AT&T CEO complained about inconsistent government regulation and the need for spectrum to serve rural America as the company recorded massive fourth-quarter loss.
AT&T's fourth quarter was a mixed blessing. On one hand, the company notched a stunning 9.4 million smartphones sales--up 60% over the previous year. On the other, it failed in its bid to acquire smaller rival T-Mobile USA. The break-up fee due Deutsche Telekom and pension costs contributed heavily to the incredible $6.7 billion loss that it saw for the quarter.
Discounting its failed-merger-related financial woes, AT&T didn't do too poorly for the fourth quarter, especially if you consider the company's wireless unit.
With 9.4 million smartphones sold, AT&T says 56.8% of its 69.3 million postpaid subscribers have smartphones, up from 42.7% a year earlier and 32.8% two years ago. (Verizon's smartphone penetration is 44.5% of its post-paid customers.) Smartphones represented more than 80% of postpaid device sales for the quarter.
Of the 9.4 million smartphones sold, 7.6 million were iPhones--the majority of which were the iPhone 4S. AT&T also said that it sold twice as many Android smartphones in the fourth quarter of 2011 as it did in the year-ago quarter. AT&T didn't provide a breakdown on exactly how many Android, Windows Phone 7, nor BlackBerry smartphones it sold, but the total of all three is 1.7 million.
The company saw a net increase of 2.5 million customers to a total of 103.2 million connections. Nearly 600,000 of those new customers chose mobile broadband devices, such as tablets, laptop dongles, and mobile hotspots. The total number of data-only devices reached 5.1 million during the fourth quarter.
But that's where the sunshine and rainbows stop.
AT&T CEO Randall Stephenson is plainly not happy about the company's failure to buy T-Mobile USA and was sure to voice his opinion during the media/analyst call Thursday.
Randall's chief gripe is that he believes the Federal Communications Commission is using a revolving set of standards to judge acquisitions and mergers. From AT&T's perspective, the FCC looked at its bid for T-Mobile through one set of lenses, while it looked at its bid to purchase spectrum from Qualcomm through a different set of lenses.
"We don't know what spectrum caps are going to apply with one transaction to the next," Stephenson said. "The first issue is not identifying [available] spectrum, but what the rules are. The rules are so fluid, you can drink out of them right now. Our biggest issue is figuring out what we're allowed to do. We don't know how much spectrum we're allowed to hold."
At issue is the company's broadband strategy moving forward. The reasoning behind AT&T's bid for T-Mobile USA was to gain the spectrum it says it needs to offer LTE 4G to 97% of Americans. AT&T claims that its current spectrum assets will only permit it to offer LTE to 80% of Americans.
"To be perfectly candid," he said, "we don't have a mobile broadband solution for rural America right now."
AT&T is currently building out LTE in larger markets across the country. It has about 26 markets live right now, covering about 90 million people. Its LTE deployment will be complete at some point during 2013.
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