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AT&T Posts Loss on Breakup Fee, Benefit Plan Costs

Though smartphone sales were strong, AT&T on Thursday reported a net loss in the fourth quarter of 2011 due to extraordinary charges including a breakup fee for the thwarted merger with T-Mobile USA.

AT&T's loss for the quarter was US$6.7 billion due to $13.4 billion in one-time charges, including $4.2 billion in charges for ending its bid to acquire rival mobile carrier T-Mobile USA.

AT&T also reported a $6.3 billion charge for its benefit plan costs and $2.9 billion for asset impairments during the quarter. The company had revenue of $32.5 billion for the quarter, up from $31.4 billion for the fourth quarter of 2010.

AT&T announced in December it would charge a $4 billion merger breakup fee during the quarter, after it withdrew its offer to purchase T-Mobile.

AT&T reported net income of $1.1 billion in the fourth quarter of 2010. Excluding one-time items, AT&T's operating income for this past quarter was $4.4 billion, compared to $5.6 billion in the fourth quarter of 2010.

The loss per share for the quarter was $1.12. AT&T's earnings per share, excluding one-time items, was $0.42, compared to $0.55 for the fourth quarter of 2010. Analyst expectations for the quarter were $0.43.

Nevertheless, AT&T officials called their results strong. It was a "blowout quarter for sales," Randall Stephenson, the company's chairman and CEO, said in a statement.

The fourth quarter was the best one ever for smartphone activations, with sales of 9.4 million devices, the company said. AT&T activated 7.6 million iPhones and added 2.5 million mobile customers during the quarter. The company's smartphone sales during the quarter were nearly double its sales during the third quarter, the company said.

Apple introduced the new iPhone 4S in early October.

AT&T's mobile revenue was $16.7 billion for the quarter, up 10 percent from a year ago. Mobile data revenue grew by 19.4 percent year over year.

AT&T's wireline division posted revenue of $14.9 billion, down 1.4 percent.

AT&T added 208,000 U-verse television customers during the quarter, to reach 3.8 million customers. The company's U-verse high-speed broadband service added 587,000 customers in the quarter to reach 5.2 million, but losses in DSL customers offset those gains. Overall, the company lost 49,000 wireline broadband customers during the quarter.

For the full year, AT&T reported net income of $3.9 billion, compared to $19.9 billion in 2010. Revenue was up slightly, from $124.3 billion in 2010, to $126.7 billion in 2011.

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