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AT&T’s Wireless Revenue: Expect Moderate Growth in 2Q15

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AT&T’s wireless revenue in 2Q15

In the previous part of this series, we learned that Wall Street expects low year-over-year, or YoY, growth in AT&T’s (T) 2Q15 revenue. We also discovered that AT&T’s wireline segment negatively impacted consolidated revenue growth during 1Q15.

Even the company’s wireless segment witnessed muted YoY revenue growth during the quarter. Wall Street analysts expect marginal ~2.9% YoY growth in AT&T’s 2Q15 wireless revenue. Nevertheless, this would be slightly more than the segment’s revenue in 1Q15.

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AT&T’s wireless revenue in 1Q15

As you can see in the above chart, AT&T’s wireless revenue increased marginally by ~1.8% YoY to reach ~$18.2 billion in 1Q15. The segment’s quarterly revenue growth was affected by lower service revenues.

Service revenues are stable, recurring revenue streams for wireless carriers including Verizon (VZ), Sprint (S), and T-Mobile (TMUS). AT&T’s wireless segment’s service revenue fell by ~3.7% YoY to ~$14.8 billion during 1Q15. Increased take-up of the company’s lower-priced “no-device” Mobile Share Value plans led the decline

The AT&T wireless segment’s equipment revenue increased significantly YoY and supported the overall segment’s growth in 1Q15. These equipment revenues grew by ~36.1% YoY to reach ~$3.4 billion during the quarter. Increased adoption of AT&T’s installment plan, Next, contributed to this growth.

For diversified exposure to AT&T, you might consider investing in the SPDR S&P 500 ETF Trust (SPY). This ETF invested ~1% of its holdings in the integrated telecom company as of June 30, 2015.

Or, you might consider investing in the Technology Select Sector SPDR Fund (XLK). XLK had invested ~4.6% of its holdings in AT&T at the end of June.

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