boost in sales was down to a “blowout holiday season.” Mr. Stephenson also had a dig his competitors in general and arch-rival Verizon in particular, noting that, “In a year when competitors began selling the iPhone, we outsold them in every single quarter."
AT&T also attracted two and a half million new mobile customers bringing its total subscriber base to 103.2. Verizon, meanwhile, signed-up added 1.2 million new users bringing its total subscriber base to 108.7 million.
However, attracting that number of new subscribers cost AT&T a pretty penny in subsidies and markedly trimmed back margins and earnings. In Q4 the carrier's margins fell from 37.6 per cent to 28.7 per cent, down by 8.9 per cent. In Q4 last year AT&T grew its margins by 6.9 per cent. The CEO seemed sanguine about the fall and noted that smartphone users tend to generate a significant amount more ARPU than those subscribers who don't yet have an iPhone or something similar.
Some 22 million consumers have signed-up to two year-long fairly expensive tiered data plans and Randal Stephenson says said he expects to see "see some lift going into next year" - but then so does the diminutive Nicolas Sarkozy.
Much to the delight of investors still bemused by the failed T-Mobile USA acquisition, AT&T is to use nine billion dollars of the $39 billion it had earmarked for the aborted purchase to buyback some 300 million shares.
And AT&T still hasn't forgiven the Federal Communications Commission (FCC) for it's part in derailing its attempts to buy T-Mobile USA and the CEO took the opportunity to have a swipe at the regulator, this time for its the strict stance it is taking on spectrum issues. Basically, AT&T blames the FCC for being niggardly with the freeing-up of new spectrum and for being too slow in auctioning the capacity that is available.
Randall Stephenson said, “We pile more and more regulatory uncertainty on top of an industry that is the foundation for a lot of today’s innovation. The end result of this is that we have an industry that is just really stuck in creating real capacity. The FCC has not held a significant spectrum auction since 2007 and we have had to to resort to making smaller transactions on spectrum, and even these are subject to intense scrutiny".
He added, "In a capacity-constrained environment, we will manage usage-based data plans, increased pricing and managing the speeds of the highest volume users." In other words, "Let us buy spectrum on our own terms or the customer gets it."
The FCC was quick to respond, noting only last month that the agency had rubber-stamped AT&T's $2 billion purchase of RF from Qualcomm and had approved over 300 commercial mobile transaction applications in the last two years. The statement ends “Unfortunately, these facts were completely ignored in the [Randall Stephenson] conference call."
So, not much love lost between those two then.
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