8-KOther EventsExhibits & Filings

AT&T INC. 8-K Report, Corporate Update (Jan 31, 2018)

Filed January 31, 2018For Securities:TT-PCTBBT-PA

Summary

AT&T Inc. reported its fourth-quarter and full-year 2017 results, which were significantly impacted by the Tax Cuts and Jobs Act of 2017. The company recorded a substantial net income of $19.0 billion for the fourth quarter, largely driven by a $14.2 billion gain related to tax reform. Excluding these one-time items, the underlying operational performance showed mixed results. Total revenues saw a slight decline year-over-year, attributed to continued softness in legacy services and wireless service revenues, though this was partially offset by growth in international markets and strategic fixed services, as well as higher wireless equipment sales. Despite revenue pressures, AT&T demonstrated subscriber growth in key areas. The company reported a net gain of 4.1 million North American wireless subscribers in the fourth quarter, with strong performance in both prepaid and postpaid segments, along with significant growth in connected devices. Video subscriber numbers saw a modest increase, bolstered by the DIRECTV NOW service. However, operating income and margins were negatively impacted by non-cash adjustments, including a copper abandonment charge and pension accounting adjustments, leading to a significant decrease in fourth-quarter operating income compared to the prior year.

Key Highlights

  • 1Fourth-quarter 2017 net income surged to $19.0 billion ($3.08 per diluted share), heavily influenced by a $14.2 billion benefit from tax reform ($2.30 per share).
  • 2Total revenues for Q4 2017 were $41.7 billion, a slight decrease of 0.4% year-over-year, impacted by legacy service declines and wireless service revenue pressures.
  • 3North American wireless subscribers grew by a net 4.1 million in Q4 2017, reaching approximately 156.7 million, with strong gains in branded net adds and connected devices.
  • 4Video subscribers increased to 38.9 million (including 1.2 million DIRECTV NOW subscribers) by year-end 2017, a net gain of 299,000 for the quarter.
  • 5Operating income for Q4 2017 significantly decreased to $0.4 billion from $4.2 billion in the prior year, primarily due to non-cash adjustments like copper abandonment charges and pension accounting.
  • 6Business Solutions segment revenue grew 2.0% year-over-year in Q4 2017, driven by wireless equipment and strategic services, although operating margin saw a slight decline.
  • 7International segment revenues increased by 16.0% in Q4 2017, with strong growth in both Mexico wireless and DIRECTV Latin America operations.

Frequently Asked Questions

The significant increase in net income for the fourth quarter of 2017 is primarily due to the impact of the Tax Cuts and Jobs Act of 2017, which resulted in a one-time benefit of $14.2 billion, or $2.30 per diluted share.

AT&T's total revenues for the fourth quarter of 2017 were $41.7 billion, a slight decrease of 0.4% compared to the prior year. This decline was mainly due to ongoing decreases in legacy services and wireless service revenues, though this was partially offset by growth in international services, strategic fixed services, and higher wireless equipment revenues.

AT&T reported a strong net gain of 4.1 million North American wireless subscribers in the fourth quarter of 2017. This growth was driven by a combination of branded net adds (postpaid and prepaid), with particularly strong performance in prepaid and connected devices (largely wholesale connected cars). The total North American wireless customer base reached approximately 156.7 million.

The substantial decrease in operating income for the fourth quarter of 2017, from $4.2 billion to $0.4 billion, was largely due to significant non-cash adjustments. These included a copper abandonment charge and noncash impacts from pension and postemployment benefit accounting, which negatively affected reported operating income.