AT&T, Verizon Quarter Revenue Slips

Both AT&T and Verizon reported lower revenue in their most-recent quarterly reports, but that might not be the bigger story. AT&T arguably has done a better job than Verizon at entering big new businesses that move away from the legacy “communications” business. And even if both firms remain largely U.S.-based businesses, future growth almost has to involve more international expansion, something AT&T has begun and Verizon has yet to embrace.

That also assumes that new domestic internet of things and machine-to-machine services also emerge in significant fashion.

But there are many wild cards. At least in principle, 5G-enabled fixed wireless might allow telcos to compete more effectively against cable companies in the internet access and video businesses, out of region as well as in region. While that would not change the strategic situation, it could help marginally in terms of bolstering the legacy businesses.

The maturation of the legacy communications business--including even mobility and mobile data--is obvious.

AT&T had a slight revenue decline in the final quarter of 2016, while Verizon Communications Inc. posted a 5.6 percent revenue decline in its fourth quarter of 2016, something Verizon executives had several quarters ago suggested would be the case.

Expected organic AT&T results for 2017 (without Time Warner) include consolidated revenue growth in the low-single digits, AT&T says.

Verizon reported $23.4 billion in mobile revenues and $7.8 billion in fixed network revenues. Of that amount, retail consumer revenues were $3.2 billion. Verizon executives expect revenue and profit in 2017 will be little changed from 2016.

It is in the video entertainment area that AT&T has shown the greatest move into big new product segments. In fact, video dwarfs AT&T’s consumer internet access and voice businesses.

Video entertainment now dominates AT&T consumer segment revenue, contributing about
73 percent of consumer segment non-mobile revenues. Internet access represents 14 percent of consumer revenue, while “other” revenues including voice generate nearly 13 percent of entertainment group revenue.

Both Verizon and AT&T have enterprise businesses that are flat to declining.

AT&T’s business segment contributes $18 billion (of which $10 billion is mobility revenue). AT&T’s entertainment group--which includes internet access, video entertainment and fixed network voice services, contributes $$13.2 billion worth of revenue.

Consumer mobility represents about $8.2 billion in quarterly revenue, international services a bit less than $2 billion.

AT&T’s total mobility business (aggregating business and consumer segments) generated nearly $19 billion.

Verizon’s enterprise business represents about $4.6 billion in quarterly fixed network revenue.

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