AT&T reported strong first-quarter results that reflect advances in wireless, broadband and business services, along with solid progress in merger integration. On a reported basis, AT&T's first-quarter earnings per diluted share were $0.37, up 37.0 percent from $0.27 in the first quarter of 2005. First-quarter earnings were $0.52 per diluted share, up 52.9 percent versus first-quarter 2005 earnings per diluted share of $0.34, before Cingular merger-related costs. AT&T's reported first-quarter 2006 net income was $1.4 billion, versus $885 million in the year-earlier first quarter.
Revenues totaled $15.8 billion, up 54.5 percent from $10.2 billion in the first quarter of 2005. Operating expenses totaled $13.6 billion on a reported basis and $13.1 billion before merger-related costs. Operating expenses in the first quarter of 2005 totaled $8.7 billion.
Some highlights for the quarter:
- In wireline operations, AT&T reported its best growth over the past five quarters in regional small/medium-business revenues, up 7.0 percent, driven by strength in transport and IP-based data services.
- Consumer revenue was up 2.1 percent, driven by strong consumer demand for bundled and broadband services, offsetting declines in retail access lines.
- Total consumer connections in service -- retail lines, DSL lines and video connections -- increased by 224,000 in the quarter. Regional retail consumer lines declined by 267,000 in the first quarter, generally in line with recent quarters.
- There was a smaller decline in enterprise revenues than in the preceding quarter -- 6.9 percent versus a 9.0 percent decline in this category for the fourth quarter of 2005.
- AT&T's data revenues, which include results from several customer categories, totaled $4.4 billion in the first quarter of 2006, up 2.6 percent versus pro forma results for the year-earlier quarter.
- Wireline data growth was led by a 14.0 percent increase in IP data revenues, which include DSL Internet, dedicated Internet access, virtual private networks and hosting services.
- There was a total net gain of 511,000 regional DSL lines during the quarter to reach more than 7.4 million in service.
- More than 50% of new business DSL services are delivered at 1.5 Mbps and higher
- DSL penetration of consumer primary lines reached 27.7% , compared to 19.6% a year earlier.
- Data transport revenues were up 1.6 percent, and revenues from packet-switched data, which includes Frame Relay and ATM services, were down 12.5 percent, in line with industry trends.
- Data services now make 46% of total enterprise revenues.
- AT&T's first-quarter wireline voice revenues totaled $8.7 billion, representing a decline of 8.7 percent versus pro forma results for the first quarter of 2005, primarily driven by declines in the national mass market category.
- SBC/AT&T merger integration is moving forward on plan. Detailed network transition plans are in place, and front-line enterprise sales force consolidation is complete. The company said it is on track to achieve previously announced merger synergies of $600 million to $800 million this year, growing to approximately $2 billion next year.
- The integrated network buildout begin in April. Customer migration begins in June. The company expects to have all legacy SBC mass-market LD traffic migrated by Q4.
