By Chelsey Dulaney
AT&T Inc.'s December-quarter results narrowly topped
expectations as the company secured more lucrative long-term
wireless contracts.
Shares gained about 2% in after-hours trading.
AT&T is facing greater competition from smaller rivals
T-Mobile U.S. Inc. and Sprint Corp., as well as challenges tied to
consolidation in the telecommunications and media industries.
The company has responded by moving much of its customer base to
cheaper plans. AT&T has also been aggressively pushing the sale
of smartphones at full price, often lowering the monthly service
fee for customers not in a contract. In October, AT&T indicated
that it was seeing fewer-than-expected customers signing up for its
no-contract Next plans that require consumers to pay full price for
their smartphones.
Meanwhile, the company has been beefing up its balance sheet to
fund its bids for U.S. wireless spectrum, moving forward with its
$49 billion deal for satellite-television company DirecTV and
expanding into Mexico. On Monday, AT&T announced plans to buy
Nextel Mexico for $1.88 billion.
In the most recent quarter, the company said it added 854,000 of
the most lucrative long-term wireless contracts, a 51% increase
from a year earlier. AT&T said it added 148,000 net postpaid
smartphones and 969,000 postpaid tablets in the quarter.
Overall, AT&T reported a loss of $3.98 billion, or 77 cents
a share, compared with a profit $6.91 billion, or $1.31 cents a
share, a year earlier.
The company warned earlier this month that it would it would
take a $7.9 billion charge for pension-related costs in the
quarter.
Excluding that cost and other items, earnings grew to 55 cents a
share.
Revenue grew 3.8% to $34.44 billion.
Analysts polled by Thomson Reuters expected a per-share profit
of 54 cents and revenue of $34.26 billion.
AT&T said the rate at which wireless customers left its
network, called churn, was 1.22% up from 1.11% a year earlier.
Wireless revenue grew 7.7%, while wireless data billings grew
18% from a year earlier.
Operating income margin, meanwhile, fell to 16.3% from 21.4% a
year earlier as AT&T saw strong seasonal adds and upgrades.
For the 2015 year, AT&T forecast per-share earnings growth
in the low single-digit range. Analysts polled by Thomson Reuters
had recently forecast 2% growth in per-share earnings.
Last week, peer Verizon Communications Inc. posted a heavy loss
in its fourth quarter on pension and severance costs, though
strength in tablets were again a driver of growth for the
company.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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