10-QPeriod: Q1 FY2012

AT&T INC. Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 4, 2012For Securities:TT-PCTBBT-PA

Summary

AT&T Inc. reported solid revenue growth and a corresponding increase in net income for the first quarter of 2012 compared to the same period in 2011. Total operating revenues rose by 1.8% to $31.82 billion, driven primarily by strong performance in the Wireless segment, particularly from increased data service revenues and equipment sales. The Wireline segment, while experiencing a slight overall revenue decline, showed robust growth in its data services, including U-verse and strategic business services, which helped offset the continued decrease in traditional voice revenues. The company demonstrated improved operational efficiency, with operating income growing 5.0% to $6.10 billion and the operating income margin expanding to 19.2% from 18.6% in the prior year. Diluted earnings per share also saw an increase, reflecting the company's ability to translate revenue growth into profitability. AT&T continued to invest heavily in its network infrastructure, particularly in wireless capacity expansion and the deployment of LTE technology, underscoring its commitment to future growth and service innovation. The company also provided an update on the planned sale of its Advertising Solutions and Interactive businesses, which is expected to close mid-year 2012.

Financial Highlights

49 data points
Beta

Revenue

$31.82B

59.7% Gross Margin

Net Income

$3.58B

11.3% Net Margin

EPS (Diluted)

$0.60

Total Assets

$269.36B

Cash & Equivalents

$2.35B

Free Cash Flow

$7.84B

Financial Statements
Beta
Revenue$31.82B
Cost of Revenue$12.82B
Gross Profit$19.00B
SG&A Expenses$8.34B
Operating Expenses$25.72B
Operating Income$6.10B
Interest Expense$859.00M
Net Income$3.58B
EPS (Basic)$0.60
EPS (Diluted)$0.60
Shares Outstanding (Basic)5.92B
Shares Outstanding (Diluted)5.94B

Key Highlights

  • 1Total operating revenues increased by 1.8% to $31.82 billion, driven by growth in Wireless and Wireline data services.
  • 2Operating income grew by 5.0% to $6.10 billion, with operating income margin improving to 19.2% from 18.6% in Q1 2011.
  • 3Wireless segment revenue increased by 5.4% to $16.14 billion, with service revenue up 4.3% and equipment revenue up 16.4%.
  • 4Wireline segment revenue slightly decreased by 0.8% to $14.93 billion, but data revenues showed strong growth of 8.7%.
  • 5Diluted earnings per share increased to $0.60 from $0.57 in the prior year's first quarter.
  • 6Capital expenditures for the quarter were $4.26 billion, with a significant portion allocated to wireless network expansion and LTE deployment.
  • 7AT&T announced an agreement to sell its Advertising Solutions and Interactive businesses in April 2012, expected to close mid-year.

Frequently Asked Questions

The primary drivers of AT&T's revenue growth were the strong performance in its Wireless segment, fueled by increased wireless service and equipment revenues due to subscriber and data revenue growth. Additionally, the Wireline segment contributed with increased revenues from AT&T U-verse services and strategic business services, despite a decline in traditional voice revenues.

AT&T demonstrated improved profitability. Operating income increased by 5.0% to $6.10 billion, and the operating income margin expanded to 19.2% from 18.6% in the prior year. Diluted earnings per share also increased to $0.60 from $0.57, indicating enhanced profitability on a per-share basis.

The planned sale of the Advertising Solutions and Interactive businesses, announced in April 2012, signifies a strategic move by AT&T to divest non-core assets. The transaction, expected to close in mid-year 2012, involves cash, a note, and an equity interest in the new company, suggesting a focus on core telecommunications services and potentially streamlining the business portfolio.

AT&T is making significant capital investments, with $4.26 billion allocated to investing activities in the first quarter, primarily in capital expenditures. A substantial portion of this spending is directed towards expanding its wireless network capacity, upgrading its High-Speed Downlink Packet Access network, and deploying LTE (4G) equipment for commercial launch. Investments are also being made in its Wireline segment, including U-verse services.