AT&T’s Mobile and Wireline Strategies
AT&T’s revenue mix
During its recent analyst conference, AT&T (T) highlighted the new composition of its revenue after the DIRECTV (DTV) and Mexican acquisitions. Mobility and Business Solutions now dominate AT&T’s revenue. As we noted earlier in the series, this segment includes both wireline and wireless components.
The second-largest segment is Entertainment and Internet, followed by Consumer Mobility. The smallest contributor to AT&T’s revenue is now International Mobility and Video. According to the company, it will report these segments in 3Q15. Before it reports the 3Q15 results, the company will provide its pro forma results for these segments.
AT&T’s revenue mix in 2Q15
In 2Q15, the company’s reported divisions were its Wireless, Wireline, and International segments. Wireless was the largest segment, generating revenue of ~$18.3 billion and operating income of ~$4.7 billion.
The second-largest segment was Wireline, with reported revenue and operating income of ~14.2 billion and ~$1.4 billion, respectively. In terms of revenue contribution, Business Solutions was the biggest subsegment of the wireline division.
AT&T’s International segment was the smallest segment in 2Q15, generating revenue of ~$491 million and an operating loss of ~$163 million during the quarter. The division included the results of AT&T’s Mexican acquisitions of Iusacell and Nextel Mexico. AT&T completed the acquisitions of these companies in 1H15.
Segment composition of other key US telecom companies
The other US telecom companies, Verizon (VZ) and Sprint (S), provide segment results of both their wireless and wireline divisions. T-Mobile (TMUS) is a wireless carrier.
Instead of taking direct exposure to AT&T’s stock, you may consider a diversified exposure to the company by investing in the iShares Russell 1000 Value ETF (IWD) or the SPDR S&P 500 ETF (SPY).
AT&T made up ~1.7% of IWD as of July 31, 2015, and it accounted for ~1.1% of SPY’s holdings on the same date.
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