Tuesday, June 3, 2014

AT&T Updates Project VIP Status, Raises 2014 Guidance

AT&T said its Project VIP network transformation plan, announced in 2012, is ahead of schedule.  The company also reported strong second-quarter wireless trends and an increase in its full-year 2014 revenue guidance, while reaffirming its full-year guidance for consolidated margins, EPS growth, capital spending and free cash flow.

Some highlights of the announcement:

  • AT&T’s 4G LTE network now covers nearly 290 million people;
  • Project VIP will bring fiber to more than 400,000 new business customer locations by the end of the second quarter.
  • For Q2, AT&T expects postpaid subscriber net adds to exceed 800,000 while postpaid churn remains at 0.95 percent or lower.
  • Approximately 3.2 million AT&T Next smartphone sales, which have risen throughout the quarter and now are expected to be approximately 50 percent of total sales;
  • Approximately one-half of the company’s postpaid smartphone customer base on no-device-subsidy Mobile Share Value pricing plans, growing to approximately two-thirds by year-end.
  • AT&T expects second-quarter wireless service EBITDA margins to be pressured year over year due to the increased sales activity and strong customer movement to the no-device-subsidy Mobile Share Value plans.  Wireless service EBITDA margins are expected to be over 40 percent in each of the three remaining quarters of 2014.
  • U-verse video additions bundled with broadband are expected continue to perform well.
  • Wireline margins continue under pressure, reflecting content cost increases, fiber expansion and high-speed broadband subscriber growth.
  • AT&T raised its full-year 2014 guidance for revenue growth to be in the 5 percent range and reaffirmed its full-year 2014 guidance for stable consolidated margins, adjusted earnings per share growth at the low-end of the mid-single digit range, capital expenditures in the $21 billion range and free cash flow in the $11 billion range.