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Results Highlighted by Record Wireless Gains, Significant Step Up in Enterprise Services Growth
-- $0.51 reported earnings per diluted share compared with $0.50 in the year-earlier fourth quarter
-- $0.71 adjusted earnings per diluted share, up 16.4 percent from $0.61 in the fourth quarter of 2006
-- 2.7 million net gain in wireless subscribers, best-ever quarterly increase by any U.S. wireless company; 70.1 million wireless subscribers at year's end
-- 16.3 percent increase in total wireless revenues with wireless data revenues up a robust 57.5 percent
-- Further ramp in enterprise customer trends with recurring service revenues up 1.8 percent, driven by a 20.9 percent increase in revenues from IP-based data services such as virtual private networking, hosting and managed Internet services
-- Stable regional revenue trends with double-digit broadband growth and a further ramp in AT&T U-verse(SM) TV subscribers: 231,000 in service at year's end, up from 126,000 three months earlier
AT&T Inc. (NYSE:T) today reported strong fourth-quarter results and reaffirmed its positive outlook for 2008 and beyond. This marked AT&T’s 11th consecutive quarter and third straight year of double-digit growth in adjusted earnings per share.
Fourth-quarter results were highlighted by record wireless gains, a significant step up in recurring enterprise services growth, continued double-digit growth in broadband revenues, and accelerated expansion of the company’s advanced TV service.
Solid trends in these areas and progress in productivity initiatives reinforce AT&T’s expectation for continued strong results as outlined at its December 2007 analyst conference. AT&T’s 2008 outlook includes mid-teens percentage growth in wireless service revenues, mid-single-digit percentage growth in consolidated revenues and continued double-digit growth in adjusted earnings per share.
“We had an excellent fourth quarter, which affirms our outlook for 2008,” said Randall Stephenson, AT&T chairman, chief executive officer and president.
“Our wireless business delivered outstanding results, with the largest quarterly subscriber gain ever posted by a U.S. provider,” Stephenson said. “Enterprise service revenue growth continues to improve. Broadband subscribers and revenues continue to grow at a solid double-digit pace. The ramp in our AT&T U-verse TV service accelerated, and we are on track to reach more than 1 million subscribers by the end of 2008.
“These growth trends, combined with the significant opportunities we have for continuous cost improvements, reinforce the positive outlook we have for our business,” Stephenson said. “AT&T has a terrific set of assets and an impressive record in terms of executing and delivering on targets, and I am very confident in our ability to drive strong results in 2008.”
2008 and Multi-Year Outlook
As outlined at its Dec. 11, 2007, analyst conference, AT&T is confident in its outlook for sustained double-digit growth in adjusted earnings per share driven by advances in wireless, broadband, enterprise, IP data and a new generation of converged services. This outlook takes into account current consumer access line and broadband market conditions and resulting impacts on consumer volumes. AT&T expects to deliver:
* Further ramp in consolidated revenue growth into the mid-single-digit range in 2008 with growth at mid-single-digit or better in the years following.
* Continued mid-teens wireless service revenue growth in 2008, including results from the acquisition of Dobson Communications, reflecting strong subscriber growth and continued robust growth in wireless data services.
* Positive growth in enterprise revenues throughout 2008 with line of sight to mid-single-digit enterprise revenue growth by 2010.
* Positive regional consumer revenue growth in 2008 and beyond driven by video, broadband and converged services, and continued mid-single-digit growth in regional business revenues.
* A 2008 adjusted consolidated operating income margin in the 25 percent to 26 percent range, up from 23.8 percent for the full year 2007, reflecting continued wireless progress and increased expense savings from merger synergies and operational initiatives, which are expected to offset expected increased expense for deployment of AT&T U-verse services.
* An adjusted wireless OIBDA service margin for the full year 2008 in the low-40 percent range, trending toward the mid-40 percent range by year's end.
* Continued double-digit growth in adjusted earnings per share in 2008. AT&T is confident that its ramping revenue growth combined with continuous cost improvements and share repurchases give it the ability to deliver sustained double-digit growth in adjusted earnings per share and strong growth in free cash flow in 2008 and on an ongoing basis.
* 2008 free cash flow in the $16 billion to $17 billion range. (Free cash flow is cash from operations minus capital expenditures.)
* Continued capital expenditures in the mid-teens as a percentage of total revenues as the company expands its advanced wireless and wired network capabilities.
* Significant progress in AT&T U-verse deployment with total AT&T U-verse video subscribers expected to exceed 1 million by the end of 2008. For the full year 2008, AT&T's outlook anticipates additional dilution from its U-verse deployment of approximately $0.12 to $0.14 per share.
* Substantial opportunities to reduce costs over the next few years. AT&T expects its annual operating expense savings run rate from AT&T Corp. and BellSouth merger synergies and from operational initiatives to increase by approximately $2 billion from 2007 levels to approximately $5.9 billion in 2008 and more than $7.0 billion in 2010.
For more information, visit www.att.com/investor.relations.