BusinessTimes is for folks who likes to get updated before others about latest news of Stock Markets, Business News, Personal Funds, Currencies and Much More. If you have any kind of questions, please feel free to ask by contacting us.

Are AT&T’s Acquisitions Weighing On Its Wireless Business?

A flag emblazoned with the AT&T logo flies on a flag in Atlanta, Georgia. Photographer: Chris Rank/Bloomberg News.CHRIS TANK

Telecom and media behemoth AT&T published its Q4 2018 results on Wednesday, reporting earnings that largely met expectations although revenues came in slightly below Street estimates. In this note we examine the performance and outlook for the company’s wireless business and the recently acquired WarnerMedia operations.

Our interactive dashboard on What To Expect From AT&T In 2019 details our key forecasts for the company. You can modify any of our estimates to gauge the impact changes would have on the company’s valuation.

WarnerMedia Business Updates

Revenues from the WarnerMedia business stood at $9.2 billion, marking an increase of about 6% year-over-year, driven by higher revenues from Warner Bros – which benefited from strong theatrical performances over the holidays – and also due to higher affiliate subscription revenues at Turner. Overall operating margins for the business expanded to 28.4%, driven by lower programming expenses at Turner and HBO, while operating income for the segment came in at $2.6 billion, up from $2.0 billion in the same period last year. The acquisition could add more value to AT&T going forward, as it could allow the company to keep content costs in check for its distribution operations (pay TV, wireless and streaming businesses) while potentially giving it some bargaining leverage in acquiring content from other companies for distribution.

Wireless Business Continues To Grow But Lags Rivals

Over the quarter, AT&T added a total of 134k postpaid phones. While this marks a sequential improvement, it represents a decline of about 55% compared to last year. Moreover, the metric is well below AT&T’s key rivals Verizon and T-Mobile, which both posted stronger-than-expected postpaid phone net additions over the holiday quarter (650k and 1 million respectively). The could stoke concerns that the company’s recent deal-making activity and integration process could be distracting it from its core wireless operations, giving its rivals – who have focused on network improvements and customer acquisitions – room to gain market share. The company’s postpaid phone churn also inched higher by 11 bps year-over-year to 1.00%, driven by higher competition and limited promotional activity. While reported postpaid phone ARPU saw a 4% decline on a year-over-year basis to about $55, due to an accounting change, the metric rose by about 3% on a comparable basis, likely driven by the higher priced unlimited plans.

Like our charts? Explore example interactive dashboards and create your own.

Led by MIT engineers and Wall Street analysts, Trefis (through its dashboards platform helps you understand how a company’s products, that you touch, read, or hear about everyday, impact its stock price. Surprisingly, the founders of Trefis discovered…

Great Speculations

Great Speculations’ contributor page is devoted to investing ideas that will help make you wiser and richer. Most articles will contain actionable advice.

You might also like

Comments are closed.