Revenue and Profits in Telecom

AT&T is an industry leader in both revenue and profit according to a May 2010 report by cnnmoney.com (Cable News Network[CNN], 2010). The website reports that in 2009, AT&T reported $123,018 million dollars in revenue and $12,535 million dollars in profit for the year (CNN, 2010). AT&T has climbed up to its current position through a combination of successful corporate strategies. AT&T’s purchase of BellSouth Corp. was a strategic move that enabled the company to successfully grow to its current size. Despite the company’s increased size, Todd Rosenbluth (2010), of Standard & Poor’s, points out that AT&T still saw revenue losses from its voice access lines (p. 6). In order to make up for these losses, the company has funneled more resources into increasing its wireline data revenues (Rosenbluth, 2010, p. 6). While wireline operations may be onerous for AT&T, wireless operations have been a source of success for the company. Rosenbluth (2010) asserts that AT&T’s ability to increase its number of customers is partially the result of smartphone sales, including the iPhone (p. 6).

Verizon is another strong player in the telecommunications industry. The company states its revenues to be $107,808 million dollars and its profits to be $3,651 million dollars as of 2009 (CNN, 2010). Verizon’s success is derived in part from its purchase of ALLTEL Corp., America’s fifth largest wireless provider, in 2008 (Rosenbluth, 2010, p. 6). The increase of customers Verizon experienced from its acquisition of ALLTEL made it the largest wireless provider in the United States (Rosenbluth, 2010, p. 6). In addition to success in its wireless operations, Verizon has increased its revenues by enlarging its broadband base through the installation of fiber-based broadband and video services (Rosenbluth, 2010, p. 6).

Sprint Nextel is a key telecommunications player with one of the largest revenues, while at the same time having the largest profit loss in the U.S. telecommunications industry (CNN, 2010). The company reported making $32,260 million dollars in revenue in 2009 (CNN, 2010). Despite this, they posted a $2,436 million dollar loss in profits for the same year (CNN, 2010). James Moorman, of Standard & Poor’s, proposes several factors that could have led to this outcome. Moorman (2011) points out that customer loss could have been caused by unattractive handsets, unsatisfactory customer service, and confusing rate plans (p. 2). Moorman (2011) further mentions that Sprint Nextel is operating two different networks, one being Nextel’s troubled integrated dispatch enhanced network (iDEN) and the other being Sprint’s code division multiple access (CDMA) network (p. 2). The fact that Sprint Nextel is operating two networks is significant because two networks are more expensive to run than a single network (Moorman, 2011, p. 2).