AT&T (T) beat analysts’ expectations with its fourth quarter earnings report, but disappointed some investors with its forecast of “mid-single digit” EPS growth for 2014.
Mobile data drove growth for AT&T Mobility during the fourth quarter, and the carrier reported its lowest-ever 4th quarter postpaid churn rate (1.11%). Mobile data revenue rose almost 17% to $5.7 billion versus the year-ago quarter, and for all of 2013 mobile data revenue was up almost 19% to $21.7 billion.
“Data is now a $23 billion annualized revenue stream and it’s continuing to grow,” said AT&T CFO John Stephens. “That helped drive 4.8% service revenue growth and total wireless revenues were up 4.5%.” Later during the earnings call, CEO Randall Stephenson described mobile data as “early in its growth curve.”
For all of 2013, data accounted for almost a third of AT&T’s wireless revenue, with voice, text, other services, and equipment comprising the rest. Voice, text and other services represented 57% of 2013 wireless revenue at $39.8 billion, down 2.6% from 2012.
Total postpaid ARPU was up 2.1% and phone-only ARPU was up 3.9%. Postpaid net adds for the quarter were 566,000, including 299,000 smartphones. That’s a sharp increase from last quarter’s 363,000 postpaid net adds, but a decline from the fourth quarter of last year, when AT&T reported 780,000 net postpaid subscriber additions. AT&T’s fourth quarter subscriber additions suffered somewhat due to intense competition from T-Mobile US, which attracted 869,000 net postpaid subscribers with its no-contract pricing.
Today AT&T said it will offer new and existing customers a $100 credit when they activate a new line. The customer must remain active for three months in order to receive the credit. More lines per account is a way for AT&T to keep its churn rate low. The carrier said that about 90% of postpaid subscribers are now on Mobile Share, FamilyTalk or business plans, all of which have significantly lower churn than other postpaid subscriber plans.
The carrier added 230,000 branded smartphones in its prepaid segment, which includes Aio and AT&T GoPhone. AT&T is in the process of acquiring Leap Wireless, which owns the Cricket brand, and has vowed to shake up the prepaid segment with aggressive pricing.
Investment in both wireless and wireline infrastructure continued per plan in 2013, as AT&T invested $21 billion in its network. Yesterday the company said that 2014 will be the peak investment year for its Project Velocity IP. AT&T U-verse is a major beneficiary of that investment; yesterday the company said that total U-verse revenue from all customers was up 27.9% year-on-year, representing a $13 billion annualized revenue stream.
Overall, AT&T reported fourth quarter revenue of $33.2 billion, up 1.8% from the year-ago quarter and full-year revenue of $128.7 billion, up 1.0% from 2012. Net income was $6.9 billion ($1.31 per share) for the quarter and $18.2 billion ($3.39 per share) for the full year.
Follow me on Twitter.
