How Does AT&T Make Money?
In this note, we discuss the revenue segments of AT&T (NYSE: T), their historical performance, and expected trajectory over the next two years. You can view our interactive dashboard analysis ~ AT&T Revenues: How Does AT&T Make Money? ~ for more details.
What Are AT&T’s Key Business Segments?
Communications: This segment includes Mobility which provides wireless service and equipment, Entertainment and Business Wireless which provides video, internet, and voice communications services to residential customers and business customers, respectively.
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Warner Media: It develops, produces, and distributes feature films, television, gaming and other content over various physical and digital formats.
Latin America Segment: It provides Pay TV services in Latin America and wireless service and equipment in Mexico.
Xandr: It provides advertising services.
What Are The Alternatives?
Wireless Carriers: Verizon Wireless, Sprint and T-Mobile, and regional carriers such as U.S. Cellular and C-Spire.
Video/Broadband: América Móvil and Telefónica
Legacy Voice and Data: Orange Business Services, BT, Singapore Telecommunications Limited, and Verizon Communications Inc
Media: Disney, Viacom, CBS, Netflix, Comcast, Apple, Amazon
Revenues have grown 4% from $163.7 billion in 2016 to $170.7 billion in 2018, we expect this growth rate to increase by 7% over the next two years.
1) Communications revenues are expected to drop by 3% in 2019
This segment’s revenues have declined by 3% over the last two years –from $154.2 billion in 2016 to $144.6 billion in 2018, we expect this trend to continue in the next two years as well, due to declining revenues from Entertainment segment and Postpaid subscriptions.
- Declines in Entertainment and Business Wireline segments over the years were driven by continued declines in legacy voice and data products, shifts to over-the-top (OTT) video offerings, and change to unlimited wireless plans and lower wireless handset sales and upgrades.
- Postpaid revenues declined due to falling average revenue per user (ARPU).
- We expect this trend to continue driven by lower price plans and promotional activities.
(1.1) Postpaid Revenues Could Decline 4% In Next Two Years On the Back of Growing Competition
2) Warner Media is expected to cross $33 billion by 2019.
Time Warner’s acquisition in 2018 led to this segment. We expect growth on the back of box-office revenues and licensing fees.
3) Latin America Segment could decline by 9% in 2019
We expect the growth rate to slow down due to foreign exchange pressures offset by related pricing actions.
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