AT&T reported strong Q1 financial results highlighted by improved wireless and enterprise trends 
Some highlights for Q1 2008:
Wireless
- Wireless Revenue Growth. Total wireless revenues increased 18.3 percent versus the year-earlier first quarter to $11.8 billion. Wireless service revenues, which exclude handset and accessory sales, grew 17.1 percent to $10.6 billion. Revenue growth was driven by strong subscriber gains and continued improvement in ARPU (average monthly revenues per subscriber). AT&T has now posted seven consecutive quarters of year-over-year growth in wireless service ARPU, which was $50.18 in the first quarter, up 2.0 percent versus the year-earlier first quarter. Retail postpaid subscriber ARPU growth was even stronger, up approximately 5 percent.
- Wireless Data Services. Wireless data revenues grew 57.3 percent versus results in the year-earlier first quarter to $2.3 billion, reflecting robust increases in Internet access, e-mail, messaging, data access and media bundles. Data now represents 21.5 percent of AT&T’s total wireless service revenues, up from 16.0 percent in the first quarter of 2007 and 10.9 percent in the first quarter of 2006. During the first quarter, AT&T’s wireless customers sent more than 620 million multimedia messages and 44 billion text messages, both volumes more than double totals in the year-earlier first quarter.
- Wireless Subscriber Gains. AT&T’s first-quarter net gain in wireless subscribers totaled 1.3 million, up 104,000, or 8.7 percent, versus net adds in the year-earlier first quarter. AT&T ended the quarter with 71.4 million subscribers in service. Total net adds in the first quarter were reduced by approximately 330,000 because of the shutdown of AT&T’s TDMA wireless network in late February. Retail postpaid net adds totaled 705,000 in the first quarter, up 3.7 percent versus net adds in the year-earlier first quarter.
- Gross Adds. AT&T continued its strong record of wireless subscriber flow share with 5.0 million first-quarter gross subscriber additions, up from 4.3 million in the year-earlier first quarter. Total average monthly subscriber churn, which includes postpaid, prepaid and reseller subscribers, was 1.7 percent, flat with the year-earlier first quarter and with the fourth quarter of 2007. Retail postpaid churn was 1.2 percent, down from 1.3 percent in the year-earlier first quarter and flat with the fourth quarter of 2007.
- Wireless Operating Income Growth. On a reported basis, AT&T’s first-quarter wireless operating expenses totaled $8.9 billion, and operating income was $3.0 billion, up 94.1 percent from $1.5 billion in the first quarter of 2007. On an adjusted basis, wireless operating expenses, which exclude merger-related costs, totaled $8.3 billion, and operating income was $3.5 billion, up 38.5 percent from $2.5 billion in the first quarter of 2007.
- Wireless Margin Expansion. AT&T’s reported wireless operating income margin was 25.0 percent, up from 15.2 percent in the year-earlier first quarter, and its adjusted wireless operating income margin was 29.8 percent, up from 25.5 percent in the year-earlier first quarter. AT&T’s first-quarter wireless OIBDA service margin was 41.7 percent, the highest ever achieved by the company’s wireless segment, up from an unadjusted 37.5 percent and an adjusted 38.9 percent in the year-earlier first quarter. (OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.)
Wireline
- Enterprise Growth. Driven by solid demand and a strong record of contract wins, AT&T delivered further improvement in enterprise revenue growth in the first quarter, led by a 22.9 percent increase in enterprise IP data revenues, including areas such as virtual private networks, managed Internet services and hosting. Total enterprise revenues continued their ramp and were up 1.2 percent versus results for the first quarter of 2007. This compares with year-over-year pro forma declines of 2.0 percent in the fourth quarter of 2007 and 3.9 percent in the first quarter of 2007. Enterprise service revenues, which exclude effects from acquisitions and CPE sales, grew 2.1 percent, following a 1.5 percent increase in the preceding quarter and a decline of 3.0 percent in the first quarter of 2007. AT&T is the premier provider for enterprise customers, delivering networking services and solutions to multinational corporations, U.S. governmental agencies and regionally based domestic companies.
- Regional Business. AT&T’s total regional business revenues increased 2.6 percent in the first quarter to $3.2 billion, with continued growth in both voice and data services. Regional business service revenues, which exclude CPE sales, grew 3.4 percent. Regional business data revenues, which make up 30.5 percent of the category, grew 6.3 percent, led by strong growth in Ethernet services and 15.2 percent growth in IP data services, including gains in broadband, managed Internet and VPN services. Regional business revenues from small and midsize firms increased approximately 5 percent.
- Broadband. AT&T’s broadband revenues grew 13.2 percent in the first quarter to $1.4 billion. Total high speed Internet connections, which include DSL, U-verse enabled AT&T High Speed Internet and satellite broadband services, increased by 491,000, and AT&T ended the quarter with 14.6 million consumer and business high speed Internet connections, up 1.8 million, or 13.9 percent, over the past year.
- U-verse TV Services. Growth in AT&T U-verse TV service, the company’s next-generation IP-based video service, continued its strong ramp during the first quarter, achieving a net subscriber gain of 148,000 to reach 379,000 in service. AT&T expects a further ramp in the quarters ahead and is on track to reach its target of more than 1 million subscribers by the end of 2008. Total video connections, which include AT&T U-verse service and bundled satellite television service, increased by 264,000 in the quarter to reach 2.6 million.
- Regional Consumer Trends. First-quarter regional consumer results continued trends of recent quarters, with improved growth in broadband and Advanced TV services offsetting traditional voice access line pressures, resulting in stable revenues. Regional consumer revenues totaled $5.5 billion, down 0.4 percent versus results for the year-earlier first quarter. Regional consumer revenue connections (retail voice, high speed Internet and video) totaled 49.3 million at the end of the quarter. This compares with 49.3 million at the end of the first quarter of 2007 and 49.4 million at the end of the fourth quarter of 2007. Gains in broadband and TV connections over the past year totaled 2.6 million, and consumer IP data revenues, which include revenues from broadband and AT&T U-verse services, increased 18.5 percent versus results for the year-earlier quarter.
- Wireline Expense Trends. On a reported basis, wireline operating expenses totaled $14.8 billion in the first quarter of 2008, versus $15.1 billion for the year-earlier first quarter. On an adjusted basis, wireline operating expenses totaled $14.4 billion, unchanged from the year-earlier first quarter.
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