AT&T (NYSE:T) on Thursday delivered a strong fourth quarter and added 400,000 retail postpaid customers and connected 442,000 iPads and Android tablets.
The quarter for AT&T is notable because there will be a lot of comparison’s to Verizon’s quarter. However, the customer counts aren’t direct comparisons. For instance, AT&T’s tablet and device additions are prepaid accounts. Verizon counts tablets and MiFi devices as postpaid.
For instance, Verizon (NYSE:VZ) added 872,000 retail postpaid customers in the fourth quarter. AT&T added 400,000 postpaid customers and 442,000 tablets to the customer mix. Simply put, the mix of the customer additions are different, but the final customer tally between the two carriers is comparable.
AT&T reported fourth quarter earnings of $1.1 billion, or 18 cents a share. That sum includes a 26 cents a share charge for pension accounting. Non-GAAP earnings were 55 cents a share, a penny better than expectations. AT&T’s fourth quarter revenue was $31.4 billion, up 2.1 percent from a year ago.
For 2010, AT&T reported earnings of $19.9 billion, or $3.35 a share, on revenue of $124.3 billion, compared to earnings of $12.1 billion, or $2.05 a share in 2009.
AT&T is portraying itself as a carrier that can hang as it loses its iPhone exclusive to Verizon. The carrier is also noting that its wireline additions—U-Verse TV and Internet—is growing faster than Verizon. AT&T’s release downplays the iPhone relative to previous statements—even though the carrier activated 4.1 million iPhones. The argument, which is believable, is that AT&T can compete well with Verizon. Indeed, AT&T noted that it landed new two-year iPhone contracts even with reports of the Verizon iPhone.
The company’s outlook was upbeat. The company is projecting mid-single digit earnings per share growth and improving margins in 2011. Capital spending will be more than $19 billion as AT&T builds its 4G network. CEO Randall Stephenson said the company would accelerate its 4G plans and is “well positioned to drive the industry’s next waves of innovation and growth.
By the numbers:
- The company added 2.8 million net customers including connected devices like e-readers (up 1.5 million), 307,000 prepaid customers and 595,000 reseller accounts in the fourth quarter.
- Fourth quarter churn was 1.32 percent with a postpaid churn of 1.15 percent.
- AT&T ended the quarter with 95.5 million wireless subscribers. On a postpaid basis, AT&T had 68 million customers. Verizon ended 2010 with 87.5 million retail customers and 94.1 million total.
- 61 percent of AT&T’s postpaid customer base had smartphones. At Verizon that percentage is 26 percent, but executives say at least half of the customer base will have smartphones by the end of the year.
- U-verse TV added 246,000 subscribers to hit the 3 million customer mark. Ninety percent of those subscribers also got U-verse Internet access. U-verse revenue was $1.3 billion in the fourth quarter. On the FiOS front, Verizon added 197,000 net Internet customers and 182,000 new TV subscribers.
- AT&T’s business revenue was $9.4 billion, down 4.5 percent from a year ago.