Why AT&T’s Revenue Fell in 1Q17



AT&T’s revenue in 1Q17

In the previous part of this series, we learned that AT&T’s (T) earnings rose YoY (year-over-year) in 1Q17. In this part, let’s look at AT&T’s 1Q17 performance in terms of its top line.

While AT&T met the EPS (earnings per share) estimate for 1Q17, revenue came in slightly below the consensus estimate of $40.6 billion. The company generated revenue of $39.4 billion in 1Q17, a 2.9% fall YoY. However, it expects the proposed acquisition of Time Warner (TWX) to improve its revenue and earnings profile and diversify its revenue mix.

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AT&T’s revenue growth by segments

Revenue from AT&T’s Entertainment Group segment fell to ~$12.62 billion in 1Q17 from ~$12.66 billion in 1Q16. According to the company, this business segment saw competitive pressure and remained flat in 1Q17 compared to a year ago, with gains in video and IP (Internet Protocol) broadband services.

In its International segment, revenue was ~$1.9 billion in 1Q17. The segment’s Mexican wireless component made up ~$0.60 billion of the segment’s revenue. Additionally, revenue from DirecTV’s Latin American component was ~$1.3 billion in 1Q17.

Revenue from AT&T’s Business Solutions segment fell ~4.3% YoY to ~$16.8 billion in 1Q17. The fall was primarily due to declining legacy wireline services and fewer wireless equipment upgrades. Revenue for the Consumer Mobility segment also fell ~7.1% YoY to ~$7.7 billion in 1Q17. The fall was mainly due to fewer phone sales and record low postpaid upgrade rates, as well as lower postpaid service revenues due to the migration of subscribers to business plans.

Peer comparison for 1Q17 revenue

Verizon (VZ) generated a total revenue of $29.8 billion in 1Q17, a 7.3% fall YoY. T-Mobile’s (TMUS) total revenue rose ~11.0% YoY to reach $9.6 billion in 1Q17. Meanwhile, Sprint’s (S) total revenue rose ~5.8% YoY to reach $8.5 billion in fiscal 4Q16, which ended in March 2017.

In the next part, we’ll take a look at AT&T’s EBITDA (earnings before interest, tax, depreciation, and amortization) margin.


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