A series of non-cash charges helped drive AT&T into the red during the fourth quarter, and much of the revenue it earned from data-hungry iPhone users was offset by iPhone subsidies. America’s second largest carrier (after Verizon) lost $6.7 billion in the fourth quarter. Some of the red ink was the result of breakup fees AT&T had to pay Deutsche Telekom after pressure from US regulators led AT&T to abandon its plan to buy T-Mobile from Deutsche Telekom for $39 billion. AT&T took a $4 billion charge in the fourth quarter, but got to offset the charge with a $3 billion tax writeoff. Other large charges in the fourth quarter came from a writedown in the value of AT&T’s directory assets, such as phone books, and from lower-than-expected returns for the investments held by the company’s benefit plans.
Although Apple’s new iPhone 4S provided a boost to AT&T’s fourth quarter sales, which totaled $32.5 billion overall for the quarter, the iPhone boost did not make it all the way to the bottom line. That’s because AT&T subsidized iPhone buyers by selling the phones below cost. AT&T says it activated 7.6 million iPhones during the fourth quarter, and sold 9.4 million smartphones overall. 82% of postpaid sales were smartphones. Average monthly revenue per subscriber rose to $63.76.
CEO Randall Stephenson referenced his company’s need for more spectrum in the company’s earnings call, saying “We don’t know how much spectrum we’re allowed to hold and who we’re allowed to do business with. We’ve seen explosive mobile broadband growth and that cannot continue without more spectrum, it’s time for Congress and the FCC to step up.”
