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Spate of Acquisitions Transformed AT&T’s Revenue Mix in 2015

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AT&T’s new segments in 3Q15

In the earlier parts of this series, we learned about AT&T’s (T) 2015 acquisition of DIRECTV (DTV). We also learned about the acquisitions of Iusacel and Nextel Mexico in the Mexican mobile space by AT&T during the year. With the spate of acquisitions, AT&T’s revenue mix transformed significantly during 3Q15.

AT&T completed the Mexican acquisitions in 1H15 and the DIRECTV acquisition during 3Q15. The telecom company reported its new business segments of Business Solutions, Entertainment and Internet Services, Consumer Mobility, and International during 3Q15.

Business Solutions includes both wireless and wireline services to this business customer segment. Among the top four US wireless players, only AT&T gives wireless results of its business customers. The other US wireless carriers top four include Verizon (VZ), T-Mobile (TMUS), and Sprint (S).

Entertainment and Internet Services got the consumer wireline and pay-TV services in the domestic market. Moreover, Consumer Mobility was domestic consumer wireless segment. Additionally, the International segment included wireless operations in Mexico and DIRECTV’s Latin American operations.

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Contribution of AT&T’s segments in 3Q15

During 3Q15, AT&T’s revenue and operating income totaled ~$39.1 billion and ~$5.9 billion, respectively. The telecom company’s 3Q15 results included DIRECTV’s revenue and operating income from July 24, 2015.

Business Solutions made ~$17.7 billion in revenue and ~$4.3 billion of operating income during the quarter. The revenue figures for Entertainment and Internet Services, Consumer Mobility, and International segments were ~$10.9 billion, ~$8.8 billion, and ~$1.5 billion, respectively, during 3Q15.

Meanwhile, the operating income for Entertainment and Internet Services segment and the Consumer Mobility segment totaled ~$1 billion and ~$2.7 billion, respectively. The International component had an operating loss of ~$0.08 billion during 3Q15.

Instead of taking a direct exposure to AT&T’s stock, you may take a diversified exposure to the telecom company by investing in the iShares US Telecommunications ETF (IYZ). The ETF held ~10.8% in the telecom company at the end of November 2015.

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