AT&T reported Q1 revenue of $9.0 billion, which included $6.4 billion from AT&T Business Services and $2.5 billion from AT&T Consumer Services. This represents a decline of 5.9% versus Q1 2002, primarily due to continued declines in long distance (LD) voice services, partially offset by growth in several key segments of AT&T Business Services, as well as the continued success of AT&T Consumer Services' bundled local and LD offering. AT&T Business Services revenue declined by 1.4% compared with the prior year first quarter, while AT&T Consumer Services revenue declined by 17.8%. Income from continuing operations of $529 million, or $0.67 per share, which compares favorably to income of $446 million, or earnings per diluted share of $0.60, in Q1 2002. Some highlights:
- Total data services revenue declined 0.9% and IP & enhanced services (IP&E) revenue grew 9.1%, from the prior year quarter.
The managed component of total data services, and IP&E-services revenue grew nearly 7% from Q1 2002 and now comprises 30% of this revenue total.
approximately 157,000 local access lines were added in Q1, for a total of 3.8 million. Local voice revenue grew approximately 25%.
Business long distance voice revenue declined 2.9% on a year-over-year basis, driven by continued pricing pressure and weakness in retail demand, partially offset by growth in wholesale revenue. Volumes grew approximately 12%
Overcapacity and aggressive pricing continue across the industry, especially in high-bandwidth applications and business retail voice services
At the end of the first quarter, AT&T Consumer provided local service to approximately 2.8 million customers, an increase of more than 119% from the prior year first quarter. The company is targeting 4 million local customers by year-end, as it begins serving UNE-P lines in more states.
AT&T ended the quarter with net debt of $12.0 billion.
CAPEX for Q1 was $662 million, a decline from $1.346 billion in Q4 2002. The company lowered its CAPEX target for 2003 from a prior range of $3.3 to $3.5 billion to around $3.0 billion.
AT&T expects that it will meet or exceed its previously stated 2003 consolidated revenue growth and operating income margin guidance.
- Shares in AT&T closed at $17.01, up by $3.20 or 23% for the day. Q1 results were $0.15 ahead of market expectations.
Separately, The Wall Street Journal published a report speculating on the prospect of a merger between AT&T and BellSouth or another RBOC. Motives for such a merger range from AT&T's stock price to the expected re-emergence of MCI as a market power. The companies have denied the rumors.
