MorrisAnderson

AT&T Inc posted a $6.7 billion (U.S.) quarterly loss as it was weighed down by a hefty break-up fee for its failed T-Mobile USA merger and other big charges on top of costly subsidies for smartphones such as Apple Inc's popular iPhone.

While the No. 2 U.S. wireless provider beat analysts' expectations for subscriber additions, the growth came at a massive cost as its wireless service margins plummeted.

On top of the $4 billion break-up package charge, AT&T also took a big impairment charge for its telephone directory business, which it said it was considering selling.

While advanced devices like iPhones can help subscriber numbers and revenue, they also shrink earnings as operators such as AT&T and its bigger rival, Verizon Wireless heavily subsidize the devices to attract customers to two-year contracts.

AT&T's wireless service margin fell to 28.7 per cent, based on earnings before interest, tax, depreciation and amortization, from 43.7 per cent in the third quarter and 37.6 per cent a year earlier, missing already low analysts' expectations.

AT&T, which would have vaulted to first place in the U.S. mobile market if it had purchased No. 4 ranked T-Mobile USA, added 717,000 subscribers in the quarter, beating the average expectation for 570,000 from seven analysts.

AT&T said it expects to increase wireless margins to around 40 per cent this year from 38.1 per cent in 2011. The target assumes that 2012 smartphone sales will be similar to 2011, when the company sold 25 million smartphones. AT&T posted a fourth-quarter loss of $6.68 billion, or $1.12 per share, compared with a year-earlier profit of $1.09 billion, or 18 cents per share.

Subject

WIRELESS INDUSTRY (92%); WIRELESS TELECOMMUNICATIONS CARRIERS (92%); SMARTPHONES (90%); COMPANY EARNINGS (90%); INDUSTRY ANALYSTS (90%); MOBILE & CELLULAR TELEPHONES (90%); TELECOMMUNICATIONS SECTOR PERFORMANCE (90%); COMPANY LOSSES (90%); TELECOMMUNICATIONS SERVICES (90%); EBITDA (78%); RANKINGS (77%)

Industry

NAICS517210 WIRELESS TELECOMMUNICATIONS CARRIERS (EXCEPT SATELLITE) (95%); NAICS517110 WIRED TELECOMMUNICATIONS CARRIERS (95%); NAICS511140 DIRECTORY & MAILING LIST PUBLISHERS (95%); SIC4812 RADIOTELEPHONE COMMUNICATIONS (91%); NAICS443112 RADIO, TELEVISION & OTHER ELECTRONICS STORES (90%); NAICS423430 COMPUTER & COMPUTER PERIPHERAL EQUIPMENT & SOFTWARE MERCHANT WHOLESALERS (84%); NAICS334112 COMPUTER STORAGE DEVICE MANUFACTURING (84%); NAICS334111 ELECTRONIC COMPUTER MANUFACTURING (84%); SIC5045 COMPUTERS & COMPUTER PERIPHERAL EQUIPMENT & SOFTWARE (84%); SIC3572 COMPUTER STORAGE DEVICES (84%); SIC3571 ELECTRONIC COMPUTERS (84%)

Ticker

T (NYSE) (95%); AAPL (NASDAQ) (84%)

Geographic

UNITED STATES (90%)