10-KPeriod: FY2001

AT&T INC. Annual Report, Year Ended Dec 31, 2001

Filed February 28, 2002For Securities:TT-PCTBBT-PA

Summary

This 10-K filing for SBC Communications Inc. (T) as of December 31, 2001, details the company's extensive operations as a leading telecommunications provider in the United States and internationally. The report highlights SBC's significant market presence across wireline, wireless (through its joint venture Cingular), and directory services, serving a large customer base in 13 states. A key strategic initiative, Project Pronto, aimed at deploying broadband DSL services, had seen substantial investment but faced a slowdown due to an uncertain regulatory environment. The company's growth has been driven by significant mergers, including those with Ameritech, Pacific Telesis, and SNET, integrating operations across a wider geographic footprint. Financially, SBC's operations are segmented into wireline, wireless, directory, international, and other. The wireline segment remains the largest contributor to revenue, driven by local exchange and network access services. The wireless segment's results are primarily reflected through its equity in the Cingular Wireless joint venture, a significant player in the U.S. market. International operations comprise a diverse portfolio of investments across Europe, Asia, North America, South America, and Africa. Investors should note the company's ongoing efforts to expand its service offerings, manage regulatory challenges, and adapt to evolving market dynamics, including competition and technological advancements.

Key Highlights

  • 1SBC Communications Inc. operates as a major telecommunications provider with a significant presence in 13 U.S. states through its wireline services, which constituted approximately 75% of normalized operating revenues in 2001.
  • 2The company's wireless operations are primarily conducted through its 60% ownership in the Cingular Wireless joint venture, the second-largest wireless operator in the U.S. as of December 31, 2001.
  • 3SBC has made substantial investments in its broadband initiative, Project Pronto, with $3.2 billion spent by year-end 2001, aiming to deploy DSL services to a broad customer base, though capital expenditures were slowed due to regulatory uncertainty.
  • 4The company has grown significantly through past mergers, notably with Ameritech, Pacific Telesis, and SNET, integrating diverse operations and expanding its service territory.
  • 5International operations represent a substantial part of SBC's business, with investments in over 25 countries, including significant stakes in TDC in Denmark, Belgacom in Belgium, and Telmex in Mexico.
  • 6The company has diversified its revenue streams, with landline local service, network access, wireless subscribers, and directory advertising all contributing significantly to its operating revenues.

Frequently Asked Questions

SBC's primary business segments are wireline, wireless, directory, international, and other. The wireline segment is the largest, accounting for approximately 75% of normalized operating revenues in 2001, providing landline telecommunications, data services, and internet access. The wireless segment's results are mainly reported through equity in its joint venture, Cingular Wireless. Directory services and international operations also contribute to the company's overall revenue mix.

Project Pronto, a $6 billion initiative to provide broadband DSL services, had seen $3.2 billion invested by December 31, 2001, with 1.3 million DSL subscribers. However, due to an adverse and uncertain regulatory environment, SBC began to slow down capital expenditures related to building its national broadband network in the third quarter of 2001.

SBC's domestic wireless operations have been substantially contributed to Cingular Wireless, a joint venture formed with BellSouth. SBC holds a 60% economic ownership in Cingular, which served approximately 21.6 million customers as of December 31, 2001, making it the second-largest wireless operator in the U.S. SBC accounts for its interest in Cingular using the equity method of accounting, reflecting its share of net income.

SBC has investments in businesses located in over 25 countries. Key international holdings include a 41.6% stake in TDC (Denmark), a 17.5% stake in Belgacom (Belgium), an 8.1% stake in Telmex (Mexico), and a 20% stake in Bell Canada. These investments span local and long-distance telephone services, wireless communications, data services, and directory publishing.