AT&T Sales Fall Short as TV Viewer Losses Continue to Mountby
No. 1 pay-TV provider lost 49,000 subscribers last quarter
Revenue of $40.5 billion missed estimates for $40.6 billion
AT&T Inc.’s second-quarter sales fell short of analysts’ estimates, hurt by a loss of video subscribers who are increasingly dropping traditional TV packages for cheaper online alternatives.
The company shed 391,000 U-verse TV customers while adding 342,000 DirecTV subscribers for a total loss of 49,000, according to a statement Thursday. Sales were $40.5 billion, missing projections for $40.6 billion.
AT&T shares fell as much as 1.8 percent to $41.74 in late trading after the earnings report. The stock has climbed 24 percent this year.
The results show AT&T struggling to maintain an edge over lower-priced, online-only competitors. As the largest U.S. pay-TV provider, AT&T has the most customers looking to cut the cord and switch to web-streaming services from Netflix Inc., Amazon.com Inc. and even Dish Network Corp.’s Sling TV. Chief Financial Officer John Stephens said on a conference call Thursday that the company will introduce a streaming-TV subscription offering, DirecTV Now, by the end of the year.
On the wireless side, the Dallas-based company added a total of 257,000 monthly mobile subscribers, more than the 251,500 average predicted by six analysts in a Bloomberg survey. To keep customers from switching to wireless rivals T-Mobile US Inc. and Sprint Corp., the company is trying to entice customers with packages of unlimited mobile data and TV services. Total churn in the wireless business, representing the share of customers who dropped service, was 1.35 percent, compared with 1.31 percent a year ago.
- Earnings excluding some items were 72 cents a share, matching analysts’ estimates.
- AT&T lost 180,000 lucrative monthly phone subscribers, fewer than the average estimated loss of 283,500, according to six analysts surveyed by Bloomberg.
- For consumer mobile, customer churn was 1.96 percent, compared with 1.86 percent a year ago, including postpaid churn of 1.09 percent, better than the 1.16 percent in the second quarter of 2015.
- Second-quarter net income was $3.4 billion, or 55 cents a share, compared with $3.1 billion, or 59 cents a share, last year. Operating income was $6.6 billion, up from $5.8 billion in the second quarter of 2015.
- Sales from business services were $17.6 billion, down 0.5 percent compared with last year. AT&T attributed the decline to older landline phone and data products, lower equipment revenue and foreign exchange pressures. This was offset, however, by growth in strategic business services and higher wireless service revenue, according to a separate filing.