AT&T Earnings Take 21% Hit From Health-Care Charge

True to its word, AT&T Inc. (T) took an almost-$1 billion charge on its first-quarter earnings because of the new federal health care law.

AT&T said in late March the hit would come about because the government money it receives for retirees’ Medicare Part D drug coverage will become taxable in 2011.

But despite the $995 million charge, AT&T’s earnings still managed to beat analysts’ expectations. Profit totaled $2.48 billion, although that was down 21 percent from $3.13 billion last year because of the charge. Revenue, however, jumped .3 percent to $30.65 billion. Wireless sales increased 10 percent and, predictably, wireline voice revenue plunged – this time by 12 percent.

AT&T added 1.9 million new wireless subscribers, thanks in large part to the exclusive iPhone arrangement with Apple Inc. (AAPL), for the largest first-quarter gain in its history. What’s notable, though, is that a mere 513,000 of those additions came on the valuable postpaid side.

“Our expectation is that postpaid customer growth and net additions will come down from prior levels,” CEO Randall Stephenson said in a conference call. “But we are seeing a continuing shift in revenue growth in higher wireless data revenues and penetration of integrated devices.”