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Why AT&T’s Wireless Service Revenue Kept Declining in 3Q15

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Oct. 30 2015, Published 10:24 a.m. ET

AT&T’s wireless service revenue in 3Q15

In the previous part of this series, we learned that AT&T’s (T) overall wireless revenue remained largely flat YoY or year-over-year in 3Q15. This stream included revenue from the wireless component of the telecom company’s Business Solutions segment and the Consumer Mobility segment. AT&T’s wireless revenue has two components: equipment and service revenue. AT&T’s wireless service revenue continued its YoY declining trend in 3Q15. Meanwhile, wireless equipment revenue continued to increase in 3Q15.

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AT&T’s wireless service revenue in 3Q15

Service revenues are stable streams for wireless telecom companies such as AT&T, Verizon (VZ), Sprint (S), and T-Mobile (TMUS). Service revenue, the larger component of AT&T’s wireless revenue, fell ~2.1% YoY to reach ~$15.1 billion in 3Q15. In 2Q15, this revenue stream had declined at slower YoY rate of ~0.2%.

The drop in AT&T’s wireless service revenue in 3Q15 came mostly from a YoY low unit contribution from postpaid wireless customers.

AT&T’s wireless equipment revenue in 3Q15

Equipment revenue, the smaller component of AT&T’s wireless revenue, increased robustly by ~11.0% YoY to ~$3.2 billion in 3Q15. In 2Q15, this revenue stream had risen by ~14.6% YoY.

As per the company, fewer smartphone units were upgraded in 3Q15. Meanwhile, equipment revenue remained positively affected by a YoY increase in installment billings during the quarter.

Instead of investing directly in AT&T’s stock, you can consider taking on diversified exposure to the telecom company by investing in the iShares MSCI USA Minimum Volatility ETF (USMV). The ETF invested ~1.7% of its portfolio in the company at the end of August 2015.

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