AT&T’s Wireline Revenue Is Likely to Decline Again in 2Q15


Jul. 23 2015, Updated 8:06 a.m. ET

AT&T’s expected 2Q15 wireline revenue

In the earlier parts of this series, we focused on the anticipated performance of AT&T’s (T) wireless segment. Now, we’ll look at AT&T’s other key segment—the wireline division. AT&T’s wireline division generated ~$14.1 billion in revenues in 1Q15. Meanwhile, AT&T’s wireless division reported ~$18.2 billion revenue during the quarter.

The wireline segment has been experiencing a declining revenue trend. Wall Street expects this segment’s performance to continue in 2Q15. Based on the consensus estimates as of July 14, 2015, AT&T’s wireline revenue is expected to fall by ~1.7% year-over-year, or YoY, during 2Q15.

AT&T’s wireline segment continues to suffer from shrinking legacy data and voice services. The wireline operations of other telecom companies such as Verizon (VZ), CenturyLink (CTL), and Windstream (WIN) are also facing this challenge, which is expected to continue for the foreseeable future.

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Connecticut sale affects YoY growth in AT&T’s wireline revenue

The sale of AT&T’s Connecticut operations to Frontier Communications (FTR) in October 2014 are likely to impact the YoY revenue growth of the wireline segment in 2Q15. AT&T’s wireline revenue fell by ~3.1% YoY during 1Q15. But if you exclude the sale’s impact, AT&T’s wireline revenue would have only declined by ~1.2% YoY and would have totaled ~$14.1 billion. The Connecticut wireline operations generated ~$275 million in revenue during 1Q14.

For diversified exposure to AT&T, you might consider the iShares Russell 3000 ETF (IWV). IWV had ~0.8% exposure to the telecom company as of June 30, 2015. You might also consider the SPDR S&P 500 ETF Trust (SPY). SPY had ~1% invested in the integrated telecom company on the same date.


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