AT&T Inc. Earnings: Shares Rise on Hopeful Guidance

By Anders

AT&T saw the past three years as a repositioning period, setting the company up for stronger growth in 2015 and beyond. Source: AT&T.

Shares of telecom giant AT&T rose 1.8% in after-hours trading, following the release of strong results for the fourth quarter of 2014.

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AT&T's non-GAAP earnings rose 4% year over year to land at $0.55 per diluted share. Total revenues increased by 4.5% to $34.4 billion, adjusted to account for the sale of Connecticut wireline operations to Frontier Communications .

The quarter matched Wall Street's earnings estimates to a "T" while exceeding the revenue consensus by $100 million.

In the crucial wireless division, AT&T saw sales rising 7.7% thanks to higher data service charges. Ma Bell added 1.9 net new subscribers during the quarter, including 854,000 net postpaid accounts.

As a reminder, AT&T's archrival, Verizon Communications , reported 2.1 net new connections in the fourth quarter, including 672,000 new postpaid phone lines.

Smaller rival T-Mobile US won't report final results for another couple of weeks, but it announced preliminary fourth-quarter additions of 2.1 million net subscribers including 1.3 million postpaid gains. Sprint added 1 million new subscribers in the fourth quarter with 30,000 new postpaid subscribers, according to another preliminary report.

The vast majority of AT&T's wireless contracts are attached to its AT&T Mobile Share family plans, and over half of smartphone upgrades and additions are taking the AT&T Next rapid upgrade plan.

In the wireline segment, AT&T reported flattish sales and operating income. A 22% increase in U-Verse high-speed data and digital television service sales just about balanced out the relentless decline in traditional voice line accounts.

Looking ahead, AT&T provided two sets of expectations for 2015. If the proposed acquisition of satellite TV broadcaster DirecTV completes in its current form, alongside numerous smaller pending deals in Mexican market, the combined company should deliver adjusted earnings growth "in the low single-digit range." In other words, the deal would hurt AT&T's bottom line at first but add profitable synergies over the long haul.

Without DirecTV and Mexico, earnings should still grow at the same single-digit percentage rate. The company didn't present any firm guidance ranges, but these directional statements were optimistic at heart.

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