AT&T; profit rises 22%
Showing few signs of being affected by a slowing economy, AT&T; Inc.’s first-quarter earnings rose 22% on strong growth in wireless.
The wireless division at the country’s largest telecommunications company continued to drive growth, even as the local-phone business was stuck with declining numbers. The enterprise division, which provides services to the government and large corporations, reversed a slide.
San Antonio-based AT&T; earned $3.46 billion, or 57 cents a share, in the three months ended March 31, compared with $2.85 billion, or 45 cents, a year earlier.
Excluding items, AT&T; earned 74 cents a share, up from 65 cents a year ago.
Revenue rose 6.1% to $30.7 billion.
The earnings per share and revenue matched the average expectation of analysts polled by Thomson Financial.
Chief Financial Officer Rick Lindner said that apart from some “softness” in local phone lines, there was little sign that the weakness in the U.S. economy was affecting the company.
AT&T; shares gained 22 cents, or 0.6%, to $37.81.
Earnings were reduced 13 cents a share by merger-related costs and 4 cents by severance costs. The company said last week that it planned to cut about 4,600 jobs, or 1.5% of its workforce, to shift resources from traditional phone operations to growing parts of its business, such as wireless. It expects its total head count of 310,070 to keep expanding.
AT&T; lost 1.2 million phone lines in the quarter, to end with 60.4 million. That’s a trend that’s affecting all phone companies, as customers switch to using wireless or cable services. As of late last year, cable companies offered phone service in practically all of AT&T;’s 22-state local phone service territory.
However, AT&T; said a ramp-up in video services and broadband nearly offset the falloff in revenue from voice customers. It added 491,000 broadband customers in the quarter, for a total of 14.6 million, and 148,000 customers for its U-verse video service, which is delivered over phone lines.
The company said it was well on its way to meeting its goal of 1 million U-verse customers by the end of the year.
The wireless unit added a net 1.3 million subscribers for a total of 71.4 million, even though it lost 330,000 subscribers because of the shutdown of a network. Revenue was $11.8 billion, up 18.3% from a year earlier. During the quarter, AT&T; spent $6.64 billion for spectrum licenses it will use to expand its broadband services.
