What was the primary driver of the significant revenue increase in the second quarter of 2007?

The primary driver of the substantial revenue increase was the full consolidation of BellSouth Corporation's financial results, following AT&T's acquisition of BellSouth in December 2006. This added BellSouth's operations to AT&T's reported revenues.

How is the company addressing the decline in traditional voice revenues?

AT&T is focusing on expanding its data services across both its wireline and wireless segments. Growth in IP data, wireless data usage (including messaging and browsing), and the launch of new devices like the iPhone are key strategies to offset the decline in voice revenues and drive future growth.

What is the status of the BellSouth integration, and what are its financial impacts?

The integration of BellSouth is progressing well, contributing to increased operating income through merger synergies and operational efficiencies. However, these benefits are partially offset by merger-related charges and increased amortization expenses on intangible assets recognized during the acquisition. The acquisition has significantly boosted revenue and operating income for the consolidated entity.

How is AT&T returning capital to shareholders?

AT&T is returning capital to shareholders through dividend payments and share repurchases. In the second quarter of 2007, the company declared a dividend of $0.355 per share and repurchased approximately 98.3 million shares of its common stock for $3.9 billion, reflecting an ongoing commitment to shareholder returns.

AT&T INC. 10-Q Quarterly Report Q2 FY2007

Summary

AT&T Inc. reported strong revenue growth in the second quarter of 2007, primarily driven by the full inclusion of BellSouth's results following its acquisition in late 2006. Total operating revenues surged by 86.9% year-over-year to $29.5 billion. Net income also saw a significant increase, rising 60.6% to $2.9 billion, or $0.47 per diluted share. The company experienced substantial growth across its segments, with particularly robust performance in its wireless and wireline operations, bolstered by data service expansion. The company highlighted a strategic shift in its business, with increasing reliance on data services to offset declining traditional voice revenues. The integration of BellSouth is progressing well, contributing to merger synergies and operational efficiencies, though offset by increased merger-related charges and amortization expenses. AT&T is actively investing in its future growth, particularly in its U-verse services and wireless network expansion, while also continuing to return capital to shareholders through dividends and share repurchases.

Key Highlights

1Total operating revenues increased by 86.9% to $29.5 billion for the second quarter of 2007, largely due to the inclusion of BellSouth's operations.
2Net income rose by 60.6% to $2.9 billion, resulting in diluted earnings per share of $0.47, an increase from $0.46 in the prior year's second quarter.
3The wireless segment demonstrated strong growth with service revenues up 14.9%, driven by increased data usage and subscriber additions, including the early impact of the iPhone launch.
4Wireline segment revenues grew by 24.6%, with significant contributions from both voice and data services, reflecting the BellSouth acquisition and an increase in broadband connections.
5The company's operating income margin improved slightly in both the wireless and wireline segments, indicating effective cost management and synergy realization post-acquisition.
6AT&T repurchased approximately 98.3 million shares of common stock for $3.9 billion during the second quarter, demonstrating a commitment to returning value to shareholders.

AT&T INC. Quarterly Report for Q2 Ended Jun 30, 2007

Summary

Key Highlights

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