AT&T’s consumer wireline revenue grew marginally in 4Q14

A closer look at AT&T’s wireline segment – 4Q14 performance (Part 2 of 10)

(Continued from Part 1)

AT&T’s consumer wireline revenue by customers

In the last part of this series, we looked at data and voice services. We discussed how they impacted AT&T’s (T) wireline segment. In this part of the series, we’ll analyze the different customer segments in AT&T’s wireline division.

The company has two large customer segments:

  1. Consumer Markets
  2. Business Solutions

AT&T provides voice, data, and IPTV (Internet Protocol Television) to consumers. The company offers legacy and fiber solutions to consumers. In Business Solutions, AT&T caters to small, medium. and large business, government, and other telecommunications providers.

Consumer markets positively impacted by Connecticut divestiture

AT&T’s consumer wireline revenue grew marginally by ~0.1% year-over-year, or YoY, in 4Q14. However, the revenue increased by ~2.4%—excluding the impact of the Connecticut sale to Frontier Communications (FTR). Connecticut’s consumer wireline revenue declined by ~75% during the quarter.

During the quarter, higher adjusted revenue per household supported the segment’s growth. Despite a decrease in consumer connections, adjusted revenue per household increased by 6% YoY during the quarter.

Business Solutions’ revenue continues to shrink

As you can see in the above chart, Business Solutions is AT&T’s biggest segment in wireline. It contributed to ~59% of the company’s adjusted wireline revenue in 4Q14. The segment was also positively impacted by the Connecticut divestiture. However, it continued to shrink during 4Q14. During the quarter, its adjusted revenue decreased by 1.8% YoY.

If this shrinking segment affects you, investors can get diversified exposure to AT&T by investing in the Technology Select Sector SPDR ETF (XLK). XLK held ~4.4% in AT&T at the end of January 2015.

You can get an even more diversified investment in AT&T through the SPDR S&P 500 ETF (SPY). SPY had ~1% holdings in the company as of February 5, 2015.  However, investors should be aware that both the ETFs also hold Verizon (VZ)—the largest US telecommunications company.

Continue to Part 3

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