You gotta love the predictable headlines this morning accompanying AT&T's solid Q1/11 earnings release. CNBC has "AT&T Earnings Solid Despite Loss of iPhone Rights" and AllthingsD has "Sharing the iPhone With Verizon Doesn't Kill AT&T". As if the company's $124B annual revenues and gobs of cash flow were going to evaporate overnight? It's only been less than two months... Even if it were going to happen, it would be hard to see it so soon in the macro. It's just our attention span that seems to expect a momentum-free response.
Anyway, AT&T's results met expectations without any immediate red flags. Revenues of $31.25B and earnings per share of $0.57 were right on the nose compared with projections. Net wireless subscribers grew by 2.0M, giving them 97.5M, and wireless churn was basically stable at 1.36%. Consumer wireline revenue continued their growth, as did 'Strategic Business Services' - both of which were more than offset by declining voice and legacy data revenues. Typical steady results - and a good thing too, as the market doesn't take kindly to surprises from its biggest companies.
That said, none of this matters much compared to the implications and likelihood of success of the proposed buyout of T-Mobile. It will take several quarters before we actually get an answer on that front, but just the threat of it happening is already showing some effects. Sprint is obviously a bit perturbed, circling its wagons while firing the occasional potshot in the direction of the FCC. I would also suggest that Level 3's proposed purchase of Global Crossing may have found itself on a faster track after the T/TMobile deal was announced, as they surely sell a fair amount of backhaul to TMobileUSA and would probably see churn similar to what they saw from the Verizon/AllTel deal that would cut into their organic efforts to achieve scale next year no matter how well they operate. Not that the LVLT/GLBC deal needed much of a push once the financing was available, but still.
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