AT&T Earns 54% of Revenue, 66% of Operating income from "Business Solutions"

If you believe the “80/20 rule” generally holds, then 80 percent of results result from about 20 percent of activities. Something like that appears to characterize AT&T’s operating income.

What might be most striking is the degree to which services sold to business customers are vital for AT&T.

If one looks at revenue, business solutions, consumer mobility, entertainment and Internet services and international are the four buckets AT&T reports results.

Business solutions represents 54 percent of total revenue. Consumer mobility represents 27 percent. Entertainment and Internet Services generates about 18 percent of revenue, while International produces only about one percent of revenue.

In other words, 81 percent of revenue is generated by business solutions and consumer mobility.

The operating income story is more skewed. Business solutions represents 66 percent of total operating income. Consumer mobility represents 38 percent of operating income. Entertainment and Internet Services has negative operating income, as does the International segment.

In terms of operating income, it all comes from business solutions and consumer mobility.

One suspects that will change when AT&T starts reporting results that reflect DirecTV operations, with the entertainment and Internet operations segment assuming both a higher role in revenue, but also contributing operating income.

DirecTV might contribute at least $32 billion in incremental revenue and perhaps $5.6 billion in operating income, more than doubling AT&T’s segment revenues and lifting segment operating income solidly into positive territory.

Whatever else might happen, AT&T's revenue and operating income profile is going to shift. Entertainment and Internet services will be the biggest single change.

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