AT&T number made Wall Street fairly happy late last week, generating $17 billion in free cash flow, and holding record cash reserves of $34.4 billion.
While the headlines as usual go to the gains in wireless sales, our friends over at Townhall Research point out that if it was not for the gains at the hands of the iPhone, AT&T would by now be losing ground to Verizon, mostly due to the state of its network. Let’s all hear it for continued HSDPA rounds and continuous capex for the next three years ‘ not yet part of AT&T’s plan.
AT&T had 2.7 million fourth-quarter net additions in total wireless subscribers, taking full-year wireless net adds to 7.3 million to reach 85.1 million subscribers in service. Churn went down in both postpaid and overall, suggesting that either customer are a little happier than we thought with the network or that the cooler device choices are keeping them there.
But it is the net gains of 248,000 in AT&T U-verse TV subscribers that really shows how AT&T is going up through the gears. In the past its fixed line business featured only departures to cable each quarter. Now there are 2.1 million U-Verse IPTV customer at AT&T, compared to the 2.9 million we reported last week that Verizon has amassed.
But Verizon net adds were just 153,000 net new FiOS TV customers, almost 100,000 behind the AT&T numbers. If those rates continues AT&T U-Verse would overtake Verizon FiOS in just two more years, by which time it will have caught up more than an 18 month head start by FiOS.
AT&T’s fourth quarter was $31 billion, with a 3 billion net income, down just slightly from the year ago revenue of $31.1 billion, when it developed net income of $2.4 billion. That’s a hell of a performance in pure financial numbers at a time like this.
But the real story for us is the way wireline has almost stopped hemorrhaging. AT&T reckons that U-verse broadband (rather than TV) had net gains of 267,000 subscribers in the quarter. But when it takes away the declines in traditional DSL connections, it nets out at a 167,000 net gain in consumer wireline broadband connections. Total broadband connections for AT&T, including business and wireless broadband, are now 17.3 million.
That doesn’t mean that AT&T isn’t losing fixed voice lines, it says these have fallen from 47 million to 45.7 million in the last year. But this is a rapid slowdown from only a few quarters ago when the rate was far higher. For instance the number of fixed lines fell from 60.4 million in March 2008 to 53.9 million by March 2009, a fall of some 6.5 million. Now the past year is just a loss of 1.3 million. That’s a massive turnaround.
Much of these (maybe 75%) are lost to its own cellular voice, as people decided they could do without fixed phones lines at home (except where they use the line for broadband) and the rest are to cable and VoIP providers.
But now AT&T is starting to be more aggressive with its own VoIP line services and reports that it now serves 1 million AT&T U-verse Voice digital home phone lines, which is says more than 67% of new U-verse TV customers now take. As the U-Verse numbers go up, the reasons for moving to cable or independent VoIP providers will be less clear, and the rate of decline will continue to fall. U-verse Voice is now available in all 120 markets that offer U-verse TV, the company said.
AT&T says that 31.8% of all growth in its revenues came from consumer IP-based services ‘ U-Verse broadband, TV and voice.