Charge comes as 5 execs top $10M in 2014 compensation
AT&T said it plans to take a $130 million charge during the first quarter tied to nearly 3,000 employees electing to retire by March 31. The company also reported that five of its top executives earned in excess of $10 million each in compensation for 2014, as well as updated Q1 operating metrics.
The announcements came in a pair of Securities and Exchange Commission filings.
AT&T said the one-time charge was related to voluntary retirements that were offered to employee that included terms allowing for lump sum distributions and “enhanced payments.” AT&T ended 2014 with 243,620 total employees, a slight increase compared with the previous year.
The telecom giant also reported that CEO Randall Stephenson would collect nearly $24 million in total compensation for 2014, an increase of about $750,000 compared with his 2013 compensation package. CFO John Stephens was set to pocket $10.7 million in 2014 compensation, an increase of nearly $3 million compared with his 2013 package.
AT&T Mobility CEO Ralph de la Vega was also set to see a significant increase in his compensation from $8.8 million in 2013 to nearly $10.1 million for 2014. However, both years were down from the $11.9 million de la Vega was awarded in 2012.
AT&T Chief Strategy Officer John Stankey was on tap to collect nearly $10.2 million in total compensation for 2014, while SEVP and General Counsel Wayne Watts totaled nearly $10.1 million in total compensation last year.
Q1 trends
Outside of its financial considerations, AT&T also updated its Q1 guidance. The company noted that it continues to expect growth of its “high-value smartphone base,” including “solid gross adds and upgrades.” However, its forecast of around 400,000 postpaid net customer additions, boosted by lower churn levels, is said to be driven by tablet sales, which generate lower monthly recurring revenues compared with smartphones.
That increasing reliance on tablets and other connected devices tied to AT&T Mobility’s Mobile Share Value plans are also set to impact overall service revenues. The telecom operator noted that about 60% of its customer base was now on a MSV plan, compared around 30% at the end of the first quarter last year. AT&T reported a 3.7% year-over-year drop in wireless service revenues during the fourth quarter tied to similar high adoption of tablets and connected devices. The impact from tablets is also set to increase as AT&T beginning with the current quarter it will include “session-based” tablets into its overall tablet accounting. Those tablets had previously been included in AT&T Mobility’s prepaid results.
The increased adoption of the MSV plans along with continued struggles from AT&T Mobility’s Cricket prepaid operations are also set to impact margins for the first quarter, though lessen as the year progresses. AT&T reported that its prepaid operations lost 180,000 customers during Q4 last year as it continues to integrate Leap Wireless’ Cricket operations and remain competitive in the prepaid market.
AT&T’s recent moves in expanding operations into Mexico through the purchase of Iusacell and planned acquisition of Nextel Mexico are also set ot have a “negative impact” on Q1 earnings. AT&T had said that the combined $4.375 billion deals would bolster its competitive position in expanding its network reach to more than 400 million potential customers.
As for its contentious $48.5 billion acquisition of DirecTV, AT&T said it expected the proposed deal to close by mid year, with greater than expected financial benefits. The deal, which was first announced last May, has seen a number of regulatory fits and starts, though is currently at day 168 of the Federal Communications Commission’s 180-day time clock to review transactions. AT&T had said the deal would become accretive in free cash flow and adjusted earnings per share within 12 months of closing, and that it expected to generate more than $1.6 billion in cost savings per year between the two operations within three years of closing.
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