June 25, 2024

AT&T’s Net Loss Tied to T-Mobile Merger Fees

However, a wave of momentum from iPhone sales and new subscribers nudged ATT’s revenue up 4 percent during the quarter, with sales rising to $32.5 billion from $31.4 billion a year ago. Analysts expected the company to report $31.95 billion in revenue.

The company added 717,000 post-paid wireless subscribers, the largest increase in five quarters, and a net total of 2.5 million wireless subscribers, which lifted the company’s base to 103.2 million wireless customers. ATT also said it beat previous records for smartphone sales during the quarter, selling 7.6 million iPhones and 9.4 million smartphones over all.

Rick Franklin, an analyst with Edward Jones, said the report “sets ATT up well for future wireless data growth and profitability.”

After discounting charges from the $4 billion breakup fee paid in the wake of the T-Mobile USA bid, ATT’s per-share profit was 42 cents; analysts expected 43 cents a share.

The company also beat results for Verizon, the country’s largest phone company, which said on Wednesday that it sold 4.2 million iPhones and 7.7 million smartphones during the same period. ATT said that 76 percent of its overall revenue increase stemmed from the company’s growth in wireless, wireline data and services.

“We had a tremendous year in terms of execution, and we have excellent momentum across our growth platforms,” said Randall Stephenson, the chief executive of ATT, in a statement. “This was a blowout quarter for smartphone sales.”

“Looking ahead, we start 2012 with the best visibility we’ve had in some time, and we’re well-positioned to deliver solid results,” Mr. Stephenson said.

Investors seemed initially disappointed by the results, with shares slipping 2.4 percent to $29.50 in premarket trading.

Article source: http://feeds.nytimes.com/click.phdo?i=7298eddb37f52d167f115a97573a3cb4

Bits Blog: Verizon Drops Plan for $2 Fee on Some Bill Payments

Brian Snyder/ReutersCustomers at a Verizon Wireless store in Boston.

4:05 p.m. | Updated Adding background and analyst comment.

In a remarkably swift reversal, Verizon Wireless has canceled plans to impose a $2 “convenience fee” on some bill payments, just a day after announcing the new policy.

The company said in a statement that it was dropping the plan in light of customer feedback.

“Verizon Wireless has decided it will not institute the fee for online or telephone single payments that was announced earlier this week,” it said. “The company made the decision in response to customer feedback about the plan, which was designed to improve the efficiency of those transactions. The company continues to encourage customers to take advantage of the numerous simple and convenient payment methods it provides.”

Objections to the fee came fast and furious, and highlighted just how quickly things race around the feedback loop now, even when a company attempts to deliver the bad news during what is supposed to be a slow news week when fewer people are paying attention.

The commentary appeared first on Twitter, where many people mistakenly believed that it would be applied to all credit and debit card payments for Verizon products. Instead it was meant to apply to one-time payments that Verizon Wireless customers made via phone or on the company’s Web sites.

Some people started petitions on the same Web site where a similar campaign helped convince Bank of America to rescind its now infamous $5 monthly debit card fee. Many others insisted that they would switch to paper billing, in effect to punish the company for its actions by finding the most cost-consuming way to pay their bills each month that did not require them to pay a fee.

Consumer advocates, like Edgar Dworsky, a lawyer who runs the Web site Consumer World, began the morning vowing to investigate whether Verizon Wireless’s fee violated the terms of its merchant agreement and federal laws that limit card surcharges.

And later in the day, the Federal Communications Commission said it was planning to question Verizon about the new policy, saying it was “concerned about Verizon’s actions.

At which point the company had apparently had enough. A Verizon Wireless spokesman did not immediately respond to a request for comment.

Article source: http://feeds.nytimes.com/click.phdo?i=efd59bbced12fc39306238beec346bea

DealBook: AT&T Ends $39 Billion Bid for T-Mobile

ATT said on Monday afternoon that it had withdrawn its $39 billion takeover bid for T-Mobile USA, acknowledging that it could not overcome opposition from the Obama administration to creating the nation’s biggest cellphone service provider.

The company said in a statement that it would continue to invest in wireless spectrum, but could not overcome resistance from both the Justice Department and the Federal Communications Commission. It added that American wireless customers “will be harmed and needed investment will be stifled” by the regulators’ decisions.

ATT had lain the groundwork for its decision in recent weeks, including by withdrawing its proposal for F.C.C. approval and by asking a federal judge to postpone proceedings in a lawsuit filed by the Justice Department. Both regulators have indicated strong opposition to the deal.

ATT said last month that it would take a $4 billion accounting charge this quarter to reflect the potential breakup of the deal.

Article source: http://feeds.nytimes.com/click.phdo?i=f8fa746f2bf01bd55b994033bc4769a7

AT&T Reports Sluggish Quarter, Meeting Expectations

ATT, the nation’s biggest telecommunications company, reported third-quarter results Thursday that just met analysts’ expectations, amid growing competition from rival wireless carriers Verizon and Sprint. The company posted a profit of $3.6 billion, or 61 cents a share, compared with a profit of $12.3 billion, or $2.07 a share, during the same quarter a year earlier, although the 2010 figures were bolstered significantly by the sale of assets. Analysts had expected ATT to earn 61 cents a share.

The company said that it activated only 2.7 million iPhones during the quarter. That number is the lowest the company has reported in several quarters, signaling that ATT is beginning to feel the competitive threat of rival carriers who are now also selling the iPhone. In addition, many wireless customers were probably waiting for the release this month of the next-generation iPhone.

Investors seemed slightly disappointed by the earnings, as shared dipped 2 percent in pre-market trading. Analysts say that the wireless industry is struggling for growth amid growing saturation.

“This may be the new normal,” said Craig Moffett, an analyst with Sanford C. Bernstein who follows the telecommunications industry. “It looks more and more like ATT is going to have to depend on organic growth and unfortunately, there isn’t any. The wireless industry just isn’t a growth industry anymore.”

ATT said, however, that during the quarter it sold 4.8 million smartphones, which made up nearly two-thirds of all device sales during that period. The company also said that the sale of Android devices more than doubled year over year.

“Mobile broadband growth continues to be robust, execution was strong across the business, and we delivered another solid quarter,” said Randall L. Stephenson, the chairman and chief executive of the company, in the statement. “The next waves in the mobile Internet revolution represent tremendous growth potential, and we are laying the groundwork required for that future.”

The company said that it added 319,000 wireless customers during the quarter. The company has faced greater competition from rival carriers who are also selling portfolios of smartphones and mobile devices.

ATT’s operating revenue slipped to $31.48 billion during the quarter, compared with $31.58 billion a year ago. Analysts surveyed by Thomson Reuters had expected the company to report operating revenues of $31.60 billion.

The operator is still looking for regulatory approval to move forward in its acquisition of T-Mobile, although Mr. Moffett said it is looking more and more like that deal may disintegrate under government scrutiny.

Mr. Stephenson said that ATT was still working “toward a successful completion of our planned T-Mobile USA merger.”

Article source: http://feeds.nytimes.com/click.phdo?i=f173712974b234e0a9067996a6b9521e

Common Sense: AT&T and T-Mobile Merger Is a Textbook Case

If it’s anything like mine, which has soared into the hundreds of dollars a month, you’ll understand why last week the Justice Department filed suit to block ATT’s takeover of T-Mobile.

The antitrust laws are intended to protect consumers, like wireless customers, by promoting competition. You could be forgiven for forgetting there are antitrust laws, given how feeble enforcement efforts have been over the last decade. Even Adam Smith railed against the pernicious effects of monopolies, but in recent years free market fervor and the writings of influential academics like Robert Bork have led many to wonder if the antitrust laws were just a quaint relic of a bygone era.

That, or something like it, may have been the thinking of the lawyers for ATT who negotiated the terms of the T-Mobile deal.

It’s hard to blame them: of the five major telecom mergers in the last decade, not one was challenged on antitrust grounds. ATT agreed to give T-Mobile a huge breakup fee of $3 billion in cash plus wireless spectrum and a roaming agreement valued at another $3 billion should the deal fall through on antitrust or other grounds.

Such confidence on ATT’s part seems inexplicable otherwise. For if ever there was a merger likely to be blocked on antitrust grounds, this is it.

“It’s only a slight overstatement to say that if they weren’t going to block this one, the Justice Department might as well just throw the antitrust guidelines out the window,” said Herbert Hovenkamp, professor of law at the University of Iowa, who is considered by many to be the dean of American antitrust law. “This merger clearly seems to violate them.”

The antitrust division has long published explicit guidelines that tell companies which mergers it is likely to block as anticompetitive.

The analysis begins with a mathematical formula for calculating the deal’s effect on competition. It’s called the Herfindahl-Hirschman Index, or HHI, a phrase you may want to drop at your next dinner party if you want to bring conversation to a halt.

Although the formula looks slightly complicated, it’s derived from the common-sense principle that the more competitors in a market, the lower the prices and the greater the innovation. In short, more competitors means more competition, which benefits consumers.

The Justice Department has officially used HHI since 1982, and the guidelines were revised by the Obama administration in 2010. Mr. Hovenkamp notes that despite tougher antitrust rhetoric from President Obama, the revision actually made it easier for proposed mergers to pass muster. Without getting too deeply into the math, industries can be scored on a scale up to 10,000, with 10,000 being a perfect monopoly. During the Bush administration, an HHI score of 1,800 or higher was deemed a concentrated industry, and a merger that increased the score by more than 100 points in such an industry was presumed to raise anticompetitive concerns. The new guidelines raised those numbers to 2,500 and 200.

“It was becoming legendary that the Bush administration wasn’t enforcing the old guidelines,” Mr. Hovenkamp said. “What good is a guideline that doesn’t provide any guidance? The Obama administration conceded that perhaps the old guidelines were too strict. So it made it easier, but at the same time said, ‘We’re going to enforce this.’ ”

How does the proposed ATT and T-Mobile merger fare under the revised guidelines? Let’s go to Exhibit B of the government’s complaint, in which the Justice Department does the math. ATT has argued strenuously that the case should be considered market-by-market, and not for the nation as a whole, where there are only four national wireless providers. So let’s look at some local markets.

Article source: http://feeds.nytimes.com/click.phdo?i=b269fddc17abe515979d1066dc1ed808