Smartphones & Devices Drive AT&T Earnings Ahead of Plans (T)

AT&T, Inc. (NYSE: T) has just delivered its expected earnings report.  As AT&T has the highest dividend yield of all 30 DJIA components, this one was going to be key to watch for dividend investors.

The company reported a 1.8% gain in revenues to $31.8 billion. Net income attributable shareholders rose to $3.6 billion, or $0.60 per share.  Thomson Reuters had estimates of $0.57 EPS and $31.85 billion in revenue.  Cash from operating activities in the quarter totaled $7.8 billion and free cash flow totaled $3.5 billion.

AT&T began repurchasing shares under its 300 million share buyback plan and the company repurchased 67.7 million of its shares for $2.1 billion in the quarter (an average price of roughly $31.02 or so per share..

The key here is wireless… Revenues increased by $1 billion and including equipment was up 5.4 percent to $16.1 billion. Wireless service revenues rose by 4.3 percent to $14.6 billion.  Wireless data revenues rose over $1 billion or 19.9 percent to $6.1 billion. Wireless operating income was up 11.3% to $4.4 billion.

AT&T posted a net increase in total wireless subscribers of 726,000 in the first quarter to reach 103.9 million in service: Postpaid net adds of 187,000; Prepaid net adds of 125,000; Connected device net adds of 230,000; and Reseller net adds of 184,000.

AT&T sold 5.5 million smartphones in the first quarter, beating its prior first quarter record, and this came to over 78 percent of postpaid device sales. Some 59.3 percent, or 41.2 million, of AT&T’s postpaid subscribers had smartphones versus 46.2 percent and 31.5 million a year earlier. ARPU for smartphones is 90 percent higher than for non-smartphone subscribers.  Churn levels for these subscribers are significantly lower than for other postpaid subscribers.

AT&T shares are up 2% at $31.25 in the pre-market and the 52-week range is $27.29 to $31.97.  The dividend yield before today’s move was roughly 5.7%.

JON C. OGG