AT&T reported Q2 revenue of $40.5 billion, up more than 22% versus the year-earlier period largely due to the July 24, 2015 acquisition of DIRECTV. Compared with results for the second quarter of 2015, operating expenses were $34.0 billion versus $27.2 billion; operating income was $6.6 billion versus $5.8 billion; and operating income margin was 16.2% versus 17.5%.
Second-quarter net income attributable to AT&T totaled $3.4 billion, or $0.55 per diluted share, compared to $3.1 billion, or $0.59 per diluted share, in the year-ago quarter. Adjusting for $0.17 of amortization, merger- and integration-related costs and other expenses, earnings per diluted share was $0.72 compared to an adjusted $0.70 in the year-ago quarter.
“One year after our acquisition of DIRECTV, the success of the integration has exceeded our expectations,” said Randall Stephenson, AT&T chairman and CEO. “Cost synergies are ahead of target, we’ve added nearly 1 million DIRECTV subscribers since the acquisition, and our new video streaming services are scheduled to roll out later this year. We plan to serve every segment of the video industry and offer customers their favorite content virtually wherever and whenever they want it.”
Some highlights:
- 2.1 million wireless net adds driven by connected devices, Mexico and Cricket
- U.S. wireless postpaid churn of 0.97%, second-lowest ever
- U.S. wireless operating margins expand; best-ever U.S. wireless EBITDA margins
- 342,000 U.S. DIRECTV net adds; 38,000 global TV net adds
- Nearly 1 million U.S. satellite net adds since acquisition of DIRECTV
- 74,000 IP broadband net adds
- Nearly 800,000 U.S.-branded smartphones added to subscriber base, more than offsetting a nearly 600,000 decline in U.S.-branded feature phone base
- 185,000 U.S.-branded (postpaid and prepaid) phone net adds
- 380 million North American 4G LTE POPs
- Q2 revenues from business customers were $17.6 billion, down 0.5% versus the year-earlier quarter.
- Revenues from strategic business services, including VPNs, Ethernet, cloud, hosting, IP conferencing, voice over IP, dedicated internet, U-verse and security services, grew by more than $200 million, or 8.4%, versus the year-earlier quarter and 9.0% when adjusting for foreign exchange pressure. These services represent an annualized revenue stream of more than $11 billion.
- Second-quarter operating expenses were $13.4 billion, essentially stable versus the second quarter of 2015
- Year-to-date cash from operations up 14.5%; year-to-date free cash flow up 11.6%
- Full-year guidance on track to meet or exceed expectations
