If there's a way to communicate, there's a good chance AT&T provides it. Through its subsidiaries, affiliates and holding companies, AT&T offers services via wireless, wireline, satellite, WiFi, IP network, and fiber optic cable. The company is the biggest wireline voice provider and its AT&T Mobility unit is the second biggest wireless provider (behind Verizon Communications) in the US with more than 128 million subscribers. It offers digital TV (as well as voice and internet service) through its U-verse brand and satellite Pay TV through DirecTV. The company's corporate, government, and public sector clients use its conferencing, managed network, and wholesale communications services.
Generating 48% of revenue, AT&T's Business Solutions segment is its biggest unit. It provides services to business, governmental and wholesale customers, and individual subscribers who purchase wireless services through employers. Services in this segment are marketed to provide a complete communications solution to customers.
The Entertainment Group and the Consumer Mobility segment each account for 24% of revenue. Entertainment provides video, internet, and voice services to US residential customers. Mobility provides wireless services to consumers and wireless wholesale and resale services in the US.
The international unit, mostly operations in Mexico and Latin America, accounts for the remaining revenue.
The company has spectrum licenses in all 50 US states, Puerto Rico, and Washington, DC. Its wireless services and mobile broadband services are available in about 200 countries.
Sales and Marketing
AT&T is a big advertiser to businesses and consumers with presence on TV, print, and online and its own retail stores. It offers smartphone handsets from major manufacturers such as Apple and Samsung. The company reported advertising spending rose to $3.6 billion in 2015 from about $3.3 billion in each of 2014 and 2013.
AT&T posted gains in revenue and profit and generated more cash in 2015 than 2014.
Revenue rose about 11% to $147 billion in 2015, paced by a 59% increase in its Entertainment Group and the contributions from DirecTV. Mobility sales fell about 5% in 2015 as customers chose plans such as Mobile Share or joined business-sponsored plans that generated less revenue.
AT&T net income rocketed 114% higher to $13.3 billion,boosted by an actuarial gain in 2015 that had been a loss in 2014.
Cash flow from operations rose to about $36 billion in 2015 from $31 billion in 2014.
AT&T is building its fiber-to-the-home technology to provide residences and business with higher Internet speeds, which will enable other technologies. The $4 billion program, called Project VIP, is aimed at bringing more customers to IP-based services as well as to subscribe to higher value entertainment services. AT&T has stepped up expansion and adjusted rates of its high-speed Internet service in areas where it competes with services such as Google Fiber.
AT&T is seeking to diversify its revenue streams through acquisitions. By the end of 2015, the company expects that wireless and wired business services will be its biggest source of revenue, followed by US TV and Internet service, US consumer mobile, and Latin American TV and mobile.
Behind the scenes, AT&T has invested in technologies such as Software-Defined Networks and Network Function Virtualization that shift networks more to software than hardware. The technologies reduce hardware costs and provide more flexibility than hardware-oriented networks.
Mergers and Acquisitions
AT&T has been using acquisitions to build its mobile data capabilities and expand its service area and subscriber numbers. In one of its biggest acquisitions, the company bought satellite pay-TV provider DIRECTV for $48.5 billion in mid-2015. The combination enables AT&T to offer new packaged services and deliver content on mobile devices, TVs, laptops, cars, and airplanes.
Two other significant acquisitions will make AT&T one of the biggest mobile carriers in Mexico almost overnight (as corporate dealings go). The company closed its purchase of Iusacell in early 2015 and should close on its Nextel Mexico purchase by the middle of the year. With the transactions, AT&T's nearly nationwide service area in Mexico will cover 100 million people.
In 2014 it purchased Leap Wireless (which operates under the Cricket brand) for some $1.2 billion in an effort to build its profile in the prepaid market and expand its LTE network.