AT&T expects $10 billion charge in Q4, operating loss of $175m

Summary:The U.S. carrier has warned it expects to take a hefty hit in the next quarter due to pension obligations.

at&t 10 billion pension charge fourth quarter financial results

AT&T has warned that it will take a $10 billion hit due to pension obligations in the next quarter.

According to a SEC filing submitted Thursday, the company believes its fourth-quarter earnings will be impacted by approximately $10 billion due to pension plans, which have been partially offset due to an asset gain of $1.9 billion.

Despite the $1.9 billion asset gain, the firm also said that there will be an estimated operating income loss of $175 million within the wireless sector due to damage and higher-than-expected smartphone costs relating to Superstorm Sandy. The storm, which hit the United States in late October, caused damage to cellphone towers and continual service outages on cellular networks. Rival firms Verizon, Sprint and T-Mobile USA also had to contend with data outages , floods and cables being severed.

In addition, AT&T warned that it has lowered its long-term rate of return from 8.25 percent to 7.75 percent due to "uncertainty in the securities markets and U.S. economy" in 2013.

The firm says that roughly 10.2 million devices were sold in Q4, breaking the record of 9.4 million in the same quarter last year. Rival carrier Verizon said that 9.8 million smartphones were activated in Q4, mainly due to high iPhone sales, however, the competitor is also facing charges of roughly $7 billion due to similar obligations within the fourth quarter.

Recent reports suggest that AT&T is considering the prospect of tapping into European markets by taking over a European mobile network. The U.K.'s new 4G LTE network Everything Everywhere (EE), or Dutch provider KPN are potential prospects.

AT&T will report its full fourth quarter and 2012 fiscal year financials on January 24.

Topics: AT&T, Tech Industry

About

Charlie Osborne, a medical anthropologist who studied at the University of Kent, UK, is a journalist, freelance photographer and former teacher. She has spent years travelling and working across Europe and the Middle East as a teacher, and has been involved in the running of businesses ranging from media and events to B2B sales. Charli... Full Bio

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.