Tags Ďfourth quarterí

AT&T and Verizon warn investors of higher Q4 churn as Sprint and T-Mobile increase competition

Screen Shot 2014-12-09 at 2.58.42 PM

While the traditional wireless carrier landscape in the United States has consisted of AT&T and Verizon Wireless as the heavyweights and Sprint and T-Mobile as the underdogs, the divide between the carriers appears to be quickly narrowing. Sprint and T-Mobile have both introduced highly-competitive plans and promotional offerings in the fourth quarter, leading many consumers to switch carriers at a higher-than-average pace.

AT&T Chief Financial Officer John Stephens confirmed at an investors conference on Tuesday that the carrier is facing a higher subscriber churn rate than a year ago, even despite the fact that its overall subscriber base continues to grow. In other words, AT&T is dealing with a higher number of subscription cancellations now compared to this time last year as customers opt for the more affordable competitors like Sprint and T-Mobile.

According to The Wall Street Journal and¬†Barrons, Verizon is also feeling the pinch due to a “highly competitive and promotion-filled fourth quarter,” and also expects to have a higher churn rate as customers flock elsewhere. Verizon cautioned that its need to offer more competitive promotions to customers will affect its EPS and overall profitability.

T-Mobile in particular continues to make impressive strides under the leadership of chief executive John Legere, who has positioned the magenta-colored company as the “Uncarrier” in the industry by eliminating several of the so-called “pain points” that relate to lengthy contracts, expensive plans, early termination fees, overage charges, upgrade programs, and confusing policies.

One thing is for certain: the increasingly competitive environment should be a win for all customers that belong to one of the big four carriers in the United States as they compete to keep and grow their subscriber base.


Filed under: Tech Industry Tagged: AT&T, carriers, Churn, competition, Fourth Quarter, Sprint, subscriber, T-Mobile, Verizon, wireless carriers

Check out 9to5Mac for more breaking coverage of Tech Industry, AT&T, and T-Mobile.

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Joe Rossignol

December 9th

Apple

Mac

AT&T and Verizon warn investors of higher Q4 churn as Sprint and T-Mobile increase competition

Screen Shot 2014-12-09 at 2.58.42 PM

While the traditional wireless carrier landscape in the United States has consisted of AT&T and Verizon Wireless as the heavyweights and Sprint and T-Mobile as the underdogs, the divide between the carriers appears to be quickly narrowing. Sprint and T-Mobile have both introduced highly-competitive plans and promotional offerings in the fourth quarter, leading many consumers to switch carriers at a higher-than-average pace.

AT&T Chief Financial Officer John Stephens confirmed at an investors conference on Tuesday that the carrier is facing a higher subscriber churn rate than a year ago, even despite the fact that its overall subscriber base continues to grow. In other words, AT&T is dealing with a higher number of subscription cancellations now compared to this time last year as customers opt for the more affordable competitors like Sprint and T-Mobile.

According to The Wall Street Journal and¬†Barrons, Verizon is also feeling the pinch due to a “highly competitive and promotion-filled fourth quarter,” and also expects to have a higher churn rate as customers flock elsewhere. Verizon cautioned that its need to offer more competitive promotions to customers will affect its EPS and overall profitability.

T-Mobile in particular continues to make impressive strides under the leadership of chief executive John Legere, who has positioned the magenta-colored company as the “Uncarrier” in the industry by eliminating several of the so-called “pain points” that relate to lengthy contracts, expensive plans, early termination fees, overage charges, upgrade programs, and confusing policies.

One thing is for certain: the increasingly competitive environment should be a win for all customers that belong to one of the big four carriers in the United States as they compete to keep and grow their subscriber base.


Filed under: Tech Industry Tagged: AT&T, carriers, Churn, competition, Fourth Quarter, Sprint, subscriber, T-Mobile, Verizon, wireless carriers

Check out 9to5Mac for more breaking coverage of Tech Industry, AT&T, and T-Mobile.

What do you think? Discuss "AT&T and Verizon warn investors of higher Q4 churn as Sprint and T-Mobile increase competition" with our community.

Comments Off on AT&T and Verizon warn investors of higher Q4 churn as Sprint and T-Mobile increase competition

Photo

Joe Rossignol

December 9th

Apple

Mac

AT&T and Verizon warn investors of higher Q4 churn as Sprint and T-Mobile increase competition

Screen Shot 2014-12-09 at 2.58.42 PM

While the traditional wireless carrier landscape in the United States has consisted of AT&T and Verizon Wireless as the heavyweights and Sprint and T-Mobile as the underdogs, the divide between the carriers appears to be quickly narrowing. Sprint and T-Mobile have both introduced highly-competitive plans and promotional offerings in the fourth quarter, leading many consumers to switch carriers at a higher-than-average pace.

AT&T Chief Financial Officer John Stephens confirmed at an investors conference on Tuesday that the carrier is facing a higher subscriber churn rate than a year ago, even despite the fact that its overall subscriber base continues to grow. In other words, AT&T is dealing with a higher number of subscription cancellations now compared to this time last year as customers opt for the more affordable competitors like Sprint and T-Mobile.

According to The Wall Street Journal and¬†Barrons, Verizon is also feeling the pinch due to a “highly competitive and promotion-filled fourth quarter,” and also expects to have a higher churn rate as customers flock elsewhere. Verizon cautioned that its need to offer more competitive promotions to customers will affect its EPS and overall profitability.

T-Mobile in particular continues to make impressive strides under the leadership of chief executive John Legere, who has positioned the magenta-colored company as the “Uncarrier” in the industry by eliminating several of the so-called “pain points” that relate to lengthy contracts, expensive plans, early termination fees, overage charges, upgrade programs, and confusing policies.

One thing is for certain: the increasingly competitive environment should be a win for all customers that belong to one of the big four carriers in the United States as they compete to keep and grow their subscriber base.


Filed under: Tech Industry Tagged: AT&T, carriers, Churn, competition, Fourth Quarter, Sprint, subscriber, T-Mobile, Verizon, wireless carriers

Check out 9to5Mac for more breaking coverage of Tech Industry, AT&T, and T-Mobile.

What do you think? Discuss "AT&T and Verizon warn investors of higher Q4 churn as Sprint and T-Mobile increase competition" with our community.

Comments Off on AT&T and Verizon warn investors of higher Q4 churn as Sprint and T-Mobile increase competition

Photo

Joe Rossignol

December 9th

Apple

Mac

AT&T and Verizon warn investors of higher Q4 churn as Sprint and T-Mobile increase competition

Screen Shot 2014-12-09 at 2.58.42 PM

While the traditional wireless carrier landscape in the United States has consisted of AT&T and Verizon Wireless as the heavyweights and Sprint and T-Mobile as the underdogs, the divide between the carriers appears to be quickly narrowing. Sprint and T-Mobile have both introduced highly-competitive plans and promotional offerings in the fourth quarter, leading many consumers to switch carriers at a higher-than-average pace.

AT&T Chief Financial Officer John Stephens confirmed at an investors conference on Tuesday that the carrier is facing a higher subscriber churn rate than a year ago, even despite the fact that its overall subscriber base continues to grow. In other words, AT&T is dealing with a higher number of subscription cancellations now compared to this time last year as customers opt for the more affordable competitors like Sprint and T-Mobile.

According to The Wall Street Journal and¬†Barrons, Verizon is also feeling the pinch due to a “highly competitive and promotion-filled fourth quarter,” and also expects to have a higher churn rate as customers flock elsewhere. Verizon cautioned that its need to offer more competitive promotions to customers will affect its EPS and overall profitability.

T-Mobile in particular continues to make impressive strides under the leadership of chief executive John Legere, who has positioned the magenta-colored company as the “Uncarrier” in the industry by eliminating several of the so-called “pain points” that relate to lengthy contracts, expensive plans, early termination fees, overage charges, upgrade programs, and confusing policies.

One thing is for certain: the increasingly competitive environment should be a win for all customers that belong to one of the big four carriers in the United States as they compete to keep and grow their subscriber base.


Filed under: Tech Industry Tagged: AT&T, carriers, Churn, competition, Fourth Quarter, Sprint, subscriber, T-Mobile, Verizon, wireless carriers

Check out 9to5Mac for more breaking coverage of Tech Industry, AT&T, and T-Mobile.

What do you think? Discuss "AT&T and Verizon warn investors of higher Q4 churn as Sprint and T-Mobile increase competition" with our community.

Comments Off on AT&T and Verizon warn investors of higher Q4 churn as Sprint and T-Mobile increase competition

Photo

Joe Rossignol

December 9th

Apple

Mac

T-Mobile reports big subscriber losses in Q4, says it will launch LTE in 2013

T-Mobile on Wednesday reported earnings for the company’s holiday quarter, which saw the carrier lose 802,000 customers causing revenue to drop 3.3% to $20.6 billion. The Deutsche Telekom-owned company is the only major U.S. carrier that does not carry Apple’s iPhone, which it blames for the defections, however T-Mobile is looking to bounce back with the launch of a 4G LTE network in 2013. “Though we are not satisfied with the contract customer losses and the decreased total revenues, the quarterly margin improvement year-on-year was impressive,” said CEO of Deutsche Telekom Ren√© Obermann. “The spectrum gained through the break-up fee empowers T-Mobile USA to start LTE-based services in key US markets and strengthens its competitiveness.”¬†The company is the last major U.S. carrier to announce plans for an LTE network, with Verizon and AT&T already offering the service and Sprint preparing to launch its new network this year. Read on for T-Mobile’s press release.

T-MOBILE USA REPORTS FOURTH QUARTER 2011 OPERATING RESULTS

Strong adjusted OIBDA and prepaid performance; contract business negatively impacted in the fourth quarter of 2011 by iPhone 4S launches by three nationwide competitors

  • Adjusted OIBDA increased by 4.3% year-on-year to $1.4 billion in the fourth quarter of 2011, adjusted OIBDA margin improved 2 percentage points year-on-year to 31% in the fourth quarter of 2011
  • Branded contract losses improved through the third quarter of 2011, however the launch of the iPhone 4S reversed this trend to a branded contract customer loss of 706,000 in the fourth quarter of 2011
  • Strong branded prepaid additions of 220,000 in the fourth quarter of 2011, primarily due to continued success of unlimited Monthly 4G prepaid plans
  • Service revenues down 2.7% year-on-year to $4.6 billion in the fourth quarter of 2011, due to branded contract customer losses and revenue effects from the shift to unlimited Value plans
  • Branded contract ARPU increased $2 year-on-year to $58 in the fourth quarter of 2011, mainly driven by an increase in data ARPU
  • Branded Data ARPU increased $2.70 year-on-year to $16.50 in the fourth quarter of 2011
  • T-Mobile USA is reinvigorating its challenger strategy, which includes a major network modernization plan to launch LTE in 2013
  • On December 20, 2011 T-Mobile USA‚Äôs proposed sale to AT&T, Inc. was terminated; due to the termination of the sale near year-end, T-Mobile USA‚Äôs annual impairment assessment of indefinite-lived assets is still ongoing

T-Mobile USA, Inc. (‚ÄúT-Mobile USA‚ÄĚ) today reported fourth quarter 2011 results and provided an update on its annual assessment of indefinite-lived assets recorded in its financial statements.¬† In the fourth quarter of 2011, T-Mobile USA reported service revenues of $4.57 billion, down from $4.69 billion in the fourth quarter of 2010, and adjusted OIBDA of $1.40 billion, up from $1.34 billion reported in the fourth quarter of 2010.¬† Blended ARPU in the fourth quarter of 2011 was $46, consistent with the fourth quarter of 2010.¬† Additionally, net customer losses were 526,000 in the fourth quarter of 2011, compared to 23,000 net customer losses in the fourth quarter of 2010.

 

‚ÄúIn 2011, T-Mobile USA showed solid financial performance with a remarkable adjusted OIBDA turn-around in the second half of the year, despite nine challenging months during the pending acquisition. We further increased our 4G data speed to 42 Mbps, expanded our sales channels, launched 25 new 4G handsets and significantly improved our operational efficiency. As a result, adjusted OIBDA rose again year-on-year in the fourth quarter of 2011 and branded data ARPU grew 20 percent year-on-year as smartphone adoption accelerated,‚ÄĚ said Philipp Humm CEO and President of T-Mobile USA.¬† ‚ÄúHowever, not carrying the iPhone led to a significant increase in contract deactivations in the fourth quarter of 2011.¬† In 2012 and 2013, T-Mobile USA will invest to get the business back to growth, including an incremental $1.4 billion investment in its network modernization initiative, which will total a $4 billion investment over time.‚ÄĚ

 

‚ÄúThough we are not satisfied with the contract customer losses and the decreased total revenues, the quarterly margin improvement year-on-year was impressive.¬† The spectrum gained through the break-up fee empowers T-Mobile USA to start LTE-based services in key US markets and strengthens its competitiveness,‚ÄĚ said Ren√© Obermann, CEO of Deutsche Telekom.

 

Total Customers

  • T-Mobile USA served 33.2 million customers (as defined in Note 1 to the Selected Data, below)¬†at the end of fourth quarter 2011, compared to 33.7 million customers at both the end of third quarter 2011 and the end of fourth quarter 2010.
  • Fourth quarter 2011 net customer losses of 526,000, compared to net customer additions of 126,000 in the third quarter of 2011, and net customer losses of 23,000 in the fourth quarter of 2010.
    • The sequential and year-on-year increase in customer losses is a result of intense competitive pressure from the launch of the iPhone 4S by three nationwide competitors in the fourth quarter of 2011.¬† In addition, higher connected device deactivations contributed significantly to the net customer loss in the fourth quarter of 2011, including a nearly 265,000 deactivation related to one customer with a yearly service revenue impact of less than $1 million.

 

Contract Customers

  • Contract net customer losses, including connected devices (as defined in Note 1 to the Selected Data, below), were 802,000 in the fourth quarter of 2011, compared to 186,000 net contract customer losses in the third quarter of 2011 and 251,000 net contract customer losses in the fourth quarter of 2010.
  • Branded contract net customer losses, excluding connected devices, were 706,000 in the fourth quarter of 2011, a decline of 317,000 net branded contract customer losses from 389,000 in the third quarter of 2011.¬† Net branded contract customer losses were 364,000 in the fourth quarter of 2010.
    • Sequentially, the decline in branded net contract customers was driven primarily by higher branded contract deactivations as a result of the launch of the iPhone 4S by three nationwide competitors in mid-October.
    • The year-over-year change in branded contract gross customer additions resulted in part from competitive pressures and the implementation of strengthened credit standards as part of T-Mobile USA‚Äôs focus on improving the overall quality of its contract customer base.
  • Connected device net customer losses were 95,000 in the fourth quarter of 2011 compared to net customer additions of 204,000 in the third quarter of 2011 and net customer additions of 113,000 in the fourth quarter of 2010.
    • The sequential and year-over-year change was driven by higher connected device customer deactivations during the fourth quarter of 2011.¬† Connected device customers, which have significantly lower ARPUs (averaging less than $2) than other contract customers, totaled 2.4 million at December 31, 2011.

Prepaid Customers

  • Prepaid net customer additions, including MVNO customers (as defined in Note 1 to the Selected Data, below), were 276,000 in the fourth quarter of 2011, down from 312,000 net prepaid customer additions in the third quarter of 2011, and up from 229,000 net prepaid customer additions in the fourth quarter of 2010.
  • Branded prepaid net customer additions, excluding MVNO customers, were 220,000 in the fourth quarter of 2011, down 34,000 from third quarter 2011 branded prepaid net customer additions of 254,000, and improved by 365,000 from 145,000 net branded prepaid customer losses in the fourth quarter of 2010.
    • Sequentially, branded prepaid net customers declined due to churn from prepaid customers as a result of competitive offers introduced by T-Mobile USA‚Äôs competitors during the quarter.
    • The year-on-year growth in branded prepaid net customer additions was due primarily to growth in customer adoption of T-Mobile USA‚Äôs unlimited Monthly 4G prepaid plans.
  • MVNO customers increased slightly in the fourth quarter of 2011, totaling 3.6 million as of December 31, 2011. Compared to the fourth quarter of 2010, MVNO net customer additions decreased due to fewer MVNO gross customer additions.

 

Churn

  • Blended churn (as defined in Note 3 to the Selected Data, below), reflecting both contract and prepaid customers, increased to 4.0% in the fourth quarter of 2011, up from 3.5% in the third quarter of 2011 and 3.6% in the fourth quarter of 2010.
    • The sequential and year-on-year increase in blended churn was primarily driven by higher churn from branded contract and connected device customers.
  • Churn from branded customers was 3.6% in the fourth quarter of 2011, up from 3.2% in the third quarter of 2011, and 3.4% in the fourth quarter of 2010.
    • The sequential and year-on-year increase was primarily due to higher churn of branded contract customers as a result of competitive market conditions and all of T-Mobile‚Äôs primary nationwide competitors offering the iPhone 4S in the fourth quarter of 2011. The year-on-year increase was partially offset by an improvement in prepaid branded churn as a result of unlimited Monthly 4G prepaid plans introduced in 2011.
  • Contract churn, including connected devices, was 3.1% in the fourth quarter of 2011, up from 2.4% in the third quarter of 2011 and 2.5% in the fourth quarter of 2010.
    • Sequentially and year-on-year contract churn was negatively impacted by competitors‚Äô launches of the iPhone 4S, which is not offered by T-Mobile USA.
    • To address contract churn, T-Mobile USA continued to focus on loyalty efforts during the quarter, including a strong focus on re-contracting its most loyal customers.
  • Prepaid churn, including MVNO, decreased to 6.8% in the fourth quarter of 2011, from 7.2% in the third quarter of 2011 and 7.5% in the fourth quarter of 2010.
  • The sequential decrease in prepaid churn was driven primarily by fewer MVNO deactivations.
  • The year-on-year decrease in prepaid churn was driven primarily by the success of unlimited Monthly 4G prepaid plans introduced in 2011.

 

Adjusted OIBDA

 

  • T-Mobile USA reported Adjusted OIBDA (as defined in Note 8 to the Selected Data, below) of $1.40 billion in the fourth quarter of 2011, compared to $1.45 billion in the third quarter of 2011 and $1.34 billion in the fourth quarter of 2010.
  • Adjusted OIBDA margin (as defined in Note 9 to the Selected Data, below) was 31% in the fourth quarter of 2011, consistent with the third quarter of 2011 and up from 29% in the fourth quarter of 2010.
    • Year-on-year OIBDA margin improved primarily due to the reductions in equipment subsidies in connection with the new unlimited Value plans.
  • T-Mobile USA is currently performing its annual assessment of the indefinite-lived assets recorded in its financial statements.¬† T-Mobile USA anticipates that it will record a material non-cash impairment charge related to its indefinite-lived assets for the fourth quarter of 2011.¬† Any such charge would have no affect on either the Company‚Äôs current cash balance or future cash flows.¬† T-Mobile USA expects to include full financial statement results for the fourth quarter of 2011 in the earnings release for the first quarter of 2012 as a comparative period.
  • Adjusted OIBDA in the fourth quarter of 2011 and the third quarter of 2011 excludes AT&T transaction-related costs of $123 million and $51 million, respectively, primarily consisting of employee-related retention benefit expenses.
  • Sequentially, adjusted OIBDA decreased as a result of lower service revenues driven by branded customer losses and higher customer acquisition expenses.¬† This was offset by lower network operating expenses.¬† Third quarter of 2011 adjusted OIBDA had also benefitted by $29 million in connection with the discontinued retail partnership with RadioShack.
  • Year-on-year, adjusted OIBDA increased as a result of reduced losses from equipment subsidies due to the launch of the unlimited Value plans and continued cost management programs. Fourth quarter 2011 operating expenses, excluding the cost of equipment sales, remained consistent sequentially and year-on-year as cost savings programs in 2011 helped control expense growth.

 

Revenue 

  • Service revenues (as defined in Note 4 to the Selected Data, below) were $4.57 billion in the fourth quarter of 2011, down from $4.67 billion in the third quarter of 2011 and $4.69 billion in the fourth quarter of 2010.
    • Sequentially and year-on-year, quarterly service revenues decreased primarily due to contract customer losses, which were partially offset by the increased adoption of data plans in the contract and prepaid customer base.¬† Additionally, year-on-year service revenues were positively impacted by growth in revenues from providing handset insurance services to customers, which were insourced in the fourth quarter of 2010 and reconnection fees, which were introduced in the third quarter of 2011.
  • Service and Sales revenues (as defined in Note 13 to the Selected Data, below) were $5.1 billion in the fourth quarter of 2011, down from $5.2 billion in the third quarter of 2011 and $5.3 billion in the fourth quarter of 2010.
    • Service and Sales revenues decreased slightly from the third quarter of 2011 primarily due to contract customer losses as described above, partially offset by increased 3G/4G smartphone sales volumes.¬† The number of 3G/4G smartphones sold in the fourth quarter of 2011 increased to 2.6 million from 1.8 million in the third quarter of 2011 and 2.1 million in the fourth quarter of 2010.¬† 3G/4G smartphones also accounted for a record 92% of equipment sales in the fourth quarter of 2011 compared to 77% in both the third quarter of 2011 and the fourth quarter of 2010.
    • Compared to the fourth quarter of 2010, Service and Sales revenues decreased by 3.6% as fewer branded contract gross additions were partially offset by handset sales in connection with the introduction of T-Mobile USA‚Äôs new unlimited Value plans.
  • Total revenues, including service, equipment sales, and other revenues were $5.2 billion in the fourth quarter of 2011, consistent with the third quarter of 2011 and down from $5.4 billion in the fourth quarter of 2010.
    • Compared to the fourth quarter of 2010, total revenues changed due primarily to contract customer losses as described above.

 

ARPU

  • Blended Average Revenue Per User (‚ÄúARPU‚ÄĚ as defined in Note 4 to the Selected Data, below) was $46 in the fourth quarter of 2011, consistent with both the third quarter of 2011 and the fourth quarter of 2010.
    • Both blended and contract ARPU benefitted from growing handset insurance revenues and from the introduction of reconnection fees.
  • Contract ARPU, including connected devices, was $53 in the fourth quarter of 2011, consistent with the third quarter of 2011 and up from $52 in the fourth quarter of 2010. ¬†Branded contract ARPU, excluding connected devices, was $58 in the fourth quarter of 2011, down from $59 in the third quarter of 2011 and up from $56 in the fourth quarter of 2010.
    • oYear-on-year, branded contract ARPU increased as data revenue growth more than offset lower voice revenue, which included effects from the shift to unlimited Value plans.
  • Prepaid ARPU, including MVNO, was $19 in the fourth quarter of 2011, up from $18 in the third quarter of 2011 and consistent with the fourth quarter of 2010.¬† Branded prepaid ARPU, excluding MVNO customers, was $25 in the fourth quarter of 2011, up from $24 in the third quarter of 2011 and consistent with the fourth quarter of 2010.
    • oQuarter-on-quarter, branded prepaid ARPU increased primarily due to the continued growth in unlimited Monthly 4G prepaid products.
  • Data service revenues (as defined in Note 4 to the Selected Data, below) were $1.4 billion in the fourth quarter of 2011, up 9.9% from the fourth quarter of 2010.
  • Data service revenues in the fourth quarter of 2011 represented 31% of blended ARPU, or $14.20 per customer, compared to 30% of blended ARPU, or $14.00 per customer in the third quarter of 2011, and 28% of blended ARPU, or $12.80 per customer in the fourth quarter of 2010.¬† Branded data ARPU in the fourth quarter of 2011 amounted to $16.50 per branded customer, compared to $16.00 per branded customer in the third quarter of 2011 and $13.80 per branded customer in the fourth quarter of 2010.
    • In the fourth quarter of 2011, the increase in the number of customers using smartphones, along with T-Mobile USA‚Äôs continued upgrade of its 3G and 4G networks helped drive Internet access revenue growth through the increased customer adoption of mobile broadband data plans.
    • 11.0 million customers were using smartphones enabled for the T-Mobile USA 3G/4G network (as defined in Note 12 to the Selected Data, below) such as the Samsung Galaxy S¬ģII, the HTC Sensation‚ĄĘ 4G and the T-Mobile¬ģ¬†myTouch‚ĄĘ 4G Slide.¬† This represents a net increase of over 34% or 2.8 million customers using smartphones from the fourth quarter of 2010.
    • 3G/4G smartphone customers now account for 40% of total branded customers, up from 36% in the third quarter of 2011 and 28% in the fourth quarter of 2010.
    • Messaging revenue (as described in Note 5 to the Selected Data, below) continued to be an important component of data service revenues.¬† Messaging accounted for approximately 31% of total data revenues in the fourth quarter of 2011, a decrease compared to 32% in the third quarter of 2011 and 36% in the fourth quarter of 2010 related to a shift in the data revenue mix towards mobile broadband data plans. ¬†¬†

 

CPGA and CCPU

  • The average cost of acquiring a customer, Cost Per Gross Add (‚ÄúCPGA‚ÄĚ as defined in Note 7 to the Selected Data, below) was $270 in the fourth quarter of 2011, up from $260 in the third quarter of 2011, but down from $290 in the fourth quarter of 2010.
    • Sequentially, CPGA increased in the fourth quarter of 2011 due primarily to a change in the customer mix towards branded customer additions and higher advertising costs.
    • Year-on-year, CPGA decreased in the fourth quarter of 2011 due primarily to lower handset subsidies as a result of T-Mobile USA‚Äôs new unlimited Value plans, which do not bundle subsidized handsets as in traditional wireless service contracts.
  • The average cash cost of serving customers, Cash Cost Per User (‚ÄúCCPU‚ÄĚ as defined in Note 6 to the Selected Data, below), was $23 per customer per month in the fourth quarter of 2011, consistent with the third quarter of 2011 and down from $24 in the fourth quarter of 2010.
    • Year-on-year, CCPU decreased in the fourth quarter of 2011 due primarily to lower handset upgrade subsidies as a result of T-Mobile USA‚Äôs new unlimited Value plans.

 

Capital Expenditures

  • Cash capital expenditures (as defined in Note 10 to the Selected Data, below) were $2.7 billion in 2011, fairly consistent with $2.8 billion in 2010.
    • In 2011, cash capital expenditures were driven by the continued build-out of the HSPA+ 21 and HSPA+ 42 networks (as defined in Note 11 to the Selected Data, below).
  • Cash capital expenditures were $551 million in the fourth quarter of 2011, compared to $741 million in the third quarter of 2011 and $828 million in the fourth quarter of 2010.
    • Sequentially and year-on-year, the decrease in cash capital expenditures was a result of lower expenditures related to the buildout of the HSPA+ 42 network.
    • To further improve the value provided to customers through its 4G mobile broadband network, T-Mobile USA has continued to invest in its HSPA+ 42 network, which reached over 184 million people as of the end of the fourth quarter of 2011, doubling the theoretical speed of its 4G network to 42 Mbps.

 

T-Mobile USA Recent Highlights

  • On March 20, 2011, Deutsche Telekom AG and AT&T Inc. entered into a definitive agreement under which AT&T proposed to acquire T-Mobile USA from Deutsche Telekom in a cash and stock transaction valued at approximately $39 billion, subject to adjustment in accordance with the agreement.¬† In the third quarter of 2011, the U.S. Department of Justice (DOJ) filed a complaint in the Federal District Court for the District of Columbia to block the acquisition.¬† On November 24, 2011, AT&T and Deutsche Telekom withdrew their pending applications at the Federal Communications Commission (‚ÄúFCC‚ÄĚ) for the transfer of T-Mobile USA spectrum licenses to AT&T as part of AT&T‚Äôs acquisition of T-Mobile USA.¬†¬† On December 20, 2011, AT&T and Deutsche Telekom jointly announced the termination of the agreement on the sale of T-Mobile USA. ¬†As a result, AT&T made a $3.0 billion cash payment to Deutsche Telekom in December 2011.¬† The break-up consideration due to Deutsche Telekom under the terminated Stock Purchase Agreement also included significant Advanced Wireless Services (‚ÄúAWS‚ÄĚ) spectrum and a long term agreement on Universal Mobile Telecommunications Systems (‚ÄúUMTS‚ÄĚ) roaming within the USA.¬† T-Mobile USA incurred transaction-related costs in 2011 that primarily reflect incremental personnel costs as a result of the formerly proposed deal.
  • T-Mobile USA and AT&T Inc. have jointly filed a request with the FCC for approval of the AWS spectrum transfer noted above, which resulted from the termination of the agreement on the sale of T-Mobile USA.¬† This spectrum will increase T-Mobile USA‚Äôs average spectrum holdings in the Top 100 markets from approximately 54 to approximately 60 MHz.
  • T-Mobile USA continues to unveil cutting edge devices including 42 Mbps-capable smartphones such as the T-Mobile¬ģ¬†myTouch¬ģ¬†Q, the HTC¬ģ¬†Amaze‚ĄĘ 4G and the Samsung Galaxy S¬ģ¬†II and new 4G tablets such as the T-Mobile¬ģ¬†SpringBoard‚ĄĘ with Google‚ĄĘ¬† and the Samsung Galaxy Tab‚ĄĘ 10.1 and the upcoming Samsung Galaxy S¬ģ¬†Blaze‚ĄĘ 4G.
  • T-Mobile USA announced it will invest $4 billion in total to strengthen its 4G network by installing new equipment at 37,000 cell sites and deploying HSPA+ in its PCS (1900) spectrum band. This spectrum re-farming effort, combined with the AWS spectrum T-Mobile USA will receive due to the termination of the AT&T transaction (subject to FCC approval), will allow the deployment of long-term evolution (LTE) service on AWS spectrum in 2013. This anticipated network transformation will significantly enhance coverage and performance for customers.

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Dan Graziano

February 23rd

Uncategorized

HTC promises change after admitting its bulky LTE phones have been weak so far

HTC on Monday reported that the company’s fourth quarter earnings missed analysts‚Äô estimates. While speaking on the vendor’s earnings call,¬†HTC’s chief financial officer said that the¬†manufacturer¬†”dropped the ball‚ÄĚ with its 2011 devices, SlashGear reports. Winston Yung admitted that the company’s LTE handsets were too thick, offered insufficient battery life and that there was plenty of work to be done to improve both ‚Äúdesign and components.‚ÄĚ Products launched in the fourth quarter “are not selling as we expected,” Yung said. New phones are on the way, however, and HTC’s next-generation smartphones are expected to be revealed later this month. BGR exclusively reported this past November that HTC will unveil the Ville at Mobile World Congress¬†along side the company’s quad-core flagship HTC Edge.

Read

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Dan Graziano

February 6th

Uncategorized

IDC: Apple passes LG to become world’s third largest phone vendor

Thanks to a strong fourth quarter, Apple has passed LG to become the world’s third largest cell phone vendor by volume, according to new estimates from market research firm IDC. The worldwide mobile phone market grew 6.1% ¬†year-over-year in the fourth quarter as the feature phone market continued to decline to its lowest growth rate in two years. Vendors shipped 427.4 million phones in the fourth quarter compared to 402.8 million units in the same quarter last year. Nokia and Samsung remained the top and No.2 vendors, respectively, though Nokia’s phone shipments slid 7.9% while shipments of Samsung handsets grew 17.6% compared to the same quarter in 2010. Read on for more

“Apple jumped into the third spot globally from the fifth spot last quarter thanks to a record-breaking quarter of shipments,” IDC stated in a press release.¬†”That represents the Cupertino-based company’s highest-ever ranking on IDC’s Top 5 global mobile phone leaderboard. The launch of Apple’s iPhone 4S smartphone, which is now available in over 90 countries (as of mid-January), was the primary reason the company leapt over LG and ZTE in 4Q11. Device sales in the U.S. and Japan were particularly strong given extra sales days in the quarter and carrier distribution.” The firm’s full press release follows below.

Worldwide Mobile Phone Market Maintains Its Growth Trajectory in the Fourth Quarter Despite Soft Demand for Feature Phones, According to IDC 

01 Feb 2012

FRAMINGHAM, Mass. February 1, 2011¬†‚Äď The worldwide mobile phone market grew 6.1% year over year in the fourth quarter of 2011 (4Q11), as the feature phone market declined faster than anticipated, dragging market growth down to its lowest point in over two years. According to the International Data Corporation (IDC)¬†Worldwide Mobile Phone Tracker, vendors shipped 427.4 million units in 4Q11 compared to 402.8 million units in the fourth quarter of 2010. The 6.1% year-over-year growth was higher than IDC’s forecast of 4.4% for the quarter, but weaker than the 9.3% growth in 3Q11.

“The mobile phone market exhibited unusually low growth last quarter, which shows it is not immune to weaker macroeconomic conditions worldwide,” said¬†Kevin Restivo, senior research analyst with IDC’s Worldwide Mobile Phone Tracker. “The introduction of high-growth products such as the iPhone 4S, which shipped in the fourth quarter, bolstered smartphone growth. Yet overall market growth fell to its lowest point since 3Q09 when the global economic recession was in full bloom.”

While smartphones continue to grow in popularity, feature phones still comprise the majority of all mobile phone shipments. “Feature phones accounted for a majority of shipments from four of the five market leaders during the quarter,” said¬†Ramon Llamas, senior research analyst with IDC’s Mobile Phone Technology and Trends team. “Even though their proportion is eroding, feature phones maintain their appeal on the basis of price and ease of use.

“At the same time, feature phones are fighting to maintain their market share,” added Llamas. “To meet the challenge, feature phones are becoming more like smartphones, incorporating mobile Internet and third-party applications. While this may not stem the smartphone tide, it should slow down the rate at which smartphones are selected over feature phones.”

Regional Highlights

  • In¬†Asia/Pacific (excluding Japan), the feature phone market declined in conjunction with the region’s largest feature phone markets ‚Äď China, India, and Indonesia. The impact on phone demand due to the holiday season, which generally means a sales uplift, was minimal in this category. Meanwhile, smartphones maintained their growth momentum as the iPhone 4S was well received in Australia, Hong Kong, Korea, and Taiwan. Competition in the Android market intensified as mid-range vendors, such as Lenovo, Coolpad, and Huawei, shipped large numbers in their home market of China. Elsewhere, the rest of the Android market was dominated by Samsung, followed by HTC and LG. Windows Phone gained some momentum thanks to sales of the HTC Titan and Radar and Nokia Lumia. In¬†Japan, pent-up demand for mobile phones after last year’s natural disasters and weakened economy meant unusually high growth for the country’s mobile phone market. Smartphone sellers, such as Apple, fared particularly well while non-Japanese vendors continue to make incremental gains in the market.
  • The¬†Western European¬†mobile phone market was impacted by lower demand, a result of the worsening economic environment. Smartphone growth was not enough to offset the feature phones decline, despite excellent performances from Apple and Samsung. Nokia experienced another difficult quarter as a result of its transition towards Windows Phones. Feature phone shipments were near historic lows, supported primarily by very low-end devices. Overall, the¬†Central Europe, Middle East and Africa (CEMA)¬†markets showed strong double-digit growth due in large part to Samsung’s continued strength in the regions. Bucking its global troubles, Nokia shipments flattened out in the regions after a strong third quarter, enabling it to remain the market leader in the regions. Apple continued to make quiet progress in the regions as well.
  • In¬†North America, smartphones held the spotlight with the launch of the Apple iPhone 4S, while LTE smartphones from HTC, LG, Motorola, and Samsung also made important gains. Research In Motion launched several new phones running on BB OS 7 during the quarter, and signaled a late 2012 timetable for its first BlackBerry 10 smartphones to reach the market, leaving an opportunity to its competitors to attack its market share.
  • Smartphones also took center stage in¬†Latin America¬†with the launch of multiple models across the region, particularly sub-$200 Android models. The low price points have enabled broader appeal, and have also found placement among popular prepaid markets. Although smartphones continued to grab attention, low-cost feature phones ruled the market, with strong participation from Nokia, Samsung, and multiple Chinese vendors.

Vendor Highlights

Nokia¬†finished the year exactly where it began: as the undisputed leader of total mobile phone shipments. The company took another step in its storied transition, having officially launched its first Windows Phone-powered Lumia smartphones and its Asha line of smartphone-like feature phones. While both have received positive response from the market, Nokia has been quick to adjust its retail experience, customer engagement, and hardware bug fixes. At the same time, the increased focus on the Lumia, combined with changing market conditions in key markets, has prompted Nokia to change its strategy on Symbian smartphones. Fewer Symbian devices will be sold in 2012. Still, Nokia’s broad distribution around the world and manufacturing capabilities make it a serious contender to maintain its leadership position.

Samsung finished the quarter and the year reaching new record levels: breaking the 90 million unit mark for the first time in a single quarter and breaking the 300 million mark for the first time in a single year. Leading the charge for Samsung was its growing smartphone volumes, boosted by the release of several high-end devices (Galaxy S II, Galaxy Note, Galaxy Nexus), mass market models (Galaxy Ace, and Galaxy Y), and new Windows Phone smartphones (Focus Flash and the Focus S). These, along with its own steadily growing feature phone volumes, pushed Samsung closer to market leader Nokia, with fewer than 20 million units separating them in 4Q11.

Apple¬†jumped into the third spot globally from the fifth spot last quarter thanks to a record-breaking quarter of shipments. That represents the Cupertino-based company’s highest-ever ranking on IDC’s Top 5 global mobile phone leaderboard. The launch of Apple’s iPhone 4S smartphone, which is now available in over 90 countries (as of mid-January), was the primary reason the company leapt over LG and ZTE in 4Q11. Device sales in the U.S. and Japan were particularly strong given extra sales days in the quarter and carrier distribution.

LG‘s total volumes declined for the third consecutive quarter, sinking to levels not seen since the second quarter of 2007. Driving this result was a combination of waning interest in its aging feature phones and stalled smartphone volumes. In addition, from a full year perspective, LG posted the largest full year-over-year decline among the leading vendors. Still, the quarter did have some bright spots, including a return to profitability and a warm reception for its Optimus LTE smartphones across multiple markets. 2012 will feature more smartphones from LG, especially LTE-powered models, but the competition has similar smartphone strategies.

Chinese vendor¬†ZTE¬†nearly tied with LG for fourth place, with fewer than a million units separating the two vendors. Long known as a purveyor of entry level devices, ZTE’s smartphones increasingly moved into the spotlight. The company’s primary targets included countries throughout Asia/Pacific, but it also gained presence in EMEA and Latin America, and branched out into North America. Key models for the quarter included its popular mass-market Blade and mid-range Skate Android smartphones, and recently the company added its first Windows Phone-powered smartphone, the Tania.

 

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Dan Graziano

February 2nd

Apple

Motorola posts $80 million Q4 loss; ships 10.5 million mobile devices including 200,000 tablets

Motorola Mobility on Thursday announced the company’s results for the fourth quarter last year. The vendor managed $3.4 billion in revenue but posted a net loss of $80 million, or $0.27 per share. Motorola posted a profit of $0.27 per share in the same quarter a year earlier. For the full year, the company’s revenue totaled $13.1 billion, up 14% compared to 2010, and it reported a net loss was $0.84 per share compared to a loss of $0.29 per share in 2010. Motorola shipped 10.5 million mobile devices in the fourth quarter, including 200,000 tablets, and full-year device shipments totaled 42.4 million units. Motorola Mobility’s full press release follows below.

Motorola Mobility Announces Fourth Quarter and Full-Year Financial Results

LIBERTYVILLE, Ill.,¬†Jan. 26, 2012¬†/PRNewswire/ –

Fourth Quarter Financial Highlights

  • Net revenues of¬†$3.4 billion
  • Non-GAAP net earnings of¬†$0.20¬†per share compared to net earnings of¬†$0.37¬†per share in fourth quarter 2010; GAAP net loss of¬†$0.27¬†per share compared to net earnings of$0.27¬†per share in fourth quarter 2010
  • Mobile Devices net revenues of¬†$2.5 billion, up 5 percent from fourth quarter 2010; Non-GAAP operating loss of¬†$19 million; GAAP operating loss of¬†$70 million
  • Shipped 10.5 million mobile devices, including 5.3 million smartphones
  • Home net revenues of¬†$897 million, down 11 percent from fourth quarter 2010; Non-GAAP operating earnings of¬†$84 million; GAAP operating earnings of¬†$57 million

Motorola Mobility Holdings, Inc. (NYSE: MMI) today reported net revenues of $3.4 billion in the fourth quarter of 2011, comparable to the fourth quarter of 2010. The GAAP net loss in the fourth quarter of 2011 was $80 million, or $0.27 per share, compared to net earnings of $80 million, or $0.27 per share, in the fourth quarter of 2010. On a non-GAAP basis, net earnings in the fourth quarter 2011 were $61 million, or $0.20 per share, compared to net earnings of $108 million, or $0.37 per share, in the fourth quarter of 2010.

For the full year, 2011 net revenues were $13.1 billion, up 14 percent compared to 2010. For the full year, the GAAP net loss was $0.84 per share compared to a loss of $0.29 per share in 2010. On a non-GAAP basis, net earnings were $0.33 per share compared to a loss of $0.28 per share in 2010.

The Company generated positive operating cash flow of $225 million and $357 million in the fourth quarter and full year, respectively. Total cash at the end of the quarter was $3.6 billion and includes cash, cash equivalents, and cash deposits.

Details on non-GAAP adjustments and the use of non-GAAP measures are included later in this press release and in the financial tables.

“In the fourth quarter, we received very positive consumer response to Motorola RAZR, which combined an iconic brand with ultra-thin in an innovative smartphone. ¬†Our Home business continues to be a leader in the industry’s transformation to all IP, with unique solutions that enable rich media experiences across any screen,” said¬†Sanjay Jha, chairman and chief executive officer, Motorola Mobility. “We remain energized by the proposed merger with Google and continue to focus on creating innovative technologies.”

Operating Results

Mobile Devices net revenues in the fourth quarter, impacted by the increased competitive environment, were $2.5 billion, up 5 percent compared with the year-ago quarter. The GAAP operating loss was $70 million compared to operating earnings of $72 million in the year-ago quarter. The non-GAAP operating loss was $19 million compared to operating earnings of $56 million in the year-ago quarter. For the full year 2011, net revenues were $9.5 billion, an increase of 22 percent compared to 2010. The 2011 GAAP operating loss was$285 million compared to an operating loss of $76 million in 2010. The 2011 non-GAAP operating loss was $126 million compared to an operating loss of $198 million in 2010.

The Company shipped a total of 10.5 million and 42.4 million mobile devices in the fourth quarter and full year 2011, respectively. This included 5.3 million and 18.7 million smartphones and approximately 200 thousand and 1 million tablets in the fourth quarter and full year, respectively.

Mobile Devices highlights:

  • Launched Motorola RAZR‚ĄĘ¬†extending the iconic RAZR brand around the world
  • Announced DROID RAZR MAXX‚ĄĘ, featuring twice as much battery life as the leading competitor and measuring only 8.99 millimeters
  • Unveiled the award-winning DROID 4 by Motorola, the thinnest and most powerful 4G LTE QWERTY smartphone featuring a five-row keyboard and edge-lit keys
  • Introduced two new 4G LTE tablets, the DROID XYBOARD 10.1‚ĄĘ¬†and XYBOARD 8.2‚ĄĘ.
  • Announced the “life proof” Motorola DEFY‚ĄĘ¬†MINI and slim MOTOLUXE‚ĄĘ, two new value priced additions to Motorola’s growing budget-friendly portfolio
  • Shipped award-winning MOTOACTV‚ĄĘ, the world’s first combined GPS fitness tracker and MP3 player
  • Launched two flagship devices in¬†China¬†‚Äď the TD-SCDMA Motorola MT917 and the Motorola XT928, a dual-core, dual-mode, dual-standby smartphone

Home segment net revenues in the fourth quarter were $897 million, down 11 percent compared with the year-ago quarter. GAAP operating earnings were $57 million, compared to$54 million in the year-ago quarter. Non-GAAP operating earnings were $84 million compared to $90 million in the year-ago quarter. Fourth quarter set-top shipments were down 3 percent compared to the year-ago quarter. For the full year 2011, net revenues were $3.5 billion, compared to $3.6 billion in 2010. GAAP operating earnings increased to $226 millionfrom $152 million in 2010. The 2011 non-GAAP operating earnings increased to $332 million from $272 million in 2010. Full year set-top shipments were up 6 percent compared to 2010.

Home highlights:

  • Launched DreamGallery next-generation HTML-5 video navigation software in¬†North America¬†with Shaw Communications
  • Expanded¬†video leadership and paved¬†the way for¬†Canada’s move to all-MPEG-4 broadcast and On-Demand HD services with Eastlink
  • Demonstrated market leadership with introduction of¬†new carrier Ethernet product line for the deployment of cost-effective commercial services
  • Introduced Motorola APEX3000, which delivers market-leading density to cost-effectively add greater demand for narrowcast services such as VOD and DVR
  • Selected by Altibox AS in¬†Norway¬†to provide VAP 2400¬†HD wireless video¬†bridge to enable multi-room TV services

Merger Update

As previously announced on¬†August 15, 2011, Motorola Mobility and Google Inc. (“Google”) (NASDAQ: GOOG) entered into a definitive agreement for Google to acquire Motorola Mobility for¬†$40.00¬†per share in cash, or a total of approximately¬†$12.5 billion. ¬†On¬†November 17, 2011, Motorola Mobility stockholders voted overwhelmingly to approve the proposed merger with Google at the Company’s Special Meeting of Stockholders. ¬†The Company continues to work closely with Google to complete the proposed acquisition of Motorola Mobility as expeditiously as possible.

The Company notes that the transaction remains subject to various closing conditions. Antitrust clearances, or waiting period expirations, are required by the U.S. Department of Justice (DOJ), by the European Commission, and in Canada, China, Israel, Russia, Taiwan and Turkey. Requisite filings have been submitted to the appropriate regulatory body in each of these jurisdictions. Clearances have been received in Turkey and Russia. In Canada and the United States, the statutory waiting period for the transaction has expired although the parties have been informed that the reviewing agencies have not closed their respective investigations.  In December 2011, the Chinese Ministry of Commerce proceeded to phase two of its investigation.  In February, the European Commission is expected to announce whether it will close its investigation or proceed to a phase two investigation.

The Company currently expects the transaction to close in early 2012 once all conditions have been satisfied and reminds stockholders that it is possible that the failure to timely meet such conditions or other factors outside of the Company’s control could delay or prevent completion of the transaction altogether.

For more information on the proposed merger, please visit http://investors.motorola.com.

Conference Call and Webcast

In light of the pending acquisition of the Company by Google, the Company does not conduct a financial analyst conference call or webcast following the release of its earnings information nor provide financial guidance. To access the fourth quarter results and other financial information, please visit http://investors.motorola.com.

Consolidated GAAP Results

A comparison of results from operations is as follows:

Fourth Quarter Full Year
(In millions, except per share amounts) 2011 2010 2011 2010
Net revenues $3,436 $3,425 $13,064 $11,460
Gross margin 854 915 3,317 2,965
Operating earnings (loss) (78) 126 (142) 76
Earnings (loss) before income taxes (78) 110 (148) (4)
Net earnings (loss) attributable to Motorola Mobility Holdings, Inc. ($80) $80 ($249) ($86)
Basic earnings (loss) per common share * ($0.27) $0.27 ($0.84) ($0.29)
Diluted loss per common share* ($0.27) N/A ($0.84) N/A
Weighted average common shares outstanding
   Basic 300.2 294.3 297.1 294.3
   Diluted 300.2 N/A 297.1 N/A

Non-GAAP Adjustments for fourth quarter and full year 2011 and 2010

Fourth Quarter
Per Share Impact 2011 2010
GAAP Earnings (Loss) per Common Share * ($0.27) $0.27
Merger-related costs** 0.22 ——
Reorganization of business charges 0.09 0.06
Stock-based compensation expense 0.12 0.14
Intangible assets amortization expense 0.04 0.05
Joint venture wind-down costs —— 0.03
IP settlement —— (0.19)
Total Non-GAAP Adjustments *** 0.47 0.10
Non-GAAP Earnings per Common Share * $0.20 $0.37
Full Year
Per Share Impact 2011 2010
GAAP Loss per Common Share * ($0.84) ($0.29)
Merger-related costs** 0.28 ——
Reorganization of business charges 0.09 0.20
Stock-based compensation expense 0.52 0.55
Intangible assets amortization expense 0.20 0.19
Legal claim provision 0.07 ——
Joint venture wind-down costs —— 0.03
Legal settlement —— (0.77)
IP settlement —— (0.19)
Total Non-GAAP Adjustments *** 1.16 0.01
Non-GAAP Earnings (Loss) per Common Share * $0.33 ($0.28)

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Dan Graziano

January 26th

Uncategorized

AT&T reports best-ever quarter for smartphones; 7.6 millon iPhones activated


AT&T reported its fourth-quarter 2011 results on Thursday and noted that it achieved record mobile broadband and smartphone activations during the quarter. The company reported consolidated revenue of $32.5 billion, up 3.6% or $1.1 billion from the same quarter last year, but it posted a loss of $6.7 billion, or $1.12 per share. EPS swings to a profit of $0.42 per share discounting one-time charges including the massive breakup fee paid to T-Mobile. AT&T attributed 76% of its revenue growth to wireless, wireline data and managed services, which represented 76% of overall revenue, up 7.5% from last year. The carrier sold 9.4 million smartphones during the quarter, a record that was 50% more than its previous record and more than twice the number of smartphones that were sold during the last quarter. AT&T added 717,000 postpaid customers, the largest increase in postpaid in five quarters, and 2.5 million total net wireless subscribers. The company said it was also the best quarter for Android and iPhone activations and that it activated a total of 7.6 million iPhones during the quarter. AT&T also noted that its full year revenue totaled $126.7 billion, up 2% from the $124.3 billion it reported in 2010. AT&T’s full press release follows after the break.

Best-Ever Mobile Broadband Sales and Strong Cash Flows Highlight AT&T’s Fourth-Quarter Results; Stock Buyback Begins on Previous 300 Million Share Authorization

2012 Outlook: Solid Revenue, Margins and Earnings Growth with Strong Free Cash Flow

Dallas, Texas, January 26, 2012

  • $(1.12) diluted EPS in fourth quarter compared to $0.18 diluted EPS in the year-ago period. Excluding significant items for both quarters, EPS of $0.42 compared to $0.55 in the year-ago quarter, driven by the company’s best-ever quarter for smartphone activations ‚ÄĒ up nearly 60¬†percent year over year
  • Consolidated revenues of $32.5¬†billion, up $1.1¬†billion, or 3.6¬†percent, versus the year-earlier period
  • In 2011, AT&T’s growth engines ‚ÄĒ wireless, wireline data and managed services ‚ÄĒ represented 76¬†percent of total revenues and grew 7.5¬†percent versus 2010, led in the fourth quarter by:
    • 10.0¬†percent growth in wireless revenues
    • 19.4¬†percent growth in wireless data revenues, up $956¬†million versus the year-earlier quarter
    • 16.4¬†percent growth in strategic business services revenues
    • 43.7¬†percent growth in consumer U-verse revenues
  • 9.4¬†million smartphone sales, best-ever quarter and 50¬†percent more than previous quarterly record and nearly double 3Q11 sales; 82¬†percent of postpaid sales were smartphones
  • 717,000 wireless postpaid net adds, the largest increase in five quarters; 2.5¬†million increase in total net wireless subscribers, with gains in every customer category
  • Best-ever quarter for Android and Apple smartphones, including 7.6¬†million iPhone activations
  • 571,000 branded computing device (tablets, aircards, etc.) sales, best-ever quarter to reach 5.1¬†million total subscribers; up almost 70¬†percent from a year ago
  • 12th consecutive quarter with a year-over-year increase in postpaid wireless subscriber ARPU (average monthly revenues per subscriber), up 1.4¬†percent to $63.76 ‚ÄĒ more than $6 higher than nearest competitor’s ARPU
  • Second consecutive quarter of sequential growth in wireline business revenues
  • Sixth consecutive quarter of year-over-year growth in wireline consumer revenues, driven by AT&T U-verse¬ģ¬†services
  • 208,000 net gain in AT&T U-verse TV subscribers to reach 3.8¬†million in service, with continued high broadband and voice attach rates

AT&T Inc. (NYSE:T) today reported fourth-quarter results highlighted by record sales, strong wireless network performance and improved wireline revenue trends.

“We had a tremendous year in terms of execution, and we have excellent momentum across our growth platforms,” said¬†Randall Stephenson, AT&T chairman and chief executive officer.”This was a blowout quarter for sales. Our network performance is at a high level on voice quality and best-in-class mobile download speeds. Sales continue to be strong and business revenue trends are on a good track.

“Looking ahead, we start 2012 with the best visibility we’ve had in some time, and we’re well positioned to deliver solid results ‚ÄĒ including continued revenue growth with margin expansion, solid earnings per share growth and strong cash flow,” Stephenson said.”In short order, we will begin share repurchases to deliver significant value to our owners.”

Fourth-Quarter Financial Results
For the quarter ended December 31, 2011, AT&T’s consolidated revenues totaled $32.5¬†billion, up $1.1¬†billion, or 3.6¬†percent, versus the year-earlier quarter.

Compared with the fourth quarter of 2010, operating expenses were $41.5¬†billion versus $29.3¬†billion; operating loss was $9.0¬†billion, compared to operating income of $2.1¬†billion; and AT&T’s operating income margin was (27.7)¬†percent, compared to 6.7¬†percent. Excluding fourth-quarter significant items, operating expenses were $28.1¬†billion versus $25.8¬†billion; operating income was $4.4¬†billion, compared to $5.6¬†billion; and operating income margin was 13.5¬†percent, compared to 17.7¬†percent.

Fourth-quarter 2011 net income attributable to AT&T totaled $(6.7) billion, or $(1.12) per diluted share. Excluding significant non-cash charges of $0.65 from the actuarial loss on benefit plans and $0.48 for directory asset impairments, along with a one-time charge of $0.44 for termination of the T-Mobile USA acquisition and a one-time gain of $0.03 from a tax settlement, adjusted earnings per share was $0.42.

(The actuarial loss on benefit plans was driven by a reduction in the discount rate from 5.8 percent to 5.3 percent. While our investment returns were better than the overall market, they were less than expectations; this was largely offset by better-than-expected force and medical cost management. The directory asset impairment resulted from an annual review of intangible assets compared to fair value.)

These results compare with reported net income attributable to AT&T of $1.1 billion, or $0.18 per diluted share, in the fourth quarter of 2010. Excluding significant items, earnings per share for the fourth quarter of 2010 was $0.55 per diluted share.

Fourth-quarter 2011 cash from operating activities totaled $7.5¬†billion, and capital expenditures totaled $5.5¬†billion. Also included in the fourth quarter, the company made a $1.0¬†billion contribution to the company’s pension fund. No additional funding is required in 2012. Free cash flow ‚ÄĒ cash from operating activities minus capital expenditures ‚ÄĒ totaled $2.0¬†billion.

Full-Year Results
For the full year 2011, compared with 2010 results, AT&T’s consolidated revenues totaled $126.7¬†billion versus $124.3¬†billion, up 2.0¬†percent; operating expenses were $117.5¬†billion, compared with $104.7¬†billion; net income attributable to AT&T was $3.9¬†billion versus $19.9¬†billion; and earnings per diluted share was $0.66 compared with $3.35. Excluding significant items, earnings per share totaled $2.20, compared with $2.29.

Compared with 2010 results, AT&T’s full-year cash from operating activities totaled $34.6¬†billion, down from $35.0¬†billion. Capital expenditures, including capitalized interest, totaled $20.3¬†billion versus $20.3¬†billion, including a 6.4¬†percent increase in wireless-related capital investment versus 2010, as AT&T aggressively deployed next-generation mobile broadband networks. Free cash flow totaled $14.4¬†billion, compared with $14.7¬†billion.

Outlook
AT&T is well positioned to deliver solid revenue and earnings growth with improving margins while returning substantial value to shareowners. In 2012, AT&T expects continued consolidated revenue growth, including postpaid wireless ARPU growth around 2 percent for the year. The company also expects to expand consolidated and wireless margins while keeping wireline margins stable. Achieving these targets will lead to mid-single-digit or better earnings growth with an opportunity to accelerate earnings growth beyond 2012. Outlook excludes any significant items. Importantly, little economic lift is assumed with these expectations.

AT&T expects capital expenditures to be about $20 billion, stable with 2011, as increases in wireless spending offset declines in wireline capital expenditures. The company also expects strong free cash flow, with full-year free cash flow in the $15 to $16 billion range, and plans to begin execution of its existing 300 million share repurchase authorization immediately.

WIRELESS OPERATIONAL HIGHLIGHTS
Record-setting mobile broadband sales and the company’s best postpaid subscriber growth in five quarters drove double-digit wireless revenue growth. AT&T continues to lead the industry in smartphone penetration, mobile broadband sales and postpaid ARPU. Highlights included:

Best Postpaid Growth in Five Quarters. AT&T posted a net increase in total wireless subscribers of 2.5 million in the fourth quarter to reach 103.2 million in service. This included gains in every customer category. Subscriber additions for the quarter include postpaid net adds of 717,000, the best gain in five quarters. Prepaid net adds were 159,000, connected device net adds were 1,029,000 and reseller net adds were 592,000. Fourth-quarter net adds reflect accelerated adoption of smartphones, including the October launch of iPhone 4S, increases in prepaid and reseller subscribers and sales of tablets and connected devices such as automobile monitoring systems, security systems and a host of other emerging products.

Record Quarter for Smartphone Sales.¬†AT&T delivered its best-ever smartphone sales quarter ‚ÄĒ up nearly 60¬†percent from the year-ago period. (Smartphones are devices with voice and data capabilities and an advanced operating system to better manage data and Internet access.)¬†In the fourth quarter, the company set a new record with 9.4¬†million smartphones sold, nearly double the number sold in the third quarter and 50¬†percent more than the previous quarterly record. Fourth-quarter smartphone sales represented more than 80¬†percent of postpaid device sales. Both iPhone and Android device sales set records. During the quarter, more than 7.6¬†million iPhones were activated, the majority of which were¬†iPhone 4S, which went on sale Oct. 14, and more than twice as many Android smartphones were sold versus the fourth quarter a year ago. iPhone sales were helped by a superior customer experience, with AT&T delivering download speeds up to three-times faster than on other U.S. carriers’ networks.

At the end of the quarter, 56.8¬†percent of AT&T’s 69.3¬†million postpaid subscribers had smartphones, up from 42.7¬†percent a year earlier and 32.8¬†percent two years ago. The average ARPU for smartphones on AT&T’s network is 1.9 times that of the company’s non-smartphone devices. About 87¬†percent of smartphone subscribers are on FamilyTalk¬ģ¬†or business plans. Churn levels for these subscribers are significantly lower than for other postpaid subscribers.

Best-Ever Quarter for Branded Computing Device Sales. AT&T had its best sales quarter ever for branded computing subscribers, a new growth area for the company that includes tablets, aircards, mobile devices, tethering plans and other data-only devices. AT&T added 571,000 of these devices to reach 5.1 million, an almost 70 percent increase in total subscribers from a year ago. Most of those new subscribers were tablets, with 311,000 added in the quarter, more than half of which were postpaid.

Double-Digit Growth for Wireless Revenues. Total wireless revenues, which include equipment sales, were up 10.0 percent year over year to $16.7 billion. Wireless service revenues increased 4.0 percent, to $14.3 billion, in the fourth quarter.

Wireless Data Revenues Increase 19.4 Percent.¬†Wireless data revenues ‚ÄĒ driven by Internet access, access to applications, messaging and related services ‚ÄĒ increased by $956¬†million, or 19.4¬†percent, from the year-earlier quarter to $5.9¬†billion. AT&T’s postpaid wireless subscribers on monthly data plans increased by 16.4¬†percent over the past year. The number of subscribers on tiered data plans also continues to increase. About 22¬†million, or 56¬†percent, of all smartphone subscribers are on tiered data plans, and about 70¬†percent have chosen the higher-tier plans.

Industry-Leading Postpaid ARPU Continues Growth. Driven by strong data growth, postpaid subscriber ARPU increased 1.4 percent versus the year-earlier quarter to $63.76. This marked the 12th consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU. AT&T continues to lead the industry with postpaid subscriber ARPU about $6 higher than the nearest competitor. Postpaid data ARPU reached $26.01, up 14.9 percent versus the year-earlier quarter.

Postpaid Churn Up Only Slightly.¬†Despite record smartphone sales and the first holiday sales period since the loss of AT&T’s iPhone exclusivity, postpaid churn was up only slightly at 1.21¬†percent, compared to 1.15¬†percent in both the year-ago fourth quarter and in the third quarter of 2011. Total churn was up slightly at 1.39¬†percent versus 1.32¬†percent in the fourth quarter of 2010 and 1.28¬†percent in the third quarter of 2011.

Wireless Margins Reflect Record Sales.¬†Fourth-quarter wireless margins reflect record-setting smartphone sales and customer upgrade levels. This was offset in part by improved operating efficiencies and further revenue gains from the company’s growing base of high-quality smartphone subscribers.

AT&T’s fourth-quarter wireless operating income margin was 15.2¬†percent versus 22.9¬†percent in the year-earlier quarter, and AT&T’s wireless EBITDA service margin was 28.7¬†percent, compared with 37.6¬†percent in the fourth quarter of 2010.¬†(EBITDA service margin is earnings before interest, taxes, depreciation and amortization, divided by total service revenues.)¬†Fourth-quarter wireless operating expenses totaled $14.2¬†billion, up 20.9¬†percent versus the year-earlier quarter, and wireless operating income was $2.5¬†billion, down 27.0¬†percent year over year.

WIRELINE OPERATIONAL HIGHLIGHTS
AT&T’s fourth-quarter wireline results were highlighted by the second consecutive quarter of sequential wireline business revenue growth, a 44¬†percent increase in U-verse revenues and solid cost management:

Sequential Wireline Business Revenue Growth Continues. Total business revenues grew sequentially for the second consecutive quarter. Revenues were $9.3 billion, down 1.4 percent versus the year-earlier quarter but a slight increase over the third quarter of 2011. The year-over-year decline reflects economic conditions and weakness in voice and legacy data products somewhat offset by growth in IP data. Business service revenues, which exclude CPE, declined 1.2 percent year over year, compared to a year-over-year decline of 4.3 percent in the year-ago quarter and were essentially flat sequentially, despite fewer business days in the fourth quarter.

Robust Strategic Business Services Revenues.¬†Revenues from the new-generation capabilities that lead AT&T’s most advanced business solutions ‚ÄĒ including Ethernet,¬†VPNs, hosting, IP conferencing and ‚ÄĒ grew 16.4¬†percent versus the year-earlier quarter, continuing strong trends in this area. This now represents a nearly $6¬†billion annualized revenue stream.

VPN Growth Drives Business IP Revenues. Total business IP data revenues grew 9.2 percent versus the year-earlier fourth quarter, led by growth in VPN revenues. IP-based solutions allow customers to easily add managed services such as network security, cloud services and IP conferencing on top of their infrastructures. Total business data revenues grew 1.3 percent year over year.

Wireline Consumer Revenues Continue Growth. Driven by strength in IP data services, revenues from residential customers totaled $5.3 billion, an increase of 0.5 percent versus the fourth quarter a year ago. The fourth quarter marked the sixth consecutive quarter of year-over-year growth.

208,000 U-verse Net Adds. AT&T U-verse TV added 208,000 subscribers to reach 3.8 million in service. As U-verse scales, its margins improve, contributing to profitability. In the fourth quarter, the AT&T U-verse High Speed Internet attach rate was 90 percent and about half of new subscribers took AT&T U-verse Voice. About three-fourths of AT&T U-verse TV subscribers have a triple- or quad-play option from AT&T. ARPU for U-verse triple-play customers was almost $170, up 2.5 percent year over year.

AT&T’s U-verse deployment has reached its goal of passing 30¬†million living units. Companywide penetration of eligible living units continues to grow and was at 15.9¬†percent in the fourth quarter, and 25.0¬†percent across areas marketed to for 36 months or more. AT&T’s total video subscribers, which combine the company’s U-verse and bundled satellite customers, reached 5.6¬†million at the end of the quarter, representing 23.9¬†percent of households served.

U-verse Broadband Continues Strong Growth. AT&T U-verse High Speed Internet delivered a fourth-quarter net gain of 587,000 subscribers to reach a total of 5.2 million, helping offset losses from DSL. Overall, AT&T lost 49,000 wireline broadband connections. About 74 percent of consumers have a broadband plan delivering speeds of 3 Mbps or higher versus 65 percent in the year-ago quarter.

U-verse Drives Consumer Revenue Transformation. U-verse continues to drive a transformation in wireline consumer, reflected by the fact that consumer IP revenues now represent 53.2 percent of wireline consumer revenues, up from 45.0 percent in the year-earlier quarter. Increased AT&T U-verse penetration and a significant number of subscribers on triple- or quad-play options drove 18.7 percent year-over-year growth in IP revenues from residential customers (broadband, U-verse TV and U-verse Voice) and 4.3 percent sequential growth. U-verse revenues grew 43.7 percent compared with the year-ago fourth quarter and were up 8.6 percent versus the third quarter of 2011.

Growth in Revenues Per Household Continues.¬†Wireline revenues per household served increased 7.0¬†percent versus the year-earlier fourth quarter and were up 2.3¬†percent sequentially¬†(average revenues per household is total wireline consumer revenues divided by the average monthly households in service),¬†driven by AT&T U-verse services. This marked AT&T’s 16th consecutive quarter with year-over-year growth in wireline consumer revenues per household as U-verse scales and represents a larger portion of this category.

Consumer Connection Trends. In the fourth quarter, AT&T posted a decline in total consumer revenue connections primarily due to expected declines in traditional voice access lines, consistent with broader industry trends and somewhat offset by increases in U-verse TV and VoIP (Voice over Internet Protocol) connections. AT&T U-verse Voice connections increased by 136,000 in the quarter and 598,000 over the past four quarters. Total consumer revenue connections at the end of the fourth quarter were 41.3 million, compared with 43.4 million at the end of the fourth quarter of 2010 and 41.9 million at the end of the third quarter of 2011.

Wireline Revenues Down Slightly.¬†Total fourth-quarter wireline revenues were $14.9¬†billion, down 1.4¬†percent versus the year-earlier quarter and down slightly sequentially. Fourth-quarter wireline operating expenses were $13.1¬†billion, down 0.2¬†percent versus the fourth quarter of 2010 and down 0.1¬†percent sequentially. Wireline operating income totaled $1.8¬†billion, down from $2.0¬†billion in the fourth quarter of 2010 and down versus the third quarter of 2011. AT&T’s fourth-quarter wireline operating income margin was 11.9¬†percent, compared to 13.0¬†percent in the year-earlier quarter and down slightly from 12.1¬†percent in the third quarter of 2011. Improved consumer and business IP data revenue trends and execution of cost initiatives helped to partially offset declines in voice revenues.

 

 

AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.

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Todd Haselton

January 26th

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Netflix adds 610,000 DVD subscribers, beats Q4 estimates

Netflix on Wednesday announced its earnings for the fourth quarter of 2011. The company noted $876 million in revenue, up 47% from the same quarter last year, and earnings per share of $0.73. Analysts had pegged the company to report revenue in the ballpark of $857.4 million and EPS of $0.54, Barron’s¬†relayed. Netflix also said it added 220,000 new subscribers, a far cry from the 800,000 it lost during the third quarter, and now serves 21.67 million streaming customers in the United States. The company has 24.4 million U.S. customers signed up for DVD subscriptions and that figure jumped by 610,000 during the quarter.

Netflix serves 1.9 million international streaming customers and added 380,000 new subs during the quarter. “We are encouraged by the strength in acquisition that we are seeing, coupled with continued improvements in retention among our domestic streaming members,” the company said in a statement. “For Q1 to date, our domestic net additions for streaming are tracking close to our net additions in Q1 2010 of 1.7 million net additions. Given this trend, we are comfortable with our ability to continue to expand our domestic streaming contribution margin.”

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Todd Haselton

January 25th

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