Telecommunications Industry

AT&T Inc.(T)
Comcast Corporation (CMCSA)
Verizon Communications Inc. (VZ)

ISKEDAR ADUGNA
THAI TRAN
ZHENG ZHANG

AT&T Inc. (T)

Full name: American Telephone & Telegraph

Ticker Symbol(NYSE): T
Industry: Telecommunications
Founded: October 5, 1983 (1983-10-05)
Market Capital: 185.28 Billion at 12/31/2011
Employees: 241,810 at end of 2011
AT&T is the only national TV service provider to

offer a 100-percent IP-based television service

serve 107.9 million wireless subscribers (12/31/2012)
spectrum licenses in all 50 U.S. states

Comcast Corporation (CMCSA)

- A global media and technology company with two primary

businesses. Comcast Cable, and NBC Universal.

Operated cable systems since 1963, but incorporated in 2001.
Corporate office is in Philadelphia, with 120,000 employees
It presents its operations in five business segments:- Cable
communications, cable networks, broadcast television, filmed
entertainment, and theme parks.
Comcast is the nations largest provider of cable
communications, which includes: video, high-speed internet,
and voice services
60% of its revenue is generated from the cable
communications segment
The most significant operation cost of the company is,
programming cost for their video customers.

Verizon Communications Inc. (VZ)

Symbol: VZ (NYSE, The NASDAQ Global Select Market,

London Stock Exchange)

Joint Venture Verizon Wireless: Verizon 55% and Vodafone
45%
Market Cap: 101.5 Billion as of 12/31/2011
Employees: 193,900
Wireless and Wireline Business
Largest carrier in the United States
Network covered a population of approximately 296 million
as of December 31, 2011.
Bell Atlantic merged with GTE (General Telephone &
Electronics Corporation

T
Years Ended December 31,

CMCSA

VZ

2011

2010

2009

2011

2010

2009

2011

2010

2009

Total Wireless Revenue

44.76%

43.06%

39.64%

0.00%

0.00%

0.00%

63.27%

59.50%

55.96%

Total Wireline

52.64%

53.78%

56.51%

60.27%

84.06%

85.24%

36.69%

38.69%

39.38%

2.60%

3.17%

3.86%

39.73%

15.94%

14.76%

0.04%

1.81%

4.66%

Operating Revenue

Other (CMCSA - Advertising, Theme Parks, etc.)

Total Operating Revenue

100.00%

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Operating Expense

Operating costs and expenses

67.13%

61.53%

61.65%

Cost of services and sales

45.28%

42.15%

41.33%

41.38%

41.43%

41.35%

Selling, general and administrative expense

30.65%

26.44%

25.60%

32.13%

29.43%

28.49%

Depreciation and amortization expense

14.50%

15.59%

15.93%

2.30%

0.07%

0.00%

92.73%

84.25%

Operating Income

7.27%

Equity in earnings

0.62%

Impairment of intangible assets

Total Operating Expense

13.67%

17.44%

18.18%

14.88%

15.39%

15.34%

82.86%

80.80%

78.97%

79.83%

88.38%

86.26%

85.18%

15.75%

17.14%

19.20%

21.03%

20.17%

11.62%

13.74%

14.82%

0.61%

0.60%

-0.06%

-0.37%

-0.18%

0.40%

0.48%

0.51%

0.28%

0.76%

0.79%

Investment Income (loss), net

Other income and (expense), net

0.20%

0.72%

0.12%

-0.24%

0.35%

0.06%

-0.01%

0.05%

0.08%

-2.79%

-2.41%

-2.75%

-4.49%

-5.68%

-6.57%

-2.55%

-2.37%

-2.88%

Income before income taxes

5.30%

14.67%

15.12%

14.69%

16.09%

14.27%

9.45%

11.90%

12.54%

Income taxes

2.00%

0.93%

4.97%

-5.46%

-6.42%

-4.13%

-0.26%

-2.32%

-1.78%

Net Income

3.30%

13.74%

10.14%

9.23%

9.67%

10.14%

9.20%

9.59%

10.76%

Net income attributable to noncontrolling

interest

0.19%

0.25%

0.25%

1.78%

0.09%

-0.03%

7.03%

7.20%

6.22%

Net income attributable to T., CMCSA., and VZ.

3.11%

15.98%

9.91%

7.45%

9.58%

10.17%

2.17%

2.39%

4.54%

Interest expense

T
At December 31,

CMCSA

VZ

2011

2010

2009

2011

2010

2009

2011

2010

2009

1.18%

0.53%

1.39%

1.03%

5.05%

0.60%

5.80%

3.03%

0.89%

0.26%

0.25%

0.22%

5.11%

5.35%

5.54%

0.41%

0.51%

0.63%

1.85%

1.01%

2.31%

Assets
Current assets
Cash and cash
equivalents

Short-term investments
Accounts receivable

5.03%

5.05%

5.53%

2.76%

1.56%

1.52%

Inventories
Prepaid expenses and other

0.43%

0.54%

0.58%

Deferred income taxes

0.54%

0.43%

0.46%

Programming Rights

Other current assets

Total current
assets
Plant, property and equipment
Less accumulated depreciation

Investments
Wireless licenses

0.00%

0.22%

0.63%

0.10%

0.00%

1.34%

1.18%

1.41%

1.02%

0.78%

0.53%

8.52%

7.73%

9.37%

5.43%

7.50%

2.86%

13.42%

10.16%

9.58%

96.28% 90.51% 85.41%

40.61%

47.26%

45.83%

93.56%

96.20%

101.25%

56.67% 52.20% 48.32%

23.15%

27.42%

24.67%

55.19%

56.34%

60.71%

39.61% 38.31% 37.09%

17.46%

19.84%

21.16%

38.37%

39.87%

40.54%

14.51%

1.59%

1.37%

31.78%

33.18%

31.76%

1.38%

1.68%

1.09%

19.00% 18.70% 18.17%

Film and television costs

Franchise rights
Goodwill

0.00%

26.20% 27.32% 27.13%

6.24%

5.63%

5.28%

3.31%

0.39%

0.00%

37.62%

50.15%

52.74%

17.03%

12.62%

13.25%

10.13%

9.99%

9.90%

Customer lists and relationships

1.02%

1.75%

2.76%

Other intangible assets, net

1.93%

2.02%

2.05%

11.51%

2.89%

3.64%

2.55%

2.65%

2.98%

Other assets

2.34%

2.49%

2.34%

1.39%

0.99%

1.08%

2.24%

2.56%

3.86%

100.00% 100.00% 100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

Total assets

T
At December 31,
Liabilities and Equity
Current liabilities
Debt maturing within one year
Accounts payable and accrue liabiltities

2011

2010

1.28%
7.35%

2.67%
7.44%

CMCSA
2009
2011

VZ
2010

2009

2011

2010

2009

2.74%
7.92%

0.87%
3.61%

1.52%
2.78%

1.03%
2.74%

2.10%
6.37%

3.43%
7.14%

3.18%
6.71%

Other
Total current liabilities

2.77% 2.82% 3.10%

11.39% 12.94% 13.77%

3.91%
8.39%

2.66%
6.95%

2.66%
6.43%

4.87%
13.35%

3.34%
13.91%

2.96%
12.84%

Long-term debt
Employee benefit
obligations
Deferred income taxes
Other liabilities

22.67% 21.89% 24.12%

24.04%

24.98%

24.78%

21.83%

20.57%

24.26%

14.30%
10.87%
2.37%

12.80%
10.37%
2.85%

14.38%
8.46%
2.98%

12.58% 10.69% 10.38%

9.52% 8.19% 8.79%
4.70% 4.73% 4.93%

18.97%
8.26%

23.83%
6.63%

24.66%
6.00%

10.15%

0.11%

0.15%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

2.40% 2.41% 2.42%

33.72% 34.05% 34.18%
9.42% 11.80% 8.18%

0.02%
25.94%
8.85%

0.03%
33.56%
10.26%

0.00%
35.70%
8.87%

0.13%
16.45%
0.51%

0.13%
17.24%
1.99%

0.13%
17.68%
3.20%

Redeemable noncontrolling interest

Equity
Series preferred stock
Common stock
Contributed capital
Retained earnings (Accumulated deficit)
Accumulated other comprehensive income
Common stock in treasury, at cost

0.00%

0.00%

1.18%

1.01%

1.00%

-0.10%

-0.08%

-0.04%

0.55%

0.48%

-0.60%

-7.68%

-7.83%

-7.92%

-4.76%

-6.34%

-6.67%

-2.17%

-2.39%

-2.20%

0.13%

0.09%

0.04%

21.67%
37.28%

21.97%
39.50%

18.85%
37.08%

Deferred compensation
Noncontrolling interest
Total equity

0.10% 0.11% 0.16%

39.13% 41.56% 38.01%

0.24%
30.20%

0.07%
37.49%

0.11%
37.98%

Liquidity
Current
Ratio

1.50
1.00

2009
2010
2011

0.50
0.00

25.00

A/R

20.00
2009
2010
2001

15.00
10.00
5.00
0.00

CMCSA
A/R
Turnover in

60.00
50.00
40.00

2009
2010
2011

30.00
20.00
10.00
0.00
T

CMCSA

VZ

VZ

Free Cash Flow

18
16
14

17.1

Free Cash Flow (in billions)

16.9

14.714.4

14.5

13.5

12
10

2009
2010
2011

8
5.2

6.2

4
2
0
T

CMCSA

VZ

Long-Term Debt
Debt/Equity

2.50
2.00
1.50
1.00
0.50
0.00

2009
2010
2011

8
6
4
2
0

Debt Ratio

0.8
0.6
0.4
0.2
0

2009
2010
2011

Time
Interest

2009
2010
2011

Profitability
20
15
10
5
0

80

Net Profit
Margin (in
%)

2009
2010
2011

Gross Profit
Margin (in %)

60
40
20
0

2009
2010
2011

0.6
0.5
0.4
0.3
0.2
0.1
0

8
6
4
2
0

Total Asset Turnover

2009
2010
2011

Return on
Asset (in %)

2009
2010
2011

Customers and Churn

Wireless Customers (in

120

Wireline Customers (in

55

100

50

80

2009
2010
2011

45
40

2009
2010
2011

60
40
20

35
T

CMCSA

VZ

Churn Rate Wireless (in %)

1.5
1.4

CMCSA

VZ
Churn Rate
Wireline (in %)

8
6

2009
2010 4
2011
2

1.3
1.2
1.1

CMCSA

VZ

2009
2010
2011

0
T

CMCSA

VZ

ARPU

48

ARPU Wireless (in

dollars)

120

47

100

46

80

45

44
43

2009
2010
2011

ARPU Wireline (in

140

2009
2010
2011

60
40
20
0
T

CMCSA

VZ

Analysis
PriceEarnings
Ratio

50
45
40
35
30
25
20
15
10
5
0

OCF/Debt
(in %)

30
25
20

2009
2010
2011

2009
2010
2011

15

10
5
0

CMCSA

VZ

CMCSA

VZ

Buy CMCSA and VZ

In dollars

50
45
40
35
30

T
CMCSA
VZ

25
20
15
10
5
0
2009

2010

2011

2012