AT&T Q4 Revenue Falls Short; Strategic Business Services Success Reinforced By Partners

AT&T's Q4 2015 earnings fell short of Wall Street expectations, even with revenue padded by its DirecTV acquisition, and although overall business revenue saw a slight slump, the success in strategic and wireless services was bolstered by partners, according to AT&T.

AT&T's Business Solutions service revenue declined slightly in the quarter when compared with the year-earlier quarter. But business wireline data revenue increased, to $2.8 billion from $2.6 billion in Q4 2014. Equipment sales on the business side were down in 2015's fourth quarter.

While higher-margin service revenue stayed flat, strategic and wireless business services demonstrated growth, which helped to offset legacy wireline declines, said John Stephens, AT&T's senior executive vice president and chief financial officer.

[Related: Partners Eye Competitive Edge As AT&T Acquires Carrier iQ Assets]

AT&T's channel of more than 400 partners helped contribute to the strategic service and wireless gains the carrier saw in the quarter, according to Sue Galvanek, vice president of AT&T's Partner Exchange program, in an email to CRN.

"We value the integral role our indirect channels play in helping us achieve our results," Galvanek said. "More companies are moving their processes to the cloud, connecting their 'things' to the network and incorporating video as a common business medium. With this, we expect solution providers to continue to turn to our best-in-class network for the integrated connectivity solutions they need to drive value in their end-to-end customer offerings."

Despite some revenue in the business segment falling short, AT&T's Partner Exchange program is still paying off for the channel, said Patrick Lee, business development executive for Morristown, N.J.-based Alliant Technologies, a solution provider and AT&T partner.

"The partner exchange is doing incredibly well, and we're selling a boatload of [AT&T's services]," Lee said.

Dallas-based AT&T posted revenue of 63 cents per share and $42.12 billion in the fourth quarter, falling just shy of Wall Street expectations. Analysts had expected AT&T to report earnings of about 63 cents a share on $42.75 billion in revenue, according to a consensus from Thomson Reuters.

The carrier's fourth quarter revenue reflects a 22 percent increase from the same quarter in 2014, which the carrier attributed mostly to its DirecTV acquisition for $49 billion. The carrier also reported a strong free cash flow of $3.1 billion in Q4 2015.

AT&T added 2.2 million new customers to its wireless business during the quarter. Also during the quarter, the carrier posted positive results from its development into the Mexican mobile market, where it has some 8.7 million subscribers.

"When you have the towers and infrastructure that's there today, and you have the spectrum holdings that we have today in wireless, you can do great things with service … and we are going to continue that. We continue to be very proud of the performance," AT&T's Stephens said.

AT&T also made it clear that it intends to stay bullish on its Internet of Things strategy for both businesses and consumers. The provider recently announced connected car partnerships with auto manufacturers Ford and BMW, and Chairman and CEO Randall Stephenson noted in the earnings call that connecting the used car market will be an area of focus this year.