AT&T 1Q15 Wireless Revenue: Expect Moderate Growth



Lackluster growth in AT&T 1Q15 wireless revenue

Wall Street analysts expect AT&T (T) wireless revenue to grow ~3.8% year-over-year to ~$18.5 billion in 1Q15. This estimate is based on consensus as of April 14, 2015. In this part of our series, we’ll look at some of the key factors that could affect AT&T 1Q15 wireless revenue.

As you can see in the above chart, AT&T wireless revenue grew significantly in 1Q14, by ~7% year-over-year. Yet analysts expect growth in 1Q15 to be significantly less.

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Next billings to provide some relief

AT&T’s postpaid phone ARPU (average revenue per user) should continue to decline year-over-year in 1Q15. According to the company, one of the reasons why is the higher penetration of its lower-priced Mobile Share Value plan.

AT&T expects a ~60% penetration rate of the Mobile Share Value plan among its postpaid smartphone subscribers in 1Q15. These smartphone customers include Apple’s (AAPL) iPhone users that tend to use a lot of data. Mobile Share Value penetration was ~30% in the postpaid smartphone segment in 1Q14.

We expect installment billings related to the Next program to provide some relief from the expected decline in postpaid ARPU during 1Q15. Unlike ARPUs, Next installment billings are part of AT&T wireless equipment revenues. Next is similar to the Verizon (VZ) Edge and the Sprint (S) Easy Pay plans.

Instead of directly investing this stock, you can get diversified exposure to AT&T by investing in the Sector SPDR Trust SBI Interest (XLK). The carrier made up ~4.2% of this ETF as of March 31, 2015.


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