Will This Charge Hurt AT&T’s Earnings?

In a Securities and Exchange filing submitted on Thursday, AT&T (NYSE:T) revealed that it will take a $10 billion charge in the next quarter because of pension obligations.

And that’s not the end of the bad news. While the wireless carrier said it expects that the $10 billion charge will be partially offset by an asset gain of $1.9 billion, AT&T estimated a net operating income loss of $175 million for the quarter in its wireless sector, resulting from Superstorm Sandy-related damages and higher-than-expected smartphone costs. Like its rival service providers, Verizon (NYSE:VZ), Sprint (NYSE:S), and Deutsche Telekom’s (DTEGY.PK) T-Mobile, AT&T’s cellphone towers and cables were affected by the October storm, which caused service outages on its cellular networks.

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The “uncertainty in the securities markets and U.S. economy” also contributed to the company’s negative outlook for the quarter, according to the filing, in which AT&T said that the current economic environment caused it to lower its long-term rate of return from 8.25 percent to 7.75 percent.

AT&T’s filing contained good news as well. The company predicted that device sales will likely surpass the number sold in the year-ago quarter; approximately 10.2 million devices were activated in the three-month period, a figure higher than last year’s 9.4 million and higher than the 9.8 million smartphone sales reported by Verizon for the quarter. AT&T’s competitor is also facing a charge of $7 billion because of similar pension obligations, ZDNet reported on Friday.

Fourth-quarter and 2012 fiscal year results will be reported on January 24.

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