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AT&T Proves It Was More Than iPhone Distributor

Tickers in this article: T VZ AAPL S

NEW YORK ( TheStreet) -- When discussing the competitive landscape in which telecom giant AT&T(T) operates, one of the biggest concerns for investors has had to do with the effects of having lost exclusivity rights to Apple's(AAPL) iPhone. Wall Street grew concerned over the company's ability to execute and maintain its leverage once fierce rivals in Verizon(VZ) and Sprint(S) entered the mix -- and I think it was valid, as the stock experienced a noticeable decline once iPhone rights were extended to Verizon and Sprint. But since then the stock has traded relatively flat and investors are now growing frustrated over what appears as an inability to "break out."

When considering an investment case for AT&T and (in particular) the entire telecom sector, the prevailing rationale has always been that the companies were "safe picks" -- particularly from the standpoint that they offer solid dividends absent their large premiums. But I am beginning to wonder that just maybe it might be time for a new perspective for AT&T -- one where growth can be proven to not be the enemy of maturity. Leading into the company's Q1 earnings results, not only was I looking for justification that it deserves consideration in my portfolio, but for evidence it can execute well enough to increase separation between itself and Verizon and to a lesser extent Sprint.

Losing exclusivity to the Apple iPhone should no longer worry potential AT&T investors.

A better quarter Q1
Last week the company beat analysts' expectations by logging $31.8 billion in revenue and registering profits of $3.6 billion -- an increase of 1.8% over the $3.4 billion it posted in the same period a year ago. Analysts surveyed by Thomson Reuters were looking for sales of $31.85 billion. The company earned 60 cents a share (excluding items) -- an increase from the 57 cents per share earned in last year's quarter while also topping analysts' estimates of 57 cents. Not only is the company demonstrating tremendous overall growth, but it is doing exceptionally well from its U-Verse business to the extent that its revenues grew dramatically -- almost 40%.

Of course, its core wireless business continues to be its bread and butter; that part of the operation climbed more than 5% on an annual basis, to $16.1 billion. All of this while also growing its wireless data revenue to $6.1 billion, or just shy of 20%. What I thought was pretty remarkable was the fact that AT&T added 726K net subscribers for the quarter -- increasing its total to 104 million -- a performance that contributed to a 70% annual increase as it reached just under 6 million customers. I think this trend dispels any cause for concern over having lost exclusivity to the iPhone.