Seeking Alpha

AT&T's subscriber adds, cash flow guidance disappoint; shares -1.9% AH

  • AT&T (T) had 566K postpaid net adds in seasonally strong Q4, up from 363K in Q3. However, tablet net adds accounted for 440K of the additions.  By comparison, Verizon had 1.6M postpaid net adds in Q4, and T-Mobile (once losing share to AT&T) 869K. 32K prepaid subs were lost.
  • However, wireless service revenue rose 4.8% Y/Y (better than Q3's 3.7%) thanks to a 16.8% increase in data revenue. Postpaid ARPU rose 2.1% Y/Y, and wireless op. margin (boosted by moderating subsidy spend) rose to 21.4% from 14.5% a year earlier. Churn rose 1 bps Y/Y to 1.43%.
  • 77% of AT&T's postpaid base now uses smartphones, up from 70% a year ago.
  • AT&T is guiding for 2%-3% 2014 revenue growth, above a consensus for 1.9% growth. The carrier has set a 2014 capex budget of $21B, which compares with 2013 capex of $21.2B. Free cash flow is expected to fall to $11B in 2014 from $13.6B in 2013.
  • Wireline revenue continues to fall, declining 1.4% Y/Y after dropping 1% in Q3. Wireline data revenue rose 5.6%, but wireline voice fell 11%. Wireline op. margin fell to 9.9% from 12% a year ago.
  • U-verse Internet and TV sub adds fell to 630K and 194K in Q4 from 655K and 265K in Q3. Total U-verse revenue rose 27.9% Y/Y.
  • $1.9B was spent on buybacks in Q4, even with Q3 and down from $3.3B in Q2.
  • CC underway. Q4 results, PR, slides.
Comments (13)
  • mostserene1
    , contributor
    Comments (3330) | Send Message
     
    Looks like good news to me. Jeez, analysts can always find something to squawk about.

     

    Long T.
    28 Jan, 06:15 PM Reply Like
  • CLUB 198
    , contributor
    Comments (58) | Send Message
     
    I've gotta say...I agree "mostserene1"
    I read the earnings report summary and listened to the entire conference call. I came away believing that, given the over all economic environment (horrible), the level of competition in the industry (fierce) and the rapidly changing nature of telecom generally, ATT is extremely well positioned to do very well over the next few years...good dividend, strong balance sheet, not sitting back and let market share be taken from them without a fight, beat earning and revenue guidance and looks to continue to do so going forward, etc., etc....lots of pluses, minor question marks going forward (in my view).

     

    It's never been a "make a quick buck" stock..I think the analysts might be judging it on the wrong terms. We'll see in a year or so...meanwhile a 5.5% "sleep at night" dividend will keep me in the game
    28 Jan, 06:34 PM Reply Like
  • Augie91
    , contributor
    Comments (217) | Send Message
     
    Well said Club. Looks like T will be on sale tomorrow, gonna buy me a few more shares :)
    28 Jan, 07:38 PM Reply Like
  • Mike Nadel
    , contributor
    Comments (7246) | Send Message
     
    Augie:

     

    I've been wanting to initiate a T position for some time. I'm hoping you're right and tomorrow will be the day! If so, I'll be elbowing you for position in the checkout line!!

     

    Mike
    28 Jan, 11:21 PM Reply Like
  • Augie91
    , contributor
    Comments (217) | Send Message
     
    Gonna try and get a nibble at $32…..Good luck!!
    29 Jan, 10:19 AM Reply Like
  • Mike Nadel
    , contributor
    Comments (7246) | Send Message
     
    Augie:

     

    I set my limit order at $32.02 and it struck. Then went down a penny more before heading back up over 33. So because I didn't do the round-number thing (and make my order 32), I'm now the proud owner of T, all bought at a 5.75% yield and one penny higher than the 21-month low.

     

    Sometimes even a blind squirrel ...

     

    Mike
    29 Jan, 12:08 PM Reply Like
  • AdamDivy
    , contributor
    Comments (378) | Send Message
     
    Good thinking and congrats Mike!
    29 Jan, 12:17 PM Reply Like
  • sethmcs
    , contributor
    Comments (2980) | Send Message
     
    2% is not a sale. I will double down at $30.00.
    29 Jan, 12:12 AM Reply Like
  • al roman
    , contributor
    Comments (4158) | Send Message
     
    (T) is (SO) generous loyal and dedicated and have been a part of our lives (SO) long now i am sure things will work out for us all,everything is going to be alright.
    29 Jan, 06:18 AM Reply Like
  • User 5935901
    , contributor
    Comments (36) | Send Message
     
    T isn't as rosy as some may think. It's generous dividend is hurting their FCF as their dividend payout ratio is 123% of trailing earnings and about 70% of forward earnings. If interest rates increase, their massive debt, which has been fueling their buybacks, will get more expensive to maintain. Although I don't think the dividend is in danger of a cut in the near term, they may cut it in the far future to give themselves more cushion and more cash for growth.

     

    Have owned T in the past and would buy again if the price is right.
    29 Jan, 08:17 AM Reply Like
  • PeteCal
    , contributor
    Comments (81) | Send Message
     
    All this concern about postpaid.
    I'm going prepay, everybody I know is going prepay.
    All the carriers will face this.
    29 Jan, 09:33 AM Reply Like
  • jumpnjoey77
    , contributor
    Comments (424) | Send Message
     
    Picked up 300 shares. Better then owning a 30 year bond.
    29 Jan, 10:44 AM Reply Like
  • Tradevestor
    , contributor
    Comments (4013) | Send Message
     
    http://seekingalpha.co...? Maybe its time to be greedy when others are fearful - Love T and PM here
    29 Jan, 11:02 AM Reply Like
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