AT&T Q3: Beats Estimates, Activates 3.2 Million iPhones

AT&T’s (T) bet on the iPhone continues to work well. The company reported a better-than-expected third quarter, delivered post paid churn of 1.17 percent (a low for AT&T), activated 3.2 million iPhones and boosted data revenue by 33.6 percent.

The telecom giant on Thursday delivered net income of $3.2 billion, or 54 cents a share, on revenue of $30.9 billion, down from $31.3 billion a year ago. Wall Street was expecting earnings of 50 cents a share. If you’re an AT&T customer you may be more interested in AT&T’s update on its infrastructure improvements. The company added that dropped calls declined by 12 percent.

As usual, AT&T was powered by its wireless unit, which represents 44 percent of total sales. Among the key wireless data points (statement, financial supplement, quarterly overview, presentation):

• AT&T added 2 million wireless subscribers in the third quarter. Post paid net adds were 1.4 million.
• Total churn for the quarter was 1.43 percent, down from 1.69 percent a year ago. Postpaid churn was 1.17 percent, down from 1.22 percent. The takeaway: You may gripe about AT&T, but you don’t leave.
• iPhone activations were 3.2 million, the largest quarterly activation total to date. Of those activations, 40 percent of them were new to AT&T. The telecom giant’s success with the iPhone isn’t all that surprising given Apple’s blowout quarter.
• Wireless data revenue was $3.6 billion, up 33.6 percent from a year ago.

Among other key items:

• AT&T said it added 240,000 U-verse TV subscribers and now has a total of 1.8 million. The company added 252,000 U-verse broadband subscribers. Most TV subscribers also get broadband in a bundle.
• Revenue from consumer IP-based services were up 32.1 percent.
• The company had free cash flow of $13.9 billion for the first nine months of the year, up from $7.9 billion for the same period a year ago.

On its earnings conference call, AT&T will spend most of the time talking about its wireless business. AT&T said that it is making good progress updating its infrastructure and adding devices such as e-books, personal navigation devices and netbooks.

AT&T also provided an update on its infrastructure upgrades.

And more on the upgrades:

And finally it’s worth noting AT&T’s enterprise business—if only because the telecom giant barely gives it a passing mention any more. The revenue declines in the quarter tell the tale:

Comments

[jstratt:]

An excellent quarter for ATT! The increased earnings and cash flow pave the way for a higher stock price.

ATT is a hidden growth story. By that I mean in an environment of large revenue declines, near even is growth. I translate that to an equivalent 10% increase when the rest of the world stablizes.

My estimation is that the stock is now worth in excess of $30 per share and a 5.2% dividend yield. The dividend is not in danger with the rise in cash flow and a 6% dividend return is more than is now justified.

Dual reasons for increased share price make T an attractive investment with significant return potential.

Oct 22 10:21 PM

[secmaven:]

When a dog operation like Amazon that has lost money for years on end reports that it beat the WS estimates its stock price jumps 25% in one day to a new zero rate of return from dividends and a PE of 40. But when Telephone after consistent YAY profits, paying a solid six per cent and sporting a PE of 15 reports a beat the market yawns and the stock drops. Go figure.

Oct 25 01:02 AM