AT&T’s wireless revenue
Earlier, we learned that year-over-year (or YoY) growth in AT&T’s (T) revenue was negatively affected by the lackluster performance of the wireless division in 2Q15. Revenue for the wireless segment, AT&T’s largest segment, grew by ~2.1% YoY to ~$18.3 billion during the quarter.
Service revenues affect AT&T’s wireless segment
Wireless service revenue fell marginally by ~0.2% YoY to reach ~$15.1 billion in 2Q15. This is the largest component of the company’s wireless revenue. It represented ~83% of AT&T’s wireless revenue during the quarter.
Wireless service revenues are stable revenue streams for wireless telecom companies such as AT&T, Verizon (VZ), Sprint (S), and T-Mobile (TMUS). Lower unit contribution of postpaid customers was a reason for the YoY decrease in service revenue.
Equipment sales helped growth in AT&T’s wireless revenue
The other component of AT&T’s wireless revenue, equipment revenue, increased significantly by ~14.6% YoY to ~$3.2 billion during 2Q15. The growth in installment billings of postpaid customers was a factor in this YoY increase in equipment revenue. According to AT&T, rising penetration of the Next installment plan is positively affecting the wireless equipment revenue. We will talk more about this plan in the following part of this series.
You can get exposure to AT&T while diversifying risk by investing in the iShares MSCI USA Minimum Volatility ETF (USMV) or the iShares Russell 1000 Value ETF (IWD). AT&T made up ~1.6% of USMV as of June 30, 2015. AT&T comprised ~1.8% of IWD’s holdings on the same date.