The Question of AT&T’s Revenue: Can Growth Remain Robust in 1Q16?



AT&T’s revenue in 1Q16

According to the consensus of Wall Street analysts, the growth momentum in AT&T’s (T) revenue is expected to have continued in 1Q16. Analysts expect the telecom company’s revenue to grow by ~24.8% YoY (year-over-year), reaching ~$40.7 billion in 1Q16.

AT&T’s revenue figures were below analyst expectations in 4Q15, 3Q15, and 1Q15. But in 2Q15, the telecom company’s revenue was in line with the consensus estimate.

The Question of AT&T's Revenue: Can Growth Remain Robust in 1Q16?

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DirecTV drove AT&T’s revenue in 4Q15

During 4Q15, AT&T’s revenue increased by ~22.3% YoY, reaching ~$42.1 billion. This YoY revenue growth in the quarter was primarily inorganic, mostly coming from the DirecTV (DTV) acquisition. With the inclusion of DirecTV’s results, revenue of AT&T’s Entertainment Group expanded to ~$13 billion in 4Q15 from ~$5.6 billion during 4Q14.

In its International segment, AT&T’s revenue was at ~$1.8 billion in 4Q15. The segment’s Mexican wireless component made up ~$0.64 billion of the segment’s revenue. Additionally, the revenue from DirecTV’s Latin American component was ~$1.2 billion during 4Q15.

Business Solutions and Consumer Mobility

Meanwhile, revenues from AT&T’s two biggest components—Business Solutions and Consumer Mobility—declined YoY in 4Q15. Revenue from Business Solutions decreased by ~2.7%% YoY to ~$18.2 billion in 4Q15. Moreover, Consumer Mobility segment’s revenue dropped ~8.1% YoY to ~$8.7 billion in that quarter.

For diversified exposure to select telecom companies in the US, you might consider investing in the SPDR S&P 500 ETF (SPY). SPY held a total of ~2.8% in AT&T, Verizon (VZ), CenturyLink (CTL), Frontier Communications (FTR), and Level 3 Communications (LVLT) at the end of March 2016.

Continue to the next part for a discussion of AT&T’s postpaid customers.


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