Blog Coverage AT&T Announced $1 Billion Loss in Q42016 as a Result of Reducing Discount Rates for Pension Obligations
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Upcoming AWS Coverage on CenturyLink Post-Earnings Results
LONDON, UK / ACCESSWIRE / January 23, 2017 / Active Wall St. blog coverage looks at the headline from AT&T Inc. (NYSE: T) as the Company announced on January 20, 2017, in a filing made to the US Securities Exchange Commission (SEC), that it has incurred a noncash, pre-tax loss of approximately $1.0 billion for the fourth quarter ended on ended December 31, 2016. The loss was incurred on account of the lowering of pension and post-employment benefit plans. Register with us now for your free membership and blog access at:
One of AT&T's competitors within the Telecom Services - Domestic space, CenturyLink, Inc. (NYSE: CTL), announced on January 18, 2017, that it will release its Q4 2016 earnings results after the market closes on Wednesday, February 08, 2017, and host a related conference call at 3:30 p.m. CT that day. AWS will be initiating a research report on CenturyLink in the coming days.
Today, AWS is promoting its blog coverage on T; touching on CTL. Get all of our free blog coverage and more by clicking on the links below:
The impact of reducing the discount rates for pension obligations.
As per details provided to the SEC the company stated that it had reduced the assumed discount rates used to measure its pension obligation from 4.6% to 4.4% and the post-retirement obligation from 4.5% to 4.3% on December 31, 2016. This exercise resulted in a loss of $3 billion.
The major part of the loss was offset by the gains made by the Company in terms of better claims experience, slightly higher returns from assets, demographic changes etc. Since the loss is actuarial in nature, it would be managed on an overall Company basis and will be reflected in the consolidated results. The loss amount will also form part of the adjustments made while calculating Q4 2016 results. The loss will not directly impact the Company's profit margins or operating profits in any way.
AT&T also disclosed the details of the increase in subscriptions and customer base in Q4 2016. As per the disclosed information, AT&T expects to add over 900,000 branded domestic wireless subscribers of which approximately 500,000 will be post-paid subscribers and 400,000 prepaid subscribers. The Company expects to add more than 330,000 branded phone customers. In Mexico, the Company managed to add 1.2 million wireless net subscribers.
Record Subscribers for DIRECTV NOW
The filing also mentioned that AT&T added 200,000 new DIRECTV NOW subscribers. DIRECTV NOW was launched by AT&T on November 2016 and it is a new live TV streaming service. The customers of AT&T's DIRECTV NOW have not been happy with the performance of the service due to freezing, slow buffering etc. Many customers have complained about not getting refunds for services not being utilized. Some of these customers have taken the matter to The Federal Communications Commission (FCC), which regulates interstate and international communications by radio, television, wire, satellite, and cable.
Despite these negative traits, it is impressive to note that AT&T has managed to add 200,000 paying subscribers. However, this being the initial launch period, AT&T had offered promotional pricing for its services as well as offering Amazon Fire TV Stick devices and Apple TVs to customers opting for either the one-month or the three-month plan. AT&T is also offering this service to its mobile service where they do not have to pay any data charges while streaming DIRECTV NOW directly to their mobile phones.
Can AT&T sustain this growth?
The million-dollar question is how long AT&T will be able to sustain this growth in subscribers over a long-term period. AT&T has already hinted at increasing the rates for the subscription over a period of time. It had assured early subscribers that they would be "grandfathered into the promotional pricing" till such time that they continue to use the service.
Rivals like Netflix have reported an addition of 7.05 million new customers in the last quarter of 2016. Out of these approximately 2 million customers were US based and the remainder were international customers. It is being speculated that another rival Hulu, an established brand is planning to enter this segment. Given the increasing competition and possible price war, it would be interesting to watch how this space evolves.
Stock Performance
AT&T's share price finished last Friday's trading session at $41.45, advancing 1.10%. A total volume of 25.15 million shares exchanged hands. The stock has advanced 6.48% and 25.80% in the last three months and past twelve months, respectively. The stock is trading at a PE ratio of 17.64 and has a dividend yield of 4.73%. The market capital for the stock is $254.86 billion.
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