AT&T announced profits for Q4 2013 but share price dropped as subscriber base missed Wall Street estimates.
On Tuesday, January 28, the U.S. carrier posted its financial results for the quarter ended December 31, 2013. AT&T revealed profit $6.9 billion, or $1.31 per share, for Q4 2013, when compared to a loss of $3.9 billion, or 68 cents per share, in Q4 2012.
The revenue for the carrier rose 1.8 percent to $33.2 billion, which is slightly over the Wall Street prediction of $33.1 billion.
Randall Stephenson, CEO of AT&T indicated that the company's financial growth was a result of strong performance of its wireless business. He said that "2013 was the year of the network."
Stephenson added that the company's project Velocity IP (VIP) delivered faster speeds and new services to millions more customers in the U.S. and growth on these platforms is still going strong. AT&T's 4G LTE network is nearly complete and the carrier claims that it is the nation's "most reliable with lightning-fast speeds.
"The next steps are to make our networks even more powerful and layer on services that will drive new growth in the years ahead. We have good momentum in areas like connected car, home automation and mobile business solutions. We're also committed to transforming our operations to make them more responsive and efficient. To that end, we've launched Project Agile, a broad set of initiatives to streamline and improve every part of our business. Execution has begun and will be a focus area for us in 2014 and beyond," said Stephenson.
AT&T is facing stiff competition from other carriers such as Verizon and T-Mobile in the U.S. In Q4 2013, AT&T added 566,000 new customers to its network, which lagged behind the average Wall Street expectation of 636,000 new customers.
The carrier also trailed behind Verizon Wireless and T-Mobile, which added 1.6 million and 869,000 subscribers in the same quarter.
It seems that AT&T is taking competition very seriously as earlier in January this year, the carrier announced that it will offer T-Mobile customers up to $450 ($200 for switching and up to $250 added as credit for trading in an old phone) for per line to switch to its network.
However, just a few days later T-Mobile upped the ante and announced that customers who switch to its network and trade-in their old handset can benefit from up to $650 (up to $350 in early termination fees to cover the cost of switching over to its service plus a credit of up to $300 for trade-in of old phone).
AT&T also revealed a free cash flow target in the $11 billion range for 2014, which is down from $13.6 billion in 2013. Analysts hoped the company would announce free cash flow nearer to $14 billion for 2014.
The carrier's share price was down by around two percent in after-hours trading on Tuesday, January 28. On Wednesday, price of shares further slipped 1.16 percent to close down at $33.31.
