What was the main driver of AT&T's revenue growth in this period?

The primary driver of AT&T's revenue growth was the continued expansion of its wireless services, particularly data revenues. Growth in IP-based wireline services, such as U-verse, also contributed positively.

Why did net income attributable to AT&T decrease so significantly for the nine-month period?

The substantial decrease in net income for the nine months of 2011 compared to 2010 was primarily due to a one-time tax benefit of $8.3 billion recognized in the third quarter of 2010 resulting from a settlement with the IRS. Without this prior-year benefit, the net income performance would appear more favorable.

What is the status of the proposed T-Mobile acquisition?

AT&T announced an agreement to acquire T-Mobile USA in March 2011. However, the transaction is facing significant regulatory hurdles, including a lawsuit filed by the U.S. Department of Justice in August 2011, and other challenges from competitors. A trial date for the DOJ lawsuit is set for February 2012. AT&T intends to contest the allegations vigorously and anticipates closing the transaction in the first half of 2012, though uncertainty remains.

How is the company managing the decline in its traditional wireline voice business?

AT&T is actively managing the decline in its wireline voice business by focusing on increasing revenues from non-access-line-related services such as data, U-verse services (broadband and TV), and IP-based business services. The company also aims to capture these customers for its wireless services, offsetting wireline losses with wireless gains.

AT&T INC. 10-Q Quarterly Report Q3 FY2011

Summary

AT&T Inc. reported its financial results for the third quarter and the first nine months of 2011. For the three months ending September 30, 2011, total operating revenues were largely flat year-over-year, while operating income saw a significant increase of 14.8%. This improvement was driven by strong growth in wireless service revenue, particularly from data services, and increased revenues from U-verse services. Declining voice and directory revenues continued to be a drag on overall revenue. For the nine-month period, operating revenues increased by 1.4%, with wireless service revenue growth and IP-based wireline services being key drivers. Operating income also grew by 4.1% for the period. However, net income attributable to AT&T saw a substantial decrease of 43.4% for the nine months compared to the prior year, largely due to a significant tax benefit recognized in the third quarter of 2010 from an IRS settlement. The company is actively pursuing a significant strategic acquisition of T-Mobile USA, which is subject to regulatory review and potential legal challenges, and also completed the acquisition of minority interests in a wireless partnership. Significant capital expenditures were made, primarily in network upgrades and expansion.

Financial Highlights

49 data points

Beta

Revenue

$31.48B

0.6% Gross Margin

Net Income

$3.62B

0.1% Net Margin

EPS (Diluted)

$0.61

Total Assets

$277.65B

Cash & Equivalents

$10.76B

Free Cash Flow

$10.39B

Financial Statements

Beta

Revenue	$31.48B
Cost of Revenue	$12.66B
Gross Profit	$18.82B
SG&A Expenses	$7.97B
Operating Expenses	$25.24B
Operating Income	$6.24B
Interest Expense	$889.00M
Net Income	$3.62B
EPS (Basic)	$0.61
EPS (Diluted)	$0.61
Shares Outstanding (Basic)	5.94B
Shares Outstanding (Diluted)	5.95B

Key Highlights

1Wireless service revenue increased by 4.3% in Q3 2011 and 6.7% for the nine months ended September 30, 2011, driven by subscriber and data revenue growth.
2Operating income increased by 14.8% in Q3 2011 and 4.1% for the nine-month period, reflecting revenue growth and cost management initiatives.
3Net income attributable to AT&T decreased significantly by 43.4% for the nine months of 2011 compared to 2010, largely due to a large tax benefit recognized in the prior year.
4The company is in the process of acquiring T-Mobile USA, a transaction facing significant regulatory scrutiny and legal challenges from the DOJ and other parties.
5Capital expenditures remain substantial, with a focus on wireless network capacity expansion (including LTE) and wireline network upgrades (including U-verse).
6Wireline voice revenues continued to decline, down 10.5% in Q3 and 11.8% for the nine months, as customers migrate to wireless and IP-based services.
7Cash provided by operating activities increased to $27.15 billion for the first nine months of 2011, up from $25.35 billion in the prior year.

AT&T INC. Quarterly Report for Q3 Ended Sep 30, 2011

Summary

Financial Highlights

Key Highlights

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