Wireless, Broadband Lead AT&T to Strong Growth
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AT&T on Thursday posted stronger-than-expected wireless growth for the fourth quarter and reiterated its 2008 outlook, easing investor concerns that U.S. economic weakness would hurt its subscriber growth.
The largest U.S. phone company had warned earlier this month that it saw some softness in its consumer business, but it said on Thursday that it added 2.7 million net new wireless subscribers in the quarter, showing resilient growth.
Five analysts contacted by Reuters had on average estimated AT&T's new subscribers at 1.92 million for the fourth quarter.
AT&T also said its fourth-quarter profit was $3.1 billion, or 51 cents per share, compared with $1.9 billion, or 50 cents a share, a year earlier. Most of the year-ago quarter excludes earnings from BellSouth, which AT&T bought at the end of 2006.
Before merger-related costs and other special items, AT&T's profit rose to 71 cents a share from 61 cents a year ago, matching Wall Street expectations.
AT&T said quarterly revenue grew 2.9 percent to $30.3 billion assuming it owned BellSouth for both full quarters.
"It was a solid quarter certainly," said Stifel Nicolaus analyst Chris King. "It's certainly a positive, and they reiterated guidance for 2008," he added. "In this type of market, any reiteration of guidance has to be viewed positively."
The exclusive U.S. carrier for Apple's iPhone, AT&T results came after third-largest U.S. wireless service Sprint Nextel warned last week it had incurred steep losses of high-value customers last quarter. Verizon Communications is scheduled to report results on Jan 28.
"We had an excellent fourth quarter, which affirms our outlook for 2008," AT&T CEO Randall Stephenson said in a statement.
He had reported earlier in January that AT&T was seeing some softness in its consumer business, which represents about 20 percent of revenue. The CEO said at the time that this had less of an impact in wireless than on wired services.
AT&T last month forecast 2008 consolidated revenue growth in the mid-single-digit percentage range and adjusted earnings-per-share growth in the double-digit range. It also forecast wireless service revenue growth in the mid teens.
The company also said on Thursday it had approved a buyback of 400 million shares, or 6.6 percent of its shares outstanding, and expects to complete the transactions by the end of 2009.
AT&T said it maintained double-digit growth in revenue and subscribers for its broadband Internet service and saw subscribers to its U-verse video service rise to 231,000 by the end of the quarter from 126,000 the previous quarter.
Stephenson said AT&T was on track to reach more than 1 million U-verse subscribers by the end of 2008.
U-verse is a video and broadband service AT&T is building to compete with cable rivals such as Comcast.
King said AT&T's addition of 12,000 U-verse customers a week in December was better than its goal of 10,000.
AT&T shares were up 12 cents at $36.65 in early trading.