What has been a worry about AT&T Inc. (NYSE: T) for some time has become a reality. The big telecom firm can no longer grow. The years in which its revenue expanded are behind it.
Source: Thinkstock
In the first quarter, AT&T’s revenue was $31.4 billion, down 1.5% compared to the year-earlier quarter. AT&T has done what many large no-growth public corporations do. It will continue to buy up shares, ostensibly to raise per-share earnings (EPS):
During the quarter, the AT&T board of directors approved a third 300 million share repurchase authorization. Since the beginning of 2012, the company has been buying back shares under two previous 300 million share repurchase authorizations.
The expansion of AT&T’s 4G network has not been enough to draw large numbers of new subscribers. Even with its push to drive revenue in this division through new services and charges for data use, the wireless operation’s revenue rose just 3.4% year-over-year to $16.7 billion. AT&T has to confront the hurdle all other wireless subscription companies in the United States do. There are more cellular customers in America than their are people. The wireless customer business has become a zero sum game.
Wireline revenue improvement also was under pressure. Sales from a new broadband-to-the home initiative, which AT&T calls U-verse, could not make up for drops in home phone attrition. Too many households use wireless phones now, or Internet-enabled ones, for AT&T to keep traditional phone service at past levels. And so, total first-quarter wireline revenue was $14.7 billion, down 1.8% versus the year-earlier quarter and down 1.8% sequentially. AT&T buried the details deep in its earning press release:
Revenues from residential customers totaled $5.5 billion, an increase of 2.0 percent versus the first quarter a year ago. Continued strong growth in consumer IP data services in the first quarter more than offset lower revenues from voice and legacy products.
That “legacy” revenue will continue to drop.
AT&T has no way to make a case for growth. It will have to come up with other means to impress investors.
Sponsored: Tips for Investing
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
Editors' Picks
