Both AT&T (T) and Verizon (VZ) missed their revenue expectations in their recently reported fourth quarters. Rival Sprint (S) posted fiscal 2018 third-quarter revenue of $8.6 billion on January 31, beating the consensus estimate of $8.4 billion.
AT&T, which reported its earnings on January 30, posted quarterly revenue of $48 billion in the fourth quarter. Though AT&T’s revenue marginally missed analysts’ expectation of $48.5 billion, it rose 15.1% from the previous year’s $41.7 billion. AT&T posted YoY (year-over-year) revenue growth for the second consecutive quarter after posting falls for seven straight quarters. Verizon, the leading US wireless carrier, delivered total revenue of $34.3 billion in the fourth quarter, which missed Wall Street expectations of $34.44 billion by 0.4% and rose only 1% YoY.
Factors affecting AT&T’s revenue growth
AT&T’s revenue rose an impressive 15.14% YoY in the fourth quarter driven by Time Warner’s assets. The WarnerMedia segment, which was formerly Time Warner and included Turner, HBO, and Warner Bros, reported revenue growth of 5.9% to $9.2 billion in the quarter. The Xandr and Vrio segments continued to perform well in the quarter. AT&T’s slower wireless customer growth and the significant declines in its pay-TV business dented its revenue growth.
AT&T’s WarnerMedia segment is planning to launch its streaming service by the end of 2019, thus strengthening the company against its digital rivals, including Netflix (NFLX), Hulu, and Amazon (AMZN) Prime Video.
Verizon’s revenue drivers
Verizon has posted weaker revenue growth YoY for the past three consecutive quarters. The weak revenue of its Wireline segment overshadowed the strong performance in its Wireless segment, especially its service revenue, in the quarter. The company had seen positive YoY Wireless revenue for the last three straight quarters. In the fourth, its Wireless service revenue rose 0.1% YoY driven by improved mobile plans for customers and consumer growth.
However, Verizon’s Wireline segment remained sluggish in the quarter and fell 3.2% YoY. The loss of the Fios video connections due to the ongoing shift from linear video offerings to over-the-top offerings led to the fall in the Wireline segment’s revenue.
The revenue of Verizon Media, formerly known as Oath, fell 5.8% YoY, while the company’s Internet of Things revenue rose ~9.5% YoY in the fourth quarter.