AT&T posts fourth quarter loss after failed bid for T-Mobile USA

Jan 26, 2012, 17:43 GMT

New York - The failed attempt to buy mobile phone operator T-Mobile USA cost US telecommunications giant AT&T dearly: the firm on Thursday posted losses of 6.7 billion dollars for the fourth quarter of 2011.

The effects of the failed purchase were made worse by losses in the company's own pension fund and by write-offs, in a quarter that was otherwise marked 'by record sales, strong wireless network performance and improved wireline revenue trends,' AT&T said in a statement.

AT&T had made a profit of more than 1 billion dollars in the same period a year earlier.

The planned purchase of Telekom's subsidiary, T-Mobile USA, for 39 billion dollars failed in December when antitrust authorities blocked the deal. If it had purchased T-Mobile USA, AT&T would have become the country's largest mobile phone operator.

AT&T had to face reality and pay the German giant Telekom 3 billion dollars in compensation for the failed bid. Besides, Telekom may use the roaming network of its bigger rival, and also obtained some precious radio frequencies.

AT&T estimated the total cost of the flop at 4 billion dollars.

The firm had to brace its pension fund with 1 billion dollars.

This appeared to fill all outstanding gaps for the US giant, however, and the current year looks a lot better, it said. AT&T's revenue was up 3.6 per cent during the last quarter of 2011, to 32.5 billion dollars.

'Looking ahead, we start 2012 with the best visibility we've had in some time, and we're well positioned to deliver solid results - including continued revenue growth with margin expansion, solid earnings per share growth and strong cash flow,' said Randall Stephenson, AT&T chairman and chief executive officer.

'We had a tremendous year in terms of execution, and we have excellent momentum across our growth platforms,' he said.

While investors had anticipated the effects of the T-Mobile USA deal, they had not been expecting the other exceptional costs, and they appeared to be disappointed with the quarterly result.