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

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.

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TOPICS: AT&T, Tech Industry
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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

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4 comments
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  • The real news here is the pension

    plan. Keep your eye on this. You cannot stay in business paying people who are no longer working for you.
    baggins_z
    • Does that include...

      ...executive severence plans?

      I can always bring up the sanctity of contracts.
      John L. Ries
  • Apples to oranges...

    "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"

    1. Devices smartphones. Devices include feature phones, tablets and cellular internet connection modems in addition to smartphones. How many feature phones, jetpacks, and tablets did Verizon activate?

    That being said, I'll refer to both as counts as 'devices' for my other point:

    2. Devices sold devices activated. A lot of devices get bought elsewhere (like Ebay) and get activated with no contract renewal and no carrier subsidy. Selling a smartphone usually involves a heavy subsidy with a contract, so a lot of sales would lower net income by heavy subsidy costs.
    NotMSUser
    • addition...

      Guess the HTML filter took out my not equal notation.
      DEVICES SOLD NOT EQUAL SMARTPHONES
      and
      DEVICES SOLD NOT EQUAL DEVICES ACTIVATED
      NotMSUser