10-KPeriod: FY2010

AT&T INC. Annual Report, Year Ended Feb 25, 2010

Filed February 25, 2010For Securities:TT-PCTBBT-PA

Summary

AT&T Inc.'s 2010 10-K filing showcases a company deeply entrenched in transforming its business for the digital age, with significant focus on wireless and broadband expansion. The company has strategically consolidated its operations through key acquisitions, notably the full ownership of AT&T Mobility and the integration of BellSouth, positioning itself as a leading telecommunications provider in the U.S. and globally. In 2009, AT&T experienced a shift in revenue, with the Wireless segment contributing a substantial 43% of total operating revenues, a notable increase from previous years, driven by strong data growth and exclusive device offerings like the Apple iPhone. Conversely, the Wireline segment, while still a significant revenue generator (52%), saw a decline in traditional voice services due to customer migration to wireless and internet-based alternatives. The company is actively investing in and expanding its U-verse broadband and video services, aiming to integrate wireline and wireless offerings, but faces regulatory and deployment challenges. Looking ahead, AT&T is focused on network modernization, including the transition to Long Term Evolution (LTE) technology, and on leveraging its expanded infrastructure to deliver converged communication and entertainment services.

Financial Highlights

53 data points
Beta

Revenue

$124.28B

59.6% Gross Margin

Net Income

$19.86B

16.0% Net Margin

EPS (Diluted)

$3.35

Total Assets

$269.39B

Cash & Equivalents

$1.20B

Free Cash Flow

$35.22B

Financial Statements
Beta
Revenue$124.28B
Cost of Revenue$50.26B
Gross Profit$74.02B
SG&A Expenses$34.99B
Operating Expenses$104.71B
Operating Income$19.57B
Interest Expense$2.99B
Net Income$19.86B
EPS (Basic)$3.36
EPS (Diluted)$3.35
Shares Outstanding (Basic)5.91B
Shares Outstanding (Diluted)5.94B

Key Highlights

  • 1AT&T has significantly expanded its wireless customer base, reaching over 85 million subscribers by the end of 2009, with wireless services accounting for 43% of total operating revenues, demonstrating a strategic shift towards mobile communications.
  • 2The company is actively deploying and expanding its AT&T U-verse high-speed broadband and video services, reaching over 2 million video customers by December 2009 and passing over 22.8 million living units.
  • 3AT&T is investing in network technology, with plans to transition to Long Term Evolution (LTE) technology in 2011, enhancing data and video capabilities.
  • 4The Wireline segment's traditional voice revenues are declining, largely due to customer migration to wireless and internet-based services, prompting a strategic focus on bundled data, broadband, and video offerings.
  • 5The company acknowledges regulatory complexities and potential headwinds, particularly concerning U-verse deployment and its classification as a cable service, which could impact deployment costs and timelines.
  • 6AT&T is managing significant labor relations, with a substantial portion of its workforce unionized and new labor agreements being ratified or under negotiation, impacting wage and benefit costs.
  • 7No single customer accounted for 10% or more of AT&T's consolidated revenues in 2009, indicating a diversified customer base.

Frequently Asked Questions

AT&T's primary business segments are Wireless, Wireline, Advertising Solutions, and Other. In 2009, the Wireless segment contributed approximately 43% of total segment operating revenues and 60% of total segment income, showing strong growth. The Wireline segment contributed approximately 52% of segment operating revenues and 36% of total segment income. Advertising Solutions accounted for about 4% of revenues and 6% of income, while the Other segment represented about 1% of revenues and less than 1% of income.

AT&T is responding to the decline in traditional wireline voice services by focusing on bundled offerings that combine voice, data, and video services, particularly its AT&T U-verse services. The company is also developing IP-based services to integrate wireline and wireless offerings, aiming to offer customers more comprehensive and convenient communication solutions.

AT&T faces several challenges and risks, including adverse economic conditions affecting customer demand and capital access, changes in technology and product substitutions, increasing costs for benefit plans, and significant regulatory scrutiny from the FCC and state commissions. Competition from alternative technologies like cable and VoIP, the cost and timing of U-verse deployment, obtaining wireless spectrum, and managing wireless data growth are also key concerns. Additionally, the company must navigate labor relations and the potential for new accounting or tax regulations.

AT&T's strategy for future growth in wireless centers on expanding network coverage, improving network quality, and offering a broad array of innovative products and services, including exclusive devices like the Apple iPhone. The company aims to attract new customers and minimize churn by focusing on integrated handsets, new devices like netbooks and eReaders, and value-added services such as free mobile-to-mobile calling. Plans also include transitioning to advanced Long Term Evolution (LTE) technology in 2011.