AT&T swings to profit, but is feeling the heat from T-Mobile

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AT&T’s head of mobility, Ralph de la Vega, on stage at the developer conference as CES kicks off.

(Credit: Roger Cheng/CNET)

AT&T swung to a profit in the fourth quarter as it deals with pressure from rival T-Mobile.

The Dallas telecommunications company posted a fourth-quarter profit of $6.9 billion, or $1.31 a share, compared with a year-earlier loss of $3.9 billion, or 68 cents a share. Excluding one-time items, including gains from its benefit plans, per-share earnings were 53 cents.

Revenue rose 1.8 percent to $33.2 billion.

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Analysts, on average, projected earnings of 50 cents a share and revenue of $33.1 billion, according to Thomson Reuters.

AT&T has notably faced stiffer competition, particularly from T-Mobile, which has gleefully skewered the company over the last year. Earlier this month, AT&T said it would pay T-Mobile customers $200 to switch over, coupling that with a credit of up to $250 for phones that were traded in. That included T-Mobile CEO John Legere crashing an AT&T party while at the Consumer Electronics Show.

A few days later, T-Mobile upped the ante, saying it would pay up to $350 in early termination fees to cover the cost of switching over to its service. The company also offered a credit of up to $300 for smartphones, which have to be turned in if used in conjunction with the ETF credit.

The pressure is evident in the subtle change in how AT&T is reporting its numbers. The company said it added 1.2 million smartphones under contract, an impressive number, but one that includes both upgrades and new subscribers, a relatively new metric that it has rolled out.

Typically, a company offers net numbers, or a measure of how many new people signed up for the service when subtracting those that cancelled their service. A company typically doesn’t throw in the number of existing customers that upgraded to a smartphone.

AT&T, meanwhile, said it added a net 566,000 wireless customers on a contract, with 440,000 net new tablet customers. In total, it added a net new 809,000 wireless subscribers when counting phones, tablets, its connected devices business, as well as prepaid and reseller business, which both saw a loss.

As with the last quarter, the company seems to be performing well when it comes to smartphone sales, but is losing customers in the low end, consumers who probably still have a basic phone, and are likely looking at T-Mobile’s aggressive offers.

AT&T’s early upgrade program, Next , has seen more than 1 million sales, representing 15 percent of all so-called postpaid smartphone additions and upgrades.

AT&T’s wireless service revenue grew 4.8 percent to $18.4 billion.

By |January 28th, 2014|Categories: Tech News|Tags: |0 Comments

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