AT&T beats Q4 estimates, but T-Mobile is ruffling feathers

Summary:The second larget U.S. cellular giant saw 566,000 wireless postpaid net adds during the quarter, as T-Mobile's efforts to shake up the wireless industry are beginning to take its toll.

iPhone_4_launch_at_ATT_store
Image: AT&T

As T-Mobile continues to shake up the wireless industry, AT&T is showing signs of stress — based on its latest earnings report.

AT&T on Tuesday reported fiscal fourth quarter profit of $6.9 billion with earnings of $1.31 per share, compared to a $39 billion loss, or 68 cents a share, on the year ago quarter (statement). Non-GAAP earnings were 53 cents on revenue of $33.2 billion, up nearly 2 percent year-over-year.

Wall Street was expecting earnings of 50 cents per share on revenue of $33.06 billion for the quarter.

AT&T may have beaten analyst expectations but T-Mobile's efforts to ruffle feathers in the wireless industry are showing on AT&T's balance sheet — not least because AT&T scored just 566,000 net wireless postpaid adds during the quarter. 

While AT&T also provides wireline, voice and managed IT services, 56 percent of the company's revenue comes from wireless and cellular. But T-Mobile has taken every opportunity over the past year to dig its claws as far as it can into the second largest U.S. carrier.

In 2013 alone, T-Mobile introduced a streamlined plan structure for new customers dubbed "Uncarrier," which  all but killed off contracts  and phone subsidies. Then, upping the ante, the introduction of the "Simple Choice" plan allowed customers unlimited international data roaming plans — something the wireless industry had been dining out on for years as a prime money-maker on business and international customers. 

To make matters worse, T-Mobile earlier in January went even further by offering up to $350 in early termination fees in order to poach customers from the cellular giant. 

And AT&T's latest results shows that the stresslines are showing as a result of T-Mobile's moves.

att
Image: AT&T Investors

AT&T chairman and chief executive Randall Stephenson said in prepared comments that the company will continue to make its networks "even more powerful" and "layer on services" to drive new growth.

He added: "We have good momentum in areas like connected car, home automation and mobile business solutions. We're also committed to transforming our operations to make them more responsive and efficient. To that end, we've launched Project Agile, a broad set of initiatives to streamline and improve every part of our business. Execution has begun and will be a focus area for us in 2014 and beyond."

By the numbers:

  • Wireless revenues up by 4.8 percent compared to the year-ago quarter

  • 93 percent of postpaid phone sales were smartphones

  • More than 440,000 total net adds in the tablet space

  • 280 million U.S. residents can now access AT&T's LTE network, with more than half the company's postpaid smartphone users on the high-speed network

Looking ahead to the fiscal first quarter, AT&T said it expects consolidated revenue growth of about 2-3 percent with continued strength in wireless.

But hold onto your hats. T-Mobile probably still has a few tricks up its sleeve.

Topics: AT&T, Networking

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

zdnet_core.socialButton.googleLabel Contact Disclosure

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.