AT&T reported Q4 revenue of $48.0 billion versus $41.7 billion in the year-ago quarter, up 15.2%, primarily due to the Time Warner acquisition and partially offset by declines in legacy wireline services, wireless equipment, domestic video and Vrio.
“Our top priority for 2018 and 2019 is reducing our debt and I couldn’t be more pleased with how we closed the year. In 2018, we generated record free cash flow while investing at near-record levels. Our dividend payout as a percent of free cash flow was 46% for the quarter and 60% for the year, allowing us to increase the dividend for the 35th consecutive year,” said Randall Stephenson, AT&T chairman and CEO. “This momentum will carry us into 2019 allowing us to continue reducing our debt while investing in the business and continuing our strong record for paying dividends.”
Some highlights:
- Total wireless revenues were $18.8 billion, down 2.1% year over year. On a comparable basis, revenues were down 0.6% due to a decline in equipment revenues, which was mostly offset by an increase in service revenues.
- Wireless service revenues of $13.9 billion were down 3.0% year over year due to accounting changes, or up 2.9% on a comparable basis, due to subscriber gains and pricing actions.
- Wireless equipment revenues increased 0.5% to $4.9 billion. On a comparable basis, equipment revenues were down 10.9% due to lower postpaid smartphone sales.
- Postpaid phone-only ARPU decreased 4.1% versus the year-earlier quarter. On a comparable basis, phone-only ARPU was up 3.0%.
- In the fourth quarter, AT&T posted a net increase in total wireless subscribers
- Postpaid churn was 1.24%, up from 1.11% in the yearago quarter largely due to limited promotional activity. Postpaid phone churn was 1.00%, compared to 0.89% in the year-ago quarter. Branded churn was 1.82%, compared to 1.75% in the year-ago quarter.
- Entertainment Group revenues were $12.0 billion, down 4.8% versus the year-earlier quarter, reflecting the impact of ASC 606 revenue recognition and declines in TV subscribers and legacy services. On a comparative
- basis, excluding the impact of revenue recognition, revenues were down 3.0%.
- Total video revenues were down mostly due to declines in linear TV subscribers partly offset by higher advertising sales.
- Broadband revenues were up 6.4% due to an allocation adjustment for bundled discounts and higher revenue from fiber customers which was partially offset by legacy declines and simplified pricing.
- Total video subscribers declined by 658,000 in the quarter. The Entertainment Group ended the quarter with 24.5 million total video subscribers
- The Entertainment Group lost 32,000 broadband subscribers in the fourth quarter.
- The Entertainment Group had net adds of 6,000 IP broadband subscribers in the fourth quarter with DSL losses of 38,000. IP broadband subscribers benefited from the expansion of the fiber network and simplified pricing and,
- at the end of the quarter, totaled 13.7 million.
- AT&T now markets its 100% fiber network to more than 11 million customer locations in parts of 84 metro areas. Broadband penetration in the fiber footprint continues to be significantly higher than in AT&T’s non-fiber footprint and is nearly 50% in locations marketed to for more than 30 months.
- In Business Wireline, declines in legacy products were partially offset by growth in strategic business services. Total business wireline revenues were $6.7 billion, down 8.9% year over year, or down 4.2% on a comparable basis.
- Strategic business services, the wireline capabilities that lead AT&T’s most advanced business solutions, continued to grow. Revenues grew by about $75 million on a comparable basis, versus the year-earlier quarter. On a comparable basis, these services represent 44% of total business wireline revenues and are an annualized revenue stream of more than $12 billion.
