Summary
AT&T Inc. reported solid financial results for the third quarter and the first nine months of 2008, demonstrating continued growth driven primarily by its wireless segment. Operating revenues saw a healthy increase of 4.0% in the third quarter and 4.9% for the first nine months, largely attributable to a growing wireless subscriber base and increased data revenues. While traditional wireline voice revenues continued to decline due to competition and economic pressures, the company's strategic shift towards data services and broadband is showing positive traction, with broadband connections up 7.9% and video connections up significantly. The company also highlighted strong performance in its equity investments, particularly in América Móvil. Despite revenue growth, operating expenses also rose, notably in the wireless segment due to increased equipment costs associated with new handset launches like the iPhone 3G and higher sales volumes. The company's debt ratio increased to 40.6% from 35.3% in the prior year, largely due to debt incurred for spectrum license acquisitions. AT&T continues to invest heavily in its U-verse services and wireless network expansion, with capital expenditures expected to remain substantial. While facing economic headwinds and ongoing litigation, AT&T remains focused on its strategic priorities, including expanding its data offerings and managing its cost structure.
Financial Highlights
27 data points| Revenue | $31.34B |
| Cost of Revenue | $13.02B |
| Gross Profit | $18.32B |
| SG&A Expenses | $7.72B |
| Operating Expenses | $25.72B |
| Operating Income | $5.62B |
| Interest Expense | $858.00M |
| Net Income | $3.23B |
| EPS (Basic) | $0.55 |
| EPS (Diluted) | $0.55 |
Key Highlights
- 1Total operating revenues increased by 4.0% to $31,342 million in Q3 2008 and 4.9% to $92,952 million for the nine-month period, driven by wireless subscriber growth and data revenue expansion.
- 2The wireless segment showed strong performance with operating income up 21.0% in Q3 and 64.9% for the nine-month period, fueled by a 16.4% increase in total segment operating revenues.
- 3Data revenues are a growing contributor, with wireless data service revenues increasing 50.5% in Q3 and 53.0% for the nine-month period, now representing 24.2% of wireless service revenues.
- 4Despite overall revenue growth, the wireline segment experienced a 2.2% decline in total segment operating revenues, primarily due to an 8.1% drop in voice revenues, though data revenues saw a 5.3% increase.
- 5Broadband connections grew by 7.9% to 14.8 million and video connections surged by 40.3% to 2.96 million, indicating successful expansion in these growth areas.
- 6The company's debt ratio increased to 40.6% as of September 30, 2008, up from 35.3% in the prior year, primarily due to significant debt issuance for spectrum license acquisitions.
- 7AT&T continues to invest heavily in capital expenditures, with significant spending on wireless network expansion and U-verse services, expected to remain in the mid-teens as a percentage of consolidated revenue for 2008.