Fourth-Quarter Operational Highlights
In the fourth quarter, AT&T delivered strong wireless growth with record gross subscriber additions, reduced subscriber churn, solid mid-teens percentage growth in revenues and robust growth in operating income. These results reflect the company's broad high-quality network, attractive handset selection, extensive sales reach and continued improvements in operations.
In the fourth quarter, AT&T achieved:
* Record Wireless Subscriber Gains. AT&T's net gain of 2.7 million wireless subscribers was the highest quarterly subscriber increase ever for any U.S. wireless provider, up 13.5 percent from 2.4 million net adds in the year-earlier fourth quarter. This year-over year improvement in quarterly net adds was almost entirely driven by stronger growth in retail postpaid net adds, which totaled 1.2 million, up 36.8 percent versus results in the year-earlier quarter. In addition, AT&T's acquisition of Dobson Communications, which was completed on Nov. 15, 2007, added 1.7 million subscribers, bringing AT&T's wireless subscriber base at year end to 70.1 million.
* Strong Gross Adds, Reduced Churn. AT&T also delivered the industry's best-ever quarterly gross wireless subscriber additions, which totaled 6.0 million, up 9.6 percent versus the year-earlier fourth quarter. Total average monthly subscriber churn was 1.7 percent, down 10 basis points versus the year-earlier quarter, and postpaid churn was 1.2 percent, down 30 basis points from the fourth quarter of 2006.
* Accelerated Wireless Revenue Growth. AT&T's total wireless revenues were $11.4 billion, up 16.3 percent versus the year-earlier quarter. This marked AT&T's sixth consecutive quarter of improved wireless revenue growth. Wireless service revenues, which exclude handset and accessory sales, grew 15.7 percent to $10.2 billion. AT&T also posted its sixth consecutive quarter of year-over-year growth in wireless service ARPU (average monthly revenues per subscriber), which was $50.28 in the fourth quarter, up 1.9 percent versus the year-earlier quarter. Retail postpaid ARPU growth was even stronger, up more than 5 percent.
* Robust Growth in Wireless Data Services. Wireless data revenues increased 57.5 percent versus results in the year-earlier quarter, driven by increased adoption of smart phones and 3G wireless devices. Data growth reflects increases in messaging, media bundles, laptop connectivity, smart phone connectivity and enterprise vertical market solutions.
* Strong Wireless Operating Income Growth. On a reported basis, AT&T's fourth-quarter wireless operating expenses totaled $9.4 billion, and operating income was $1.9 billion, up 45.0 percent from $1.3 billion in the fourth quarter of 2006. Before merger-related costs, wireless operating expenses totaled $8.4 billion, and operating income was $2.9 billion, up 58.2 percent from $1.8 billion in the fourth quarter of 2006.
* Wireless Margin Expansion. AT&T's reported wireless operating income margin was 17.0 percent, up from 13.6 percent in the year-earlier quarter. Before merger-related costs, AT&T's fourth-quarter adjusted wireless operating income margin was 25.7 percent, up from 18.9 percent in the year-earlier quarter. AT&T's unadjusted fourth-quarter wireless OIBDA service margin was 35.3 percent, up from 33.1 percent in the year-earlier quarter. Before merger-related costs, AT&T's wireless OIBDA service margin was 38.2 percent, up from 34.4 percent for the year-earlier quarter. (OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.)