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AT&T cites pensions, storms for $10B Q4 charge

With a week to go before announcing its fourth quarter financial results, AT&T told government regulators that it plans to record a $10 billion, pre-tax, non-cash charge for the quarter related to pension and post-employment benefit plans.

In a Securities and Exchange Commission filing, AT&T said the approximately $10 billion filing was due to the lowering of its assumed discount rate to 4.3% that resulted in an “actuarial loss of approximately $12 billion.” This was offset by $1.9 billion in expected excess rate of return of 8.25%.

The company also noted that the device subsidies connected to its previously announced sale of more than 10 million smartphones during the fourth quarter would place near-term pressure on “operating income, margins and earnings per share in the fourth quarter of 2012.” AT&T also said storms during the fourth quarter, including Hurricane Sandy, would account for an approximately $175 million hit on operating income during the quarter.

AT&T’s stock (T) was trading down slightly early Friday at around $33 per share.

Earlier this month, Verizon Communications said it would take a $10 billion, one-time charge during the fourth quarter related to damage from Hurricane Sandy, restructuring of long-term debt and a charge for employee pensions. In its own SEC filing, the telecom operator also acknowledged that strong smartphone sales during the quarter would impact margins, “which will be greater than the sequential decline from fourth quarter 2011, and a consequent negative impact on earnings per share.”

Verizon’s stock (VZ) was trading slightly higher early Friday at just over $42 per share.

Both carriers are scheduled to announce fourth quarter and full-year 2012 results later this month, though interestingly AT&T has adjusted its typical reporting time from before markets open to after closing on Jan. 24.

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