Wireless major AT&T is set to retain its capital expenditure (Capex) for mobile networks for 2017 in line with its investment in 2016.
AT&T, while announcing its earnings report for Q4 2016, said its capital expenditures will be in the $22 billion range in 2017 against 2016’s Capex of $22.4 billion which also includes capitalized interest. In 2015, AT&T made an investment of $20 billion towards capital expenditure sprucing up its LTE network.
Capital expenditures of AT&T in Q4 2016 were $6.5 billion. Capital investment for the fourth quarter totaled $6.7 billion.
AT&T said its Q4 revenues fell to $41.8 billion from $42.1 billion, while 2016 revenue increased 11.6 percent to $163.8 billion. The 11.6 percent increase in revenue was due to acquisition of DIRECTV and gains in IP services and video.
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AT&T’s operating income was $4.2 billion versus $7.5 billion; and operating income margin was 10.2 percent versus 17.9 percent in Q4. Operating income was $31.8 billion in 2016 versus $27.7 billion with operating income margin of 19.4 percent versus 18.8 percent
Q4 net income of AT&T dipped to $2.4 billion from $4 billion, while 2016 net income fell to $13 billion from $13.3 billion.
Analysis by TBR
AT&T’s revenue declined 0.7 percent to $41.8 billion in Q4, the first quarter the carrier has reported a year-to-year consolidated revenue decline since Q1 2013.
AT&T’s no longer gets the inorganic revenue lift from the DirecTV acquisition, which closed in late July 2015, and the company continues to experience declines within its core Business Solutions and Mobility segments due to market saturation and pricing pressures.
“Though AT&T’s operating income fell 770 basis points to 10.2 percent, which was largely affected by one-time, non-cash pension and post-employment costs, the company is cutting costs through Project Agile initiatives, DirecTV synergies and early cost-benefits from NFV/SDN,” said Steve Vachon, research analyst at TBR.
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AT&T’s wireless revenue declined 0.7 percent year-to-year due mainly to lower ARPU and postpaid phone subscriber losses.
AT&T lost 67,000 postpaid phone customers in Q4 due to competition from the newly launched T-Mobile One and Sprint’s Unlimited Freedom unlimited data programs. TBR said AT&T’s results were a significant improvement from the 256,000 postpaid phone customers it lost in Q4 2015.
Providing zero-rated access to DirecTV services offers AT&T a stronger incentive to retain premium customers as the carrier was able to improve postpaid churn amidst the pressures of the holiday season.
AT&T improved wireless EBITDA margins by 180 basis points to 35.7 percent by transitioning customers to non-subsidized pricing plans and wireless profitability will continue to improve in 2017 through recent initiatives, including AT&T raising activation rates and the price of grandfathered unlimited plans.
Business Solutions revenue declined 1 percent in Q4 as revenue declines in legacy services outpaced growth in strategic data business wireless service revenue. AT&T is retiring low-demand legacy assets to increase its focus on next-generation technologies that will improve Business Solutions revenue and foster innovation across the global telecom market.
AT&T is focused on bringing agility and intelligence to its enterprise customers, bringing its NFV/SDN, IoT and analytics offerings to bear to help its customers transform into digitally optimized businesses.
AT&T is building upon Domain 2.0 through its latest initiative, AT&T Network 3.0 Indigo, which was introduced in January. The Indigo platform, which is still in the concept stage, combines AT&T’s technologies in areas including SDN, security and big data to allow businesses to share data and analytics while safeguarding confidential information.
Baburajan K
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