AT&T posts Q4 loss on breakup fee, benefit plan costs

Carrier reports a record quarter for smartphone sales; driven by iPhone purchases

Though smartphone sales were strong, AT&T Thursday reported a $6.7 billion loss in the fourth quarter of 2011 due to extraordinary charges including a breakup fee for the thwarted merger with T-Mobile USA.

The results included $13.4 billion in one-time charges, including $4.2 billion to ending the bid to acquire rival mobile carrier T-Mobile USA.

AT&T also reported a $6.3 billion charge for its benefit plan costs and $2.9 billion for asset impairments during the quarter. The company had revenue of $32.5 billion for the quarter, up from $31.4 billion for the fourth quarter of 2010.

AT&T announced in December it would charge a $4 billion merger breakup fee during the quarter, after it withdrew its offer to purchase T-Mobile.

AT&T reported net income of $1.1 billion in the fourth quarter of 2010. Excluding one-time items, AT&T's operating income for this past quarter was $4.4 billion, compared to $5.6 billion in the fourth quarter of 2010.

The loss per share for the quarter was $1.12. AT&T's earnings per share, excluding one-time items, was 42 cents, compared to 55 cents in the year-earlier period. Analyst expectations for the quarter were 43 cents per share.

Nevertheless, AT&T officials called their results strong. It was a "blowout quarter," said Randall Stephenson, the company's chairman and CEO, in a statement.

Stephenson used a conference call Thursday to rip into the U.S. Federal Communications Commission for failing to provide more spectrum for mobile carriers. The FCC's staff opposed the company's failed acquisition of T-Mobile, which would have given AT&T more spectrum.

The mobile industry continues to see "explosive" mobile broadband growth, but the FCC and Congress have not made good on promises to open up spectrum, he said. "This growth cannot continue without more spectrum being cleared and brought to market," he said. "Despite all the speeches from the FCC, we're all still waiting."

The FCC has made it "abundantly clear" it won't allow major mergers to bridge the spectrum gap, Stephenson added. "Even the smallest and most routine spectrum deals are getting intense scrutiny from this FCC," he said. "I hope I'm wrong, but it appears the FCC is intent on picking winners and losers, rather than letting these markets work."

In the absence of more spectrum, AT&T will consider more use-based data plans, higher prices and managing speeds of its largest bandwidth users, Stephenson said.

The fourth quarter was the best one ever for smartphone activations, with sales of 9.4 million devices, the company said. AT&T activated 7.6 million iPhones and added 2.5 million mobile customers during the quarter. The company's smartphone sales during the quarter were nearly double its sales during the third quarter, the company said.

Apple introduced the new iPhone 4S in early October.

AT&T's mobile revenue was $16.7 billion for the quarter, up 10% from a year ago. Mobile data revenue grew by 19.4% year over year.

AT&T's wireline division posted revenue of $14.9 billion, down 1.4%.

AT&T added 208,000 U-verse television customers during the quarter, to reach 3.8 million customers. The company's U-verse high-speed broadband service added 587,000 customers in the quarter to reach 5.2 million, but losses in DSL customers offset those gains. Overall, the company lost 49,000 wireline broadband customers during the quarter.

For the full year, AT&T reported net income of $3.9 billion, compared to $19.9 billion in 2010. Revenue was up slightly, from $124.3 billion in 2010, to $126.7 billion in 2011.

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