Thursday, October 23, 2014

Verizon, Comcast Show 4% Revenue Growth in 3Q 2014; AT&T 2.5%

In a quarter with a lot of moving parts (shift in the way AT&T accounts for device sales, Leap Wireless and Alltel revenue and costs), AT&T reported third quarter 2014 revenues up 2.5 percent versus the year-earlier period.

Verizon reported 89 cents in earnings per share for the third quarter of 2014, compared with 78 cents per share (or 77 cents on a non-GAAP adjusted basis) in the same quarter of  2013. Whether one is happy with those results depends, as always, on expectations.

Some had estimated Verizon would do even better than it did. But Verizon did post significant revenue growth.

Total operating revenues in the third quarter of 2014 were $31.6 billion, a 4.3 percent increase compared with third-quarter 2013, Verizon reports.

Comcast has a different mix of product lines, including theme parks, film production, broadcast TV operations and programming networks.

So although Comcast reported third quarter 2014 revenue that grew about four percent, in line with Verizon and AT&T, Comcast saw higher rates of growth from its broadcast TV segment (7.7 percent growth), a loss in filmed entertainment (-15.2 percent) and  theme park segment growth of 18.7 percent.

In the cable communications segment, video revenue grew one percent, while high speed Internet access grew 9.6 percent. Voice revenues declined -0.5 percent while business services grew 21 percent.

In tandem with Verizon, Comcast reported growth in its business customer segment, almost twice as much overall revenue growth as AT&T reported. As always, segment results are key.

Total AT&T mobile segment revenues, which include equipment sales, were up 4.9 percent year over year to $18.3 billion.

Total third-quarter fixed segment revenues were $14.6 billion, down 0.4 percent versus the year-earlier quarter and down slightly versus the second quarter of 2014.

Mobile service revenues were essentially flat in the third quarter at $15.4 billion, and wireless equipment revenues increased 44.3 percent to $2.9 billion as more customers chose equipment installment plans versus subsidized devices.

Third-quarter mobile operating expenses totaled $13.8 billion, up 7.5 percent versus the year-earlier quarter due to higher equipment costs, network systems expenses and marketing costs, largely attributable to the company’s acquisition of Leap Wireless, and wireless operating income was $4.5 billion, down 2.3 percent year over year.

Revenues from residential customers totaled $5.7 billion, an increase of three percent compared to the third quarter a year ago.

U-verse, which includes high speed Internet, TV and Voice over IP, now represents 64 percent of fixed segment consumer revenues, up from 54 percent in the year-earlier quarter. Consumer U-verse revenues grew 23.2 percent year over year.

As was the case at Verizon, total revenues from business customers declined. At AT&T, business customer revenues were $8.7 billion, down two percent year over year and stable sequentially.

As was the case for Verizon Communications, declines in AT&T business customer legacy products were partially offset by continued double-digit growth in strategic business services (VPNs, Ethernet, cloud, hosting, IP conferencing, VoIP, MIS over Ethernet, U-verse and security services).

Strategic business services grew 14.3 percent versus the year-earlier quarter.

The bottom line for AT&T includes continued revenue growth overall, with gains lead by the mobile segment, and by consumer services within the fixed network segment, as also was the case at Verizon in the third quarter.

Voice was an issue for all three companies, with growth driven by high speed access.

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