AT&T’s Segments: What Drove Revenue Growth in 1Q16?



AT&T’s revenue in 1Q16

In this part, we’ll look at the growth dynamics of AT&T’s (T) revenue in 1Q16. At ~$40.5 billion, AT&T’s revenue was in line with the consensus expectations of Wall Street analysts during the quarter. The telecom company’s revenue increased by ~24.4% YoY (year-over-year) during the quarter. In 4Q15, AT&T’s revenue grew by ~22.3% YoY. These solid growth figures in the revenue stream were driven by the addition of DIRECTV’s (DTV) operations, which AT&T acquired in July 2015.

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AT&T’s revenue growth by segments

For 1Q16, the revenue from AT&T’s Entertainment Group segment was ~$12.7 billion. According to the company, on an adjusted level, this stream grew by ~3.1% YoY in 1Q16.

In the International segment, revenues totaled ~$1.7 billion in 1Q16. The segment’s Mexican wireless component made up ~$0.54 billion of the segment’s revenue. Meanwhile, the revenue from the Latin American component was ~$1.1 billion.

The Business Solutions segment’s revenue increased slightly, by ~0.3% YoY to ~$17.6 billion in 1Q16. The growth in the division’s wireless component offset the decline in the segment’s fixed component. The segment’s wireless revenue grew by ~2.3% YoY to ~$9.6 billion in 1Q16. Meanwhile, its fixed revenue declined ~2% YoY to ~$8 billion for the quarter.

AT&T’s Consumer Mobility segment’s revenue continued to shrink in 1Q16. This revenue stream declined by ~5.1% YoY to ~$8.3 billion in the quarter. This YoY decline was mostly due to the segment’s service revenue.

Among the top four US wireless players, Verizon (VZ), T-Mobile (TMUS), and Sprint (S) do not provide results of their consumer and business components separate of their wireless operations. For diversified exposure to telecom players in the United States, you could consider investing in the iShares Russell 1000 Value ETF (IWD). The ETF held a total of ~2.7% in AT&T, Verizon, Level 3 Communications (LVLT), CenturyLink (CTL), and T-Mobile at the end of March 2016.


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